Kloogh - now struck off as a financial adviser - created hundreds of fictitious investments for his unfortunate clients, who were lulled into a false sense of security by seeing the names of deposits held in blue chip companies when reading the statements he provided for them.
However, almost all the assets listed on those statements never existed.
Court documents released on Friday - when Kloogh was imprisoned for eight years, 10 months with a minimum period to be served of five years and four months after a hearing in the Dunedin District Court - set out how some of the 81 victims identified so far were defrauded.
Much of the $15.7 million estimated to have been stolen by Kloogh through his firm, Impact Enterprises Ltd, was taken using a ruse only the deeply suspicious might have rumbled.
The money Kloogh’s clients trusted him to invest for them was meant to have been deposited into the FNZ Custodians Ltd account, the custodian for the Consilium platform - a custodial "investment wrap" service which bundled together different investments belonging to the same customer for ease of management.
However, the money seldom went to FNZ.
Not being a licensed broker, Kloogh was not permitted to receive money from clients - when they either wrote him cheques or made transfers via internet banking, they usually paid "Consillium", as this is where Kloogh told clients funds should go.
However, the bank’s system allowed Kloogh to designate a trading name for his company’s accounts - a function he used to name IEL’s three main accounts after Consillium and two other trading portfolios.
It was IEL’s bank account number, not that of the custodian, that clients were generally given.
Customers were meant to be given a password to access the platform so they could monitor their investments but - crucially - Kloogh told few, if any, of his clients the Consillium platform offered that function.
Instead, Kloogh sent statements to clients which detailed investments he claimed to have made on their behalf.
Almost every victim of Kloogh spoken to by the ODT has a story to tell about ringing the bank or finance company they thought had their money, only to be told it had no record of their existence.
Kloogh had good records of his customers’ profits and losses, ironically due to a function on the Consillium platform.
The site allowed Kloogh to enter the "external investments" he claimed to have bought for his clients outside of custody.
"It meant that I knew that that money was owed. Nearly every external investment in that portfolio was misappropriated," Kloogh told investigators.
If a customer wanted their money back, Kloogh would transfer money from IEL’s account to the custody account, so it looked like it had been deposited by a client.
The custodian would then credit the withdrawing client’s account, unwittingly believing it was simply returning to the people concerned their own money.
"If a person had said ‘Oh look, we need $50,000 for a vehicle’, I’d go ‘Oh my God I’ve got to get more money in’ and that’s how I’d actually get the funds in," Kloogh told investigators.
"It astounded me that they [the bank] would allow me to change who the payer was. So the payer could be changed to Consillium so it would look as if it was coming from FNZ Consillium.
"And vice versa, I could put money into the Consillium account and it looks like it was coming from the client."
Occasionally, he would sell a genuine asset from an account on the Consillium platform and pay the proceeds into a customer’s account.
Kloogh would then ring to say he had accidentally put money into their account, and ask for it to be transferred to the "correct" account.
Some customers transferred money two or three times to fix Kloogh’s "mistakes".
Kloogh was eventually caught after his accountant spotted a discrepancy in the accounts and alerted authorities.
