90 seconds at 9am: ASB banker who spent NZ$3.4 mln on prostitutes convicted of Ponzi fraud

Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news that former ASB banker Stephen Versalko has been convicted of fraud and sentenced to 6 years in prison after stealing NZ million from 30 wealthy ASB clients over a 9 year period.

Versalko was running a classic Ponzi scheme and hiding it from ASB’s systems. He was only found out after a client saw a documentary about New York Ponzi schemester Bernie Madoff and got curious and worried. The client talked to another ASB banker and the fraud was quickly identified. Versalko used the money to buy luxury properties and a portfolio of investment properties. He also spent NZ.4 mln on two prostitutes, althought NZ.2 million of that was extortion from one of the prostitutes. Meanwhile, he was also using new money being invested to pay the interest on previous money invested — a classic Ponzi scheme.

But how did he get away with it for so long while operating under ASB’s noses? How well was he supervised? He called himself ‘Mr Invincible’. ASB has repaid clients the lost money and says it has changed its systems to stop a repeat. The full ASB statement is below.

Meanwhile, the government is setting up an Australian style Productivity Commission as part of its coalition agreement with ACT. It will cost NZ million to run.

Finally, Finance Minister Bill English has signalled tax cuts in the May 20 budget are likely to be smaller than expected because Treasury’s forecasts of revenues from property tax tweaks are lower than the Tax Working Group’s estimate of NZ.3 billion, Radio Live and Radio NZ have reported.