Woman tells of her shock at being sucked in by $17.8 million investment fraudster
A victim of Stephen Versalko's $17.8 million fraud has spoken of the day she was told he had been "naughty" and had defrauded her and 25 other investors out of millions of dollars.
Speaking after Versalko was sentenced to six years in prison, the woman told the Herald she was in "absolute shock" at being sucked in by her investment adviser of five years.
"He rang me the week before [the fraud was discovered] to tell me he had a new job at the bank and to invite me to lunch.
"The next thing I know I got a call from the ASB to say, 'Don't worry about your money'.
"I was completely at a loss until the investigating officer explained he had been so naughty."
The woman was one of 26 wealthy investors - all of whom have name suppression - whom Versalko defrauded for nine years.
She declined to say how much money she had lost and described him as a "pathetic creep" for spending millions on prostitutes.
"I cannot understand how a man could do that."
In a statement, ASB said only a small number of customers were affected by the fraud and all had been reimbursed.
"Within hours of concerns being expressed by a customer, Mr Versalko's offending was confirmed, the matter reported to the SFO and he was dismissed.
"We apologise again to these customers who were impacted by his actions," he said.
ASB said new processes and practices had been put in place to further strengthen security and "protect our customers so that this situation does not happen again".
The SFO summary of facts shows that funds were taken from ASB client accounts to Versalko's personal accounts or a "ghost" account created in the name of an existing client.
Versalko was able to manipulate the ASB computer system so that none of the transfers were recorded on bank statements.
Wayne Kiely, a senior investigator at Paragon New Zealand and a former head of security for New Zealand Post and Kiwibank, was surprised at how long Versalko managed to get away with the fraud.
While it can be hard to detect a "cunning operator" like Versalko, Mr Kiely said tighter checks and balances could have prevented the fraud.
"That's the big question: If the money went into an ASB account, and they didn't pick it up in an audit, then something is terribly wrong.
"There also should have been controls in place about employees opening accounts.
"You can only do something like this if you're in a position of trust."
It was that abuse of trust that led Judge Christopher Field to comment on the shock and betrayal felt by Versalko's victims.
Versalko's case was the largest employee theft investigated by the Serious Fraud Office.
At sentencing, prosecutor Patrick McCann read the previously suppressed summary of facts, including the revelations that Versalko had spent $3.4 million on two escorts.
Although Versalko co-operated with the SFO, Mr McCann said he misled investigators when trying to explain millions of dollars he gave to two women.
He initially told the SFO that the money was for ASB clients who had fallen on hard times, when in fact they were two prostitutes.
"I can understand his reluctance to admit that," said Mr McCann.
Versalko's wife, Megan, has previously stood by her man, but was not in court yesterday.
Defence lawyer Stuart Grieve, QC, said $1.2 million was paid to one of the escorts after she began blackmailing Versalko. He said Mrs Versalko was an innocent party to the fraud.
The SFO pushed for a starting point of 10 years and six months for a sentence and acknowledged Versalko was entitled to a 33 per cent discount for his early guilty plea.
Mr Grieve argued for a starting point of a sentence between eight and nine years for his client.
He submitted that although Versalko stole more than $17.8 million over nine years, $4.7 million of the money was used to repay other investors in the "Ponzi" scam.
By those calculations, Mr Grieve said the total he was culpable for was actually $13.1 million.
More than $4 million is now in a trust account from the sale of the Remuera and Coromandel properties.
However, Mr Grieve said Mrs Versalko had a legitimate claim to the couple's assets, including property, that were not bought with "tainted" stolen money.
Judge Field imposed a minimum term of imprisonment of four years - the maximum he could - as a message to deter white collar crime.
By Jared Savage
