Tipped off by Madoff documentary, elderly investor uncovers New Zealand's biggest fraud ever

Tipped off by Madoff documentary, elderly investor uncovers New Zealand's biggest fraud ever
Similarities between New York's Ponzi King and and an Auckland investment manager led an elderly client to contact officials. Guess what?
DEC 29, 2009
By  John Goff
Strangely enough, some small bit of good has come from Bernard Madoff's $50 billion fraud. According to the New Zealand Herald, a documentary about the notorious U.S. fraudster, which ran on local television, led an elderly woman in Auckland to contact bank officials about her investment manager. That call, in turn, ultimately led authorities to charge an Auckland Savings Bank manager with fraud. And not just any fraud, mind you. On Wednesday, banker Stephen Versalko was sentenced to six years in prison for running a Ponzi scheme that duped some 30 investors — mostly elderly women — out of $12.5 million. That makes Mr. Versalko the biggest scammer in the country's banking history — the Kiwi Madoff. Details of the case were revealed in court today. Turns out the viewer-turned-whistleblower first became suspicious of Mr. Versalko because he was the only manager she ever dealt with at the bank. Then in August, she watched a documentary about Mr. Madoff. According to local press reports, it struck the investor that the Ponzi King's MO was eerily similar to the way Mr. Versalko operated. A call to the bank quickly confirmed the investor's worst fears. Her $3 million investment portfolio was a fiction. Mr. Versalko eventually confessed to duping not only the whistle-blower, but about 30 other investors over a nine-year period. He reportedly told local investigators that after years of fooling investors, he thought he was “Mr. Invincible.” Turns out Mr. Invincible had some weaknesses. He spent about $3 million on luxury properties. He also put more than $1 million on his credit cards, including $300,000 for stocking his wine cellar. In addition, he had long-term arrangements with two prostitutes. Price? $2 million. And getting busted by a little old lady? Priceless.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.