Thieving banker went undetected for nine years

Stephen Versalko used his stolen millions to finance a lavish lifestyle. Photo / Sarah Ivey

For nine years, Stephen Gerard Versalko lived the high life.

The investment adviser stole nearly $18 million from wealthy ASB Bank clients undetected and lived a lavish lifestyle with the ill-gotten gains.

Temporary suppression orders stop us from reporting how he spent the money, or describing how he tricked his clients and was eventually caught.

But the Herald can reveal that the largest employee theft in New Zealand history was discovered by a fluke.

A spokeswoman for the ASB yesterday declined to comment, citing the suppression orders.

Asked if the bank had tightened security since the theft, or how such offending could go on for so long, she said those questions would be answered when the suppressions were lifted.

"The only thing we can say is that all affected parties have been reimbursed."

The 51-year-old Versalko appeared in the Auckland District Court yesterday to plead guilty to three charges laid by the Serious Fraud Office after a three-month investigation.

He defrauded nearly 30 wealthy ASB clients of $17,763,110.19 over nine years until he was fired last August.

In the days leading up to Christmas, the Herald was the first to report that Versalko had been arrested over the largest employee theft in New Zealand history.

Yesterday, he sat alone in the courtroom and declined to comment when approached.

His defence lawyer, Stuart Grieve, QC, told Judge Paul Gittos his client understood a jail sentence was inevitable and did not seek bail.

Versalko was remanded in custody, but the case was adjourned for two more weeks to clarify specific allegations made by the SFO in the summary of facts.

The issue is the amount of money that the SFO says Versalko still possesses.

If the amount cannot be resolved, Mr Grieve said the case would go to a disputed facts hearing.

He told the court Versalko had admitted his wrongdoing immediately to ASB investigators when interviewed on August 25. When interviewed by the SFO on September 4, Versalko asked to be arrested immediately.

Mr Grieve also said Versalko had assisted in the sale of assets to help to recoup the stolen money.

The early guilty plea and co-operation with the SFO are likely to qualify Versalko for a discount of at least 30 per cent of his eventual sentence.

SFO director Adam Feeley was pleased with the early guilty plea, which he said was " a good outcome"to the quick investigation.

While he would not criticise ASB - and was unable to discuss specific facts because of the court suppression - Mr Feeley said the Versalko case showed fraud could happen anywhere.

"All employers need to be mindful and manage those risks. But the public also need to be aware that there is a risk with all investments. There is a saying that something is as 'safe as a bank'. But a bank is still an investment decision."

The $17.7 million Versalko took is more than the $16.9 million stolen through false invoices by Michael Andrew Swann, an IT manager with the Otago District Health Board.

In sentencing Swann last year to 9 years in prison - a record for an SFO prosecution - Justice Lyn Stevens described his offending as likely to be "one of the largest frauds, if not the largest, in New Zealand history".

TRAIL OF FRAUD

The three charges that Versalko admitted are:
* Obtaining $12,958,608 from 17 ASB Bank clients by conducting 68 fraudulent transactions between October 2003 and August 2009.
* Offering fictitious investment opportunities to obtain $1,074,077 in 12 fraudulent transactions between August 2000 and September 2003.
* Obtaining $3,730,423 from 28 ASB clients by conducting 43 fraudulent transactions between October 2003 and April 2009.