A foreign exchange broker in New Zealand, whose financial decisions are believed to have left his clients owed over $10 million dollars, is considering declaring himself bankrupt.
Russell Maher, who ran the firm Forex Brokers, is believed to have run up what has been described as “significant losses” while he had clients on the books.
According to liquidators Stephen Lawrence and Christopher McCullagh of PKF, Maher carried on trading for four years even though the losses were mounting up.
This constitutes a breach of New Zealand’s Company Act.
Liquidators did, however, attempt to secure some cash from Maher. He was believed to be responsible for almost $4 million dollars’ worth of the debt – although, in a blow to those who lost money, he has indicated that he may not be able to repay.
In total, there have been 96 claims from unsecured creditors. It is believed that across the board the total amount owed is now $12,834,505.
“Maher responded advising that he did not have the means to settle the demand and therefore intended to declare himself as bankrupt shortly”, liquidators said.
Forex Brokers was set up in 1995, and Maher served as managing director. Before it went down, his firm’s website appeared to emphasise his glowing credentials.
However, the problems with the firm did not appear to begin in earnest until the end of 2016.
Investors told newspapers in New Zealand that it was at this point that payment issues began to surface. It was not until March, however, that the firm’s phones were no longer being answered.
At this stage, its site also went down.
At the moment, there is an ongoing investigation by New Zealand’s Serious Fraud Office, or SFO. This has been going on since the issues with creditors first began.
Maher himself has spoken about the accusations.
In statements given to liquidators, he said that issues relating to competition, time and amount of cash available had caused him problems.
“I had tried to devise a plan to start returning investor funds and start scaling back the company until I could close it down, but I ran out of time and cash flow”, he said.
As well as the accusations of forex fraud, the case has experienced another twist involving a large number of precious metals.
According to a report from PKF, there was a quantity of gold and silver bullion found in a safe at the firm’s headquarters in the Dingwall Building, which is located on Queen Street in Auckland.
In terms of worth, this was valued at a six-figure sum.
An unspecified third party then claimed that this was their bullion, and they produced access to the safe to verify their identity.
It took a court case at the country’s High Court to settle the matter, although eventually, cash did go to the liquidators.
“After obtaining legal advice from a Queens Council and extensive negotiations, the liquidators settled the proceedings in September 2018. The liquidators received $260,771 in full and final settlement, and the bullion was handed over to the third party”, they said.