New Zealand fund manager Kelly Tonkin, who overstated the net asset value of his Cayman fund and forged a BDO Cayman Islands auditors report by copying the firm’s letterhead and signature on fabricated accounts and audit statements, has been sentenced to eight-and-a-half years in prison by a court in Christchurch.
Tonkin, 52, will have to serve at least four years and three months of the sentence before he is eligible for parole.
New Zealand’s Serious Fraud Office brought charges against Tonkin in March 2021, one year after his firm Penrich Capital collapsed, alleging that the fund manager had overstated the value of the Cayman Islands-registered Penrich Global Macro Fund by tens of millions of dollars.
The SFO had been alerted after Tonkin admitted the fraud in an apology email and letter to colleagues, who had uncovered a hidden cell in the fund’s accounting spreadsheet that inflated the value of the fund.
Tonkin pleaded guilty to charges of false accounting, making false statements and forgery in June of this year.
Last month, the Cayman Islands Monetary Authority cancelled Tonkin’s director licence and barred him from holding directorships in the islands.
At the sentencing on Tuesday, 21 Dec., the fund manager read a letter in which apologised to investors, his family, friends and co-workers, saying he was sorry for the hurt he caused and that there were no excuses or explanations for his actions.
“I still don’t understand why I chose to be dishonest rather than accept that the investments had gone wrong,” he said, according to New Zealand news website Stuff.
“What I did was foolish, wrong and utterly dishonest. I am very sorry for all the people who have lost money in their investments. I thought I could get their money back.”
District Court judge Tony Couch called Tonkin’s “calculated and deliberate” actions one of the most serious fraud cases in New Zealand’s history, the New Zealand Herald reported.
The “prolonged scheme of lies and deception”, which ran for almost a decade, had a profound effect on the victims, the judge said.
The 150 investors in the fund, included many who had saved for their retirement and even a school.
The court attributed at least NZ$80 million (US$55 million) in losses to Tonkin for sentencing purposes.
However, the former New Zealand Treasury economist and London investment banker received credit for his early guilty plea, genuine remorse and cooperation with the SFO, which reduced his custodial sentence by 35%.
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