Latest news with #Kloogh
Otago Daily Times
10-07-2025
- Business
- Otago Daily Times
Stopping fraudsters worthy investment
Sadly, throughout history, whenever value has been ascribed to anything crime has soon followed. Our ancestors once had to be wary of cut purses or coin shavers; these days hackers and phishers attack several times a day via spam emails and other nefarious means. New Zealand has always had enforcement agencies to protect us. Some are obvious and visible, such as police. Others less so, such as those who deal with specialised types of offending like financial crime. For most it would be unthinkable that police would not pursue criminals because their taxpayer funding had reached its limit. However, this is a real concern for other enforcement and regulatory bodies, especially those which monitor financial crimes. In recent years the spotlight has been on the Serious Fraud Office. It has often been claimed that the office takes few prosecutions because it is underfunded and during the 2020 election campaign then National leader Judith Collins pledged to double the SFO budget. That has not happened since the change of government in 2023, although the government did recently announce additional funding to target foreign bribery. The focus shifted last week when Financial Markets Authority released its statement of expectations for the coming year, in which the FMA noted that it had overspent its legal budget for the previous year — expenses which it had covered from its dwindling reserves. "With multiple cases in the pipeline, forecast litigation expenditure for 2025-26 is expected to exceed the annual litigation funding appropriation of $5 million," it warned. While this might be good news for dodgy accountants and financial advisors, it is bad news for the rest of us. The FMA plays a critical role in ensuring that New Zealand's financial system runs smoothly. It licences a range of firms and individuals who provide financial services, supervises the sector and acts to prosecute those who try to game the system. For southerners, the FMA may be fresh in the mind due to its successful prosecution of disgraced Dunedin financial advisor Barry Kloogh, who was imprisoned for stealing $15 million-$18 million from his clients. Kloogh was recently declined parole, the board saying that despite having served five years behind bars so far Kloogh still lacked insight into what had caused his 25 years of plundering from his clients, and the impact that it had had on them. Although a relatively straightforward prosecution — some of Kloogh's methods of bilking people who had every right to trust a licensed financial advisor were far from sophisticated — it still took a couple of years before Kloogh's day in court came. Investigators are still working on tracing where some of the money placed, allegedly safely, with Kloogh finally ended up. Dealing with such crimes takes time and money — and even more so for more elaborate embezzlers than Kloogh. For New Zealanders to have trust in the markets, they need to know that the likes of the SFO and FMA can step up and take action without checking their wallets beforehand. This need for reassurance is even more necessary as the government makes moves to overhaul New Zealand's Anti-Money Laundering and Countering Financing of Terrorism laws. Introduced with the best of intentions, to protect innocent people against fraud and malfeasance, they have ended up imposing large costs in terms of both money and staff time on firms — many of them small operations — to ensure that they comply with the rules. So they should, but the government feels that there needs to be a balance of compliance commensurate to level of risk. It is a makeable argument, but the Kloogh case is a salient reminder that just one person can cause immense heartbreak for hundreds of others. Amidst the proposals in the government's consultation document is one that a levy be raised to provide more funds for enforcement services. This is a sensible quid pro quo to any lessening of financial regulations. Should the unintended consequence of any such move be an increase in illegal activity, investigators should be properly resourced to detect and then prosecute criminal activity. The government also, yesterday, announced an "anti-scam alliance" between the public and private sectors — a promising development. Ultimately, this is about protecting families and their financial future, and that must be a priority.
Otago Daily Times
03-07-2025
- Business
- Otago Daily Times
Dunedin Ponzi scamster lacks insight into 'abhorrent' crimes
A Dunedin financial adviser, who put his $15.7 million Ponzi scheme down to "overconfidence", lacks insight into his crimes after more than five years behind bars, the Parole Board says. Barry Kloogh, 62, was jailed for eight years and 10 months when he came before the Dunedin District Court in 2020 and made his first application for parole yesterday. Despite his tears and the fraudster condemning his crimes as "abhorrent", board member Greg Coyle said the inmate lacked insight into what caused his 25-year scam. Kloogh, who wore the same grey jacket and white shirt in which he was sentenced, made no reference to the factors of greed and dishonesty, Dr Coyle noted. His next parole hearing will be in December and a psychological assessment was ordered to "dig deeper" into his motives. Vanya Thurston, who helped establish an investor support group, said the decline of parole was the correct result, but no cause for celebration among the victims. The losses would affect families for generations, she said. "A lot [of victims] didn't want to participate in this process because it was retraumatising. I truly believe it led to people's premature deaths; the stress of it has just been too much," Ms Thurston said. Dr Coyle began yesterday's hearing by summarising the views of Kloogh's victims. "Dreams have been shattered; you've stolen their future; lives have been wrecked ... their world has been turned upside down, based on narcissistic greed." It was "disgusting, manipulative behaviour", they said. Kloogh acknowledged the statements were true. "I think I was too overconfident ... I simply thought I would be able to pay this money back. "I obviously have this character flaw that suggests I can achieve anything and I know I can't now." At Kloogh's sentencing, the court heard he had embezzled $15.7m of investor funds, but yesterday he said he believed the total was $18m. He estimated he personally profited by up to $3m. "I think that was more about making myself and others around me feel good. I think that was a mechanism to make me feel I was better than everyone else and I simply wasn't," Kloogh said. He told the Parole Board his use of alcohol was a key factor in the offending. Kloogh said he would drink to stifle any negative emotions and instil a sense of confidence. "I had moments I thought: 'This isn't going to work'. I had alcohol again, there was bravado and away I would go," he said. "What alcohol did was remove any semblance of morality that I had to pull myself in." Panel member Paul Knox said many victims had spoken about Kloogh's dramatic performances, which had led to them investing with him. How could the board be confident the prisoner's tears were not a similar manipulative display? "I absolutely have heartfelt emotions about these people," Kloogh said. "I never want to go into the emotions of harming people ever again. I made a pact that I would not do this ever again, that I would not get involved in this stupid behaviour ever again, and I've held true to that pact." Dr Knox suggested that might be a little hasty, given Kloogh had been in prison for the past five years. The board discussed with him an "exclusion zone" — a prohibited geographical area to stop a parolee unwittingly running into his victims — common in such serious cases. Kloogh said he had not considered living anywhere outside Dunedin because it was where all his support remained. He believed keeping "a low profile" and dedicating himself to studies and household chores would keep him out of the public eye. Kloogh said he had no assets remaining, bar a $12,000 KiwiSaver account. It still makes him better off than one of his victims, who told the Parole Board they had just $10 in the bank at present.
