Kloogh's lavish life roused suspicion

Barry Kloogh. PHOTO: ODT FILES
Barry Kloogh. PHOTO: ODT FILES
A combination of Barry Kloogh’s lavish lifestyle and a suspicious accountant brought down Kloogh’s Ponzi scheme, the Serious Fraud Office (SFO) says.

It is the first time the SFO has confirmed details of how the fraudster was caught.

Kloogh, once a regular in many of Dunedin’s best restaurants and a devotee of expensive cars, had aspirations in early 2019 to buy one of the city’s most expensive private homes.

 Julie Read
Julie Read
However, his Champagne tastes and beer income had alerted his accountants, who grew more and more concerned at what they viewed as a gulf between their client’s profile and the profitability of his investment advice business.

Kloogh’s offending came to the attention of the authorities when he provided falsified accounting records to his external accountants who were preparing financial statements for Impact Enterprises Ltd, a company Mr Kloogh owned, SFO director Julie Read said.

"Mr Kloogh intended to use the financial statements to obtain finance for his company."

Ms Read said the accountants obtained the genuine accounting records which confirmed that the documents provided by Kloogh were fraudulent.

They reported the matter to the Financial Markets Authority (FMA), which once it realised Kloogh’s fraud added up to multimillions, passed the case on to the SFO.

The SFO, aided by the FMA and police, raided Kloogh’s office and home on May 23, 2019.

Fourteen months later, Kloogh was sentenced to eight years and 10 months’ jail after earlier pleading guilty at a Dunedin District Court hearing to 11 charges.

"The SFO investigation included extensive financial analysis of financial records and investment platforms," Ms Read said.

Ponzi schemes were successful because investors were told their money had successfully returned a profit and were encouraged to leave the investment and earnings in the scheme, she said.

Much of the money Kloogh stole went on keeping his Ponzi scheme going and was repaid to other investors.

The SFO believes the rest went into propping up his businesses and the facade he presented of a successful, wealthy financial adviser.