This is how the whole scheme of things works.  All good things are difficult to achieve; and bad things are very easy to get.

- Confucius
 

Fraudbusters came and left satisfied, NZEB says

by Chris Hutching

The Wellington investment manager involved in a row over an immigrant investment scheme involving forestry trusts says Serious Fraud Office staff approached him but was satisfied with what it learned.  "The Serious Fraud Office came and went away happy," Don Simcock, of NZEB (formerly New Zealand Enterprise Board), said.

Mr Simcock and business partner Stephen Reidy had been involved in steering business migrants into forestry lrusts in the early 1990s, notably the Flat Rock Forests Trust whose assets are in receivership.  Together the two men have been involved in bringing in about $66 million worth of migrant investment into New Zealand.

They were also directors of the management company of the investment trusts until court action last year passed control to KPMG on behalf of investors.  The matter was highlighted in a recent National Business Review article about two US emigres, Jeff and Ruth Hatch, who say they lost about $500,000.  More recently 23 Asian investors have complained that they too had lost money and they believed the schemes had government backing.

The Serious Fraud Office provided its usual "neither confirm nor deny" response but several investors have been in frequent contact with the SFO and Mr Simcock himself confirmed its involvement.  "The Serious Fraud people were satisfied there had been a failure in communication," Mr Simcock said.

He reiterated there had never been a government guarantee and that investors had been well aware when they signed up.  But the out-of-pocket investors have claimed they were lulled into placing the money in the trusts under the impression they were part of a government migrant scheme and because of the general immigration advice provided by Messrs Simcock and Reidy when being offered the forestry investments.

They point to the March 24, 1993 Flat Rock Prospectus No 2 which stays: "NZEB evolved from the activities of the Wellington Regional Enterprise Board which was founded in 1987 by central government, local government in the Wellington region, and the private sector through the Chamber of Commerce."

However Mr Simcock said the investors were all told there were no guarantees.  While he had "enormous" sympathy for the 23 Asians caught out he said they were fortunate in the sense that only a portion of the $500,000 they had invested would have gone into collapsed Flat Rock.  Mr Simcock said although neither he nor Mr Reidy had any specific management involvement in the trusts any more they had put in any hours of their own time to try to help clear up the situation.

He said there were some outstanding issues with Countrywide over the receivership and a further development might see the position of unitholders improved.  "We've dealt successfully with over 200 migrant groups. This was just a very unfortunate situation," Mr Simcock said.

Source: The National Business Review 17 July 1998

I have several comments about this article.

First, I'm left with the feeling that investors who are not happy can always apply for a job with the Serious Fraud Office.  Then they could be happy, too.

So DID the SFO go away "happy"?  Perhaps after one of the matters they discussed with Mr Simcock some time prior to their discussions with him about Flat Rock.

Hutching repeats in this article what he said in his 27 February 1998 article (see Flak Flies Over Flat Rock Trust Collapse), that "investors were all told there were no guarantees."  At the risk of also repeating myself, let me again include the response I gave there:

Here is an excerpt from a (handwritten) letter Steve Reidy wrote to me:

The Fund IS Trustee guaranteed (AMP Perpetual Trust) NOT by Stephen Reidy!

(a)     As to the Forest Trust, I point out that it had then and indeed still has, written qualifying status as a BIC Investment Fund, which is not given lightly by Govt.

(b)     I would also point out Ruth that the Fund which is under AMP Trustee status is required AT ALL TIME, to hold clear asset value of NZ$10 million, which it does.

So, do you think Simcock is 100% correct?

Last, for Hutching to include Simcock's remark that "outstanding issues with Countrywide" and "a further development" (of an unrevealed sort) "might see the position of unitholders improved" was, as time has shown, to paint a more rational picture of the situation than reality warranted.

For news articles on the Flat Rock Forests Trust, forestry, the Serious Fraud Office, one immigrant family's experiences, immigration specialists, fraud, juries, logging, and more, pressing the "Up" key below will take you to the Table of Contents for this News section.  Or you may wish to visit the Forestry Trust Table of Contents to read how a unit trust went bust.  Or the Topics Table of Contents which offers a different approach to lots of topics - among them poisonous insects, eating dogs, what's addictive, training vs teaching, tornados, unusual flying machines, humour, wearable computers, IQ tests, health, Y chromosomes, share options, New Jersey's positive side, oddities, ageing, burial alternatives, capital punishment, affairs, poverty, McCarthyism, the most beautiful city in the world, neverending work and more...