END OF THE HIGH LIFE: Stephen Versalko is sentenced in Auckland District Court to six years' jail for defrauding ASB Bank customers of nearly $18 million.

A prostitute has walked away with $2.5 million spent by a banker stealing clients' money to fuel an extravagant lifestyle of sex, booze and luxury property.

Stephen Gerard Versalko, 52, married with three children, lived the high life for nine years after siphoning $17,763,110.19 off 30 wealthy clients from ASB Bank, where he worked.

Outside of buying property, his biggest spend was on sex – including $3.34m on just two Auckland prostitutes with whom he had long-term relationships.

One received $2.5m, the other $791,181. The Serious Fraud Office said both women also say they received further "large cash payments" estimated at $800,000.

Still more was spent at a variety of escort agencies around Auckland. The SFO could not track all the payments because they included cash taken out using seven credit cards that Versalko had.

Yesterday he was jailed for six years on three fraud charges by Judge Chris Field in Auckland District Court. He will be eligible for parole in four years.

His fraud was the biggest employee theft the SFO has dealt with in its 20-year history.

Versalko's lawyer, Stuart Grieve, QC, claimed that one of the prostitutes was blackmailing Versalko over a lengthy period for $1.2m, but the SFO said it had no information to prove that.

One of the prostitutes bought property with the proceeds and the ASB is suing to try to recover it – her name and more details are suppressed by the courts while that case proceeds.

A clutch of other civil cases are also under way as ASB attempts to recover money, including $4.75m held in trusts set up by Versalko.

His biggest splurge was $4m on property, towards a $3.2m mansion in Remuera's plush Seaview Rd and a $1.8m beachfront holiday home at Whangapoua in Coromandel. Neither had mortgages, but not all the money used was stolen.

In addition, extensive renovations costing $558,000 were carried out and he owned a range of other properties through a series of family trusts or jointly with his wife.

He racked up $2.2m on credit cards, including $313,000 for wine bought on an American Express card between 2002 and 2009, and personal travel.

Versalko, a slim, unremarkable man who suffers from Crohn's disease, an inflammation of the digestive tract, was an investment adviser with ASB. He started his fraud after he was made redundant from a $200,000 job – plus bonuses – and racked up $40,000 on credit cards. He was then hired by ASB in 1997, but on a far lesser salary.

He was an expert in futures, options trading and the money markets, but he tried to make extra money by dabbling in property investment. In 1999 he ran into difficulties, needing $70,000 to bail himself out.

He lined up an ASB client with $400,000 in a long-term deposit and carried out his first fraud, convincing her to invest in a scheme promising higher interest rates with no tax, no administration fees and the funds on call. In total, he looted $528,340 from that one client.

From there, 30 others were sucked into his fake investment schemes, largely targeting elderly women living overseas who were unsophisticated about money and did not monitor their accounts online, SFO prosecutor Patrick McCann said.

All their names, and details of how much he rorted from each, were permanently suppressed yesterday.

Mr McCann described Versalko as "clever and charming". He explained away his wealth as profits from personal trading on an online site that dealt with complex derivatives.

Mike Harper, the real estate agent who sold Versalko his Whangapoua house, said he was personable and came across as a man of substance. He used to give an expensive bottle of wine to local shop owners each year.

He was a master of using ASB's computer system to transfer money leaving no trace of the transactions. He also forged account statements which he signed and sent to the victims to fool them into believing their investments were safe.

Of the $18m he stole, $4.6m was used to repay fake interest and principal to clients, with $13.1m raked off for himself. In 2008 alone, he took about $4m for himself.

The gravy train finally came to a halt in August last year, when one of his elderly clients with $3m invested with Versalko saw a documentary about US fraudster Bernie Madoff and spotted similarities in the schemes they both ran.

When she contacted ASB Bank Securities to check, she found no record of her $3m. It triggered an urgent investigation and, on August 25, Versalko was confronted, admitted the fraud and was later sacked.

Putting his hand up so early shaved three years off his sentence, Judge Field said.

Mr Grieve said his client had shown "exceptional remorse". But Mr McCann said Versalko was not fully frank – he tried to hide his relationships with the prostitutes, describing the payments as handouts to two ASB clients down on their luck, on whom he took pity.

The SFO traced the prostitutes through Versalko's phone records. Given his long-term marriage, "I can understand Versalko was reluctant to admit it", Mr McCann said.

Mrs Versalko was not in court yesterday and is understood not to have attended any of his appearances.

The ASB said it had since introduced "additional processes and practices to further strengthen our security and protect our customers so that this situation does not happen again".

It had reimbursed $15.5m to all the clients Versalko had defrauded and would honour a further $1m in promised interest payments.

The fraud contributed to ASB's first loss in 20 years, for the first half of the current financial year.

SEX WORKERS ORGANISATION TAKEN ABACK BY HUGE SPENDING

Stephen Versalko's money would have been a great source of intrigue for the working girls he spent it on, Prostitutes Collective president Catherine Healy says.

Sex workers were "usually incredibly discreet" but there was sometimes "chat" about well-heeled regular clients.

"The chat around them is how is this happening? How are they sustaining this amount of spending? Usually when clients become regulars people get to know a bit about their circumstances. Sometimes people would think, `This doesn't feel right – is this guy embezzling?"'

It was very rare for prostitutes to become tangled up in legal cases, but she warned sex industry workers to be on their guard.

"Sometimes there are clients who may be doing something illegal. While it's not [prostitutes'] responsibility, it's something to be aware of because there could be repercussions."

She was taken aback by how much Versalko had spent, though it was not uncommon for prostitutes to have long-standing business relationships with clients.

"The sex workers very often don't regard it as being in a relationship ... but it's also true that some become very attached to their clients."

- with KATE NEWTON