Victims of a Dunedin lawyer who yesterday pleaded guilty to Serious Fraud Office charges following a $2.8 million Ponzi scheme can now start the process of trying to get their money back.
Dunedin people lost the largest portion of funds caught up in the scheme run by John David Milne, a 79-year-old lawyer who pleaded guilty to 34 charges laid by the Serious Fraud Office.
Milne's late plea had made things harder for victims, a Dunedin lawyer dealing with them said yesterday.
''It certainly has all the hallmarks of delay, delay, delay, delaying the inevitable: a 79-year-old man facing a lengthy incarceration,'' Alistair Paterson said.
''It hasn't made it any easier for the affected people; not at all.''
In the Christchurch District Court yesterday, Milne admitted the fraud, on the morning his trial was set to begin.
He pleaded guilty to 34 charges laid by the Serious Fraud Office (SFO), including theft by a person in a special relationship and misappropriation of funds.
He will be sentenced on November 26.
The SFO said Milne elicited money from clients or associates on the premise he would invest it, and pay them a return on their invested funds.
But none of that money had been invested and some early investors had been repaid with money received from later clients.
SFO director Julie Read said Milne had a loyal client base in Dunedin derived from previous legal work.
He operated the scheme from 1991 to 2012.
''Mr Milne's activity had hallmarks of a Ponzi scheme, as he had in fact been paying investors from funds received for investment from other clients.
''Mr Milne had not actually invested any of his clients' money.''
Ms Read said clients who trusted Milne were keen to be involved with a scheme that paid such good returns.
''Mr Milne's victims were vulnerable, and although there is a sense of relief that he has pleaded guilty, for many it is too late to recover from the impact of his dishonesty.''
The court heard there had been losses of about $2 million, but as he entered his pleas, Milne said some of that money had been repaid.
The Crown indicated in court it would ask for eight years' jail as a starting point at sentencing.
Milne was remanded on bail.
The complaint to the SFO was received from the New Zealand Law Society Otago standards committee regarding Milne's activities around client funds, in June 2012.
Milne was adjudged bankrupt in the High Court at Christchurch in November 2012.
In April last year, a Lawyers and Conveyancers Disciplinary Tribunal decided to strike him off its roll of barristers and solicitors.
He had his own Dunedin legal practice from 1960 until it was bought out by another local law firm, Craig Paddon Law, in 2008.
He worked in the company's Christchurch office from 2008, but left last year.
Mr Paddon said yesterday he did not want to comment on the matter.
In 2012, Mr Paterson launched an ''affected persons' register'' to collate the names and extent of loans made to Milne.
Mr Paterson said yesterday everything in terms of recouping the money had been on hold till the trial.
''But in the event he's pleaded guilty, and we're in a position that we will have to be formally lodging claims with the respective fidelity funds,'' Mr Paterson said.
''Certainly, the largest portion of the funds are Dunedin-based.''
He could not say how likely it was people would get their money back, but ''there are avenues open''.
''Certainly, we'll be exploring pretty much everything.''
''We're going to struggle with our formal claims against the [New Zealand Law] Society, because they've got an exemption for investment funds.''
Dunedin lawyer David More was involved with the case in the past as Law Society Otago standards committee convener, but yesterday spoke to the Otago Daily Times as a lawyer.
He said New Zealand Law Society Fidelity Fund rules were changed after a large fraud payout in the 1990s.
That meant money placed for investment was excluded from the responsibility of the fidelity fund.
''The first question was whether or not the funds placed with Mr Milne were placed for investment.
''The second question is did any of those pre-date the change in the law?''
