Forex Trader Charged With Fraud

Forex Trader Charged With Fraud
 
The Serious Fraud Office (SFO) today laid charges against Mr Christopher John Collecutt (57), a foreign exchange (forex) trader operating under the name ‘CFX Trading’.
 
Mr Collecutt is facing three charges totalling $1,741,835 under the Crimes Act including theft by person in special relationship, obtaining by deception or causing loss by deception, and false statement by promoter.
 
Mr Collecutt traded foreign currency on behalf of 73 investors, located both in New Zealand and overseas. 
 
Mr Collecutt has been forex trading on behalf of investors since around 2007 and it is alleged that a total of 59 investors lost approximately $1,478,131 through investing with Mr Collecutt.
 
The SFO alleges that figures in weekly investment reports emailed to investors from late 2008 onwards were false, that commission income was calculated on false profits, and that investor funds were used for personal use.
 
SFO Chief Executive, Adam Feeley, says “Many of Mr Collecutt's investors were family and friends, and this highlights the fact that a personal connection with the promoter of an investment opportunity is no substitute for careful research into the risks associated with any type of investment" 
 
The SFO was alerted to the case in August 2011 and immediately commenced a Part II investigation.
 
Background to investigation
 
Mr Collecutt has been forex trading (from his home) for himself since 2004, and on behalf of other investors since 2007.  Mr Collecutt predominantly traded in US Dollars, Australian Dollars, and Japanese Yen.
 
Mr Collecutt traded using the trade name ‘CFX Trading’.
 
Crimes Act offences
220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.
(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
(i) knows that it is false in a material particular; or
(ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.
242 False statement by promoter, etc.
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent—
(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978; or
(b) to deceive or cause loss to any person, whether ascertained or not; or
(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.
(2) In this section, false statement means any statement in respect of which the person making or publishing the statement—
(a) knows the statement is false in a material particular; or
(b) is reckless as to the whether the statement is false in a material particular
 
Role of the SFO
 
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO operates three investigative teams:
 
•           Fraud Detection & Intelligence;
•           Financial Markets & Corporate Fraud; and
•           Fraud & Corruption.
 
The SFO operates under two sets of investigative powers.
 
Part I of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
 
Part II of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”
The SFO’s Annual Report 2011 sets out its achievements for the past year, while the Statement of Intent 2011-2014 sets out the SFO’s three year strategic goals and performance standards.  Both are available online at: www.sfo.govt.nz

ENDS

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