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New Zealand regulator brings forex fraud case

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New Zealand flag on backgroundA major regulator in New Zealand has brought allegations of foreign exchange fraud against a man who they claim scammed millions of dollars out of traders.

The New Zealand Serious Fraud Office, or SFO, claims that Kelvin Clive Wood ran a forex trading firm which ended up causing losses of over $1 million New Zealand dollars each in the case of its largest investors.

In total, over $7 million NZ dollars are believed to have been lost as a result of Wood’s alleged crimes. That figure is equivalent to around $4.5 million US dollars or around £3.5 million British pounds at the time of writing.

Wood, aged 69 years old and from the country’s largest city of Auckland, faces two separate charges – one of  “theft by person in a special relationship” and one of “obtaining by deception”.

He entered no plea when faced with these charges at Auckland District Court on Tuesday, October 23rd.

Wood is believed to have built up a Ponzi scheme over time. A scheme like this sees cash deposits from new investors being paid to existing traders in order to create the illusion of profits.

It only usually unravels once the supply of new investors runs out, and the fake gains can no longer be sustained.

In total, 18 people are believed to have lost out as a result of the scheme.

He is alleged to have commenced the crimes around January 2010 and managed to avoid being caught until May 2017.

It was around this time that the New Zealand Financial Markets Authority involved the SFO in the case.

In a press statement, the SFO gave more details as to what Wood is alleged to have done.

“Kelvin Clive Wood (69) of Auckland facilitated foreign exchange and trading services through two companies – Forex (NZ) Limited and Forex NZ 2000 Limited”, it said.

“Mr Wood’s clients placed money with him through his companies for the purpose of fixed interest term deposits, the purchase of foreign currency, general investment and foreign exchange trading purposes. Clients invested on the basis that their principal was not at risk.”

The New Zealand SFO was set up in 1990, and it implements the Serious Fraud Office Act.

According to its website, it exists to help defend “New Zealand’s reputation for transparency, integrity, fair-mindedness and low levels of corruption.”

New Zealand does indeed have a reputation for these things, although this is not the first time it has experienced cases of alleged financial fraud.

Last year, for example, it was revealed that a woman in the country had lost around $7,000 New Zealand dollars – £3,500 or so British pounds, or $4,500 or so US dollars – as a result of financial fraud.

“The FMA regularly receives complaints from consumers who have been caught out by slick websites and promises of high returns from off-shore. These complaints centre on products like binary options and foreign exchange trading”, a Financial Markets Authority spokesperson said at the time.

“Where an unlicensed, unregulated company based off-shore withholds money from an investor, it is very hard for the FMA to help.”