Two fraudsters from New Zealand who operated a fake forex trading platform have been sentenced.
The pair operated Arena Capital Limited, sometimes known as BlackfortFX, seemingly as a forex trading site – but in reality, it never used customers’ deposits for trading.
Lance Jack Ryan, aged 44, was sent to prison for seven and a half years during the sentencing at Christchurch District Court. He will not be eligible for parole for three years and nine months.
Ryan, who was also sometimes known by the alias Lance Jared Thompson, focused on securing new investors for the Ponzi scheme. In total, he targeted almost 1,000 new investors willing to deposit cash, and they invested over NZD $8m.
On the charge of obtaining registration as a financial service provider by deception, Ryan pled not guilty, but he did plead guilty to a host of other charges, including forgery, reproducing documents with the intention to deceive and several more.
In addition to his forex fraud conviction, Ryan also has a history of criminal activity. He has previously been found guilty of offences related to commerce and business, such as crimes against the Companies Act, as well as other fraud-related misconducts.
The other fraudster, Jimmie Kevin McNicholl, aged 56, will have almost a year of home detention as well as a compensation charge of NZD $50,000.
McNicholl acted as a director for BlackfortFX, and he pled guilty earlier in the judicial process to a charge of obtaining registration as a financial services provider by deception.
The sentencing comes well over a year after the Serious Fraud Office in New Zealand first brought this charge against McNicholl in October 2016.
The wider investigation into BlackfortFX and the two fraudsters was complicated and long-running. BlackfortFX began operations in 2014, although it never actually traded in the foreign exchange market.
In 2015, the Financial Markets Authority in New Zealand announced that it was looking into the activity of BlackfortFX.
Shortly afterwards, the advisory firm KordaMentha became the company’s receivers. However, Ryan and McNicholl lost some access to it after the Financial Markets Authority acquired asset preservation orders on the grounds that customer deposits were not secure.
“The sentence imposed on Mr Ryan reflects the very serious nature of his offending,” said Julie Read, Director of New Zealand’s Serious Fraud Office.
“He cynically manipulated vulnerable and trusting investors, many of whom have suffered considerable stress in addition to financial loss. Some of the lost money was payouts from the Earthquake Commission. Mr Ryan also deceived the Financial Markets Authority and the Companies Office. “The prosecution of such matters is an important aspect of protecting New Zealand’s reputation as a safe place to invest and do business,” she added.