Frequently Asked Questions (FAQs) for Ross Group (In Receivership and/or In Liquidation)

$1,000 per week living allowance

1. The $1,000 per week living allowance which was granted to Mr Ross by the High Court was payable from his personal assets. The available funds from which to make the payments ran out on 22 February 2013. No payments have been made since this date. The assets of the Ross Group Companies have not been used to fund any $1,000 per week payments.

Conflict of Interest

2. John Fisk and David Bridgman of PWC are not conflicted from acting as receivers or liquidators of the Ross Group Companies. Statements purportedly made by David Ross that PWC was the auditor or accountant for the Ross Group are incorrect.

Clawback

3. There has been no legal action commenced in regard to clawback at this stage. The Liquidators have requested payment of monies from certain investors against whom they believe a successful clawback claim could be brought. The amount potentially recoverable through clawback is not yet quantifiable, but figures publicly mentioned of over $100 million are likely to be materially wrong.

4. The liquidators are aware of various statements made by investors in recent times to the effect that a global declaration should be sought in the Court that all “profits” made by former investors should be deemed to be stolen property such that they can be recovered. The liquidators have taken legal advice from Bell Gully and a leading QC on the legal strategy in relation to clawbacks. They do not consider such a proceeding or declaration is viable under New Zealand law.

5. The Liquidators are conscious of the fact that Mr Ross has now pleaded guilty to a number of criminal charges. Very broadly, there is no general principle of law that once money or property is shown to be stolen it can automatically be recovered from the recipient. In civil law, whether such a right of recovery exists depends upon a number of factors including the relationship of the parties, the knowledge of the recipient of the property and what the recipient did with the property. In general the Liquidators and their legal advisors consider the alternatives available under the Companies Act 1993 are more cost effective and have a greater prospect of recovery than adopting this approach in the first instance.

Ponzi Scheme

6. Due to the disparate nature of the dealings of the Ross Group it is not possible to give it a definitive label as a Ponzi scheme or otherwise. Some transactions show the characteristics of a Ponzi scheme, whereas others suggest a legitimate share trading business. Investor contributions will have been used for a variety of purposes, including payment of distributions to other investors, the purchase of shares and operating expenses of the business. The Liquidators are reviewing the transactions entered into by the Ross Group as a part of our general investigations, however, the cost of tracing how all deposits received from investors have been treated would likely outweigh any benefits to investors from doing so.