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The liquidator's first report, released yesterday, said more than 170 investors were owed a total of about $12million to $14million they had placed with Mr Kloogh's firms, Financial Planning Ltd and Impact Enterprises Ltd.
"The evidence shows that the companies have operated as a Ponzi scheme controlled by Mr Kloogh," the report said.
"Such schemes generally collapse when the operator can no longer find sufficient new funds to satisfy the existing investors.
"The liquidator is proceeding on the assumption that Mr Kloogh has withheld the true situation from many of his clients."
Any reports or documents Mr Kloogh provided to his clients were unlikely to be a true reflection of their investments, the liquidators said.
The platform which investors believed was holding their funds on their behalf has been placed on notice that they should not pay out any of the assets pending an investigation by the liquidators.
"A tracing exercise will be undertaken to determine whether funds paid by an individual investor were ultimately used to purchase a custody asset for that investor," the liquidators said.
"Initial sample investigations have shown that the actual funds provided by one investor may have been used for other purposes, e.g. to repay earlier investors, or co-mingled with other funds.
"For each investor, an investment that appears in the records in their name, may actually be purchased with another investor's funds or a mixture of investors' funds."
The scale of co-mingling and misapplied funds was not known and would be investigated, the liquidators said.
The Serious Fraud Office launched an investigation into Mr Kloogh in May.
No charges have been laid, but his accreditation as an authorised financial adviser has been cancelled.
Mr Kloogh did not attend the liquidation hearing for Financial Planning Ltd and Impact Enterprises Ltd on August 29 and the companies, of which he was sole director, did not have any legal representation.
In an earlier interim liquidation ruling, Judge Dale Lester said it appeared that "substantial funds" were used for personal spending by Mr Kloogh.
The Otago Daily Times has spoken to many of those affected.
Sums invested range up to the hundreds of thousands of dollars, and some families had life savings with Mr Kloogh.
One person who contacted the ODT had invested funds with Mr Kloogh for more than 30 years.
A professional group has been established to support the affected investors.
In September, Mr Kloogh answered a knock at the door at a Dunedin address, but only to tell the ODT to leave.