Finance Company cases before the Court

FMA alleged that the Defendants:

- Five Star Consumer Finance Limited (FSCF) charges: made untrue statements in the investment statements and registered prospectuses of that company dated 20 September 2006.

It is also alleged that the directors made further untrue statements when they signed a prospectus extension certificates on 21 December 2006.

- Five Star Finance and Five Star Debenture Nominee (FSF and FSDN) charges: offered securities in contravention of the Securities Act and did so without having registered a prospectus or provided investors with an investment statement. Furthermore, they offered investments in FSF and FSDN in advertisements that were not authorised advertisements for purposes of the Securities Act.

The SFO also laid charges against all four directors of FSCF.

The FSCF charges were laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000.

The FSF and FSDN charges were laid summarily under section 59 of the Securities Act and carry a maximum penalty fine not exceeding $300,000. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

4 August 2008 in the District Court at Auckland (FSF and FSDN).

30 November 2009 in the District Court at Auckland (FSCF).

All defendants pleaded guilty. Mr Kirk and Mr Macdonald were sentenced to over two years imprisonment on these charges on 22 December 2010. Mr Bowden was sentenced to home detention. The convicted directors are all subject to automatic five year management bans under s60E of the Securities Act. Mr Kirk is banned until 12 August 2015. Mr MacDonald is banned until 5 October 2015. Mr Bowden is banned until 17 September 2017.

Mr Williams applied to vacate his plea of guilty. On 23 March 2012 the Court declined Mr Williams' application. He then applied for a judicial review of that decision and other matters. That was heard on 4 February 2013 and declined. His disputed facts sentencing hearing was heard from 25 February 2013 and the Crown's view of the facts was largely upheld. Mr Williams was sentenced to three years seven months imprisonment on 19 April 2013. He is also subject to a management ban until 5 October 2015, being five years from the date of his 2010 conviction.

John Hotchin, Donald Young, Kenneth Moses and Mervyn Doolan

FMA alleged that the directors made untrue statements in the registered prospectus and investment statement of Nathans Finance NZ Limited (in receivership) dated 13 December 2006.

FMA also alleged that the directors made further untrue statements when they signed a prospectus extension certificate on 30 March 2007.

In addition FMA alleged that letters sent to members of the public advertising Nathans Finance debenture stock contained untrue statements about some of the matters referred to above. These claims do not apply to Mr Hotchin who had resigned his directorship by the time the advertisements were sent out.

The defendants denied the charges.

Criminal charges - These charges were laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000 plus $10,000 for every day the offence is continued. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

Civil proceedings - The proceedings were issued under section 55C and related sections of the Securities Act. FMA applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the five directors.

Criminal charges - filed on 12 December 2008 in the District Court at Auckland.

Civil proceedings - filed on 12 December 2008 in the High Court at Auckland.

Criminal charges - High Court trial began on 21 March 2011 and concluded on 17 June 2011.

Mr Hotchin entered a guilty plea and was sentenced on 4 March 2011 to eleven months' home detention and 200 hours community service, and was ordered to pay reparation of $200,000.

The verdict was delivered on 8 July 2011. Messrs Moses, Doolan, and Young were each found guilty on five out of the six counts in the indictment. Sentencing was held on 2 September 2011. Mr Doolan was sentenced to two years four months imprisonment and ordered to pay reparation of $150,000, Mr Moses for two years two months imprisonment and ordered to pay reparation of $425,000 and Mr Young nine months home detention, 300 hours community service and ordered to pay reparation of $310,000. Appeals by Messrs Moses and Doolan against imprisonment on 27 September 2011 were dismissed.

The convicted directors are all subject to automatic five year management bans under s60E of the Securities Act. Mr Hotchin is banned until 25 February 2016. Mr Moses, Mr Young and Mr Doolan are each banned until 8 July 2018.

Civil proceedings - discontinued on 5 March 2013.

Rodney Petricevic, Robert Roest, Bruce Davidson, Gary Urwin and Peter Steigrad

FMA alleged the directors made untrue statements in the investment statements and registered prospectuses of Bridgecorp and BIL dated 21 December 2006.

FMA also alleged that the directors made further untrue statements when they signed prospectus extension certificates for Bridgecorp and BIL on 30 March 2007.

The Crown also laid charges under the Crimes Act 1961 and Companies Act 1993 against Mr Petricevic and Mr Roest.

The defendants denied the charges.

The SFO has also laid charges relating to these companies.

Criminal charges - these charges were laid indictably under section 58 of the Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

The Crimes Act charges against Mr Petricevic and Mr Roest were laid indictably under section 242 of that Act and carry a maximum penalty of ten years imprisonment.

The Companies Act charges against Mr Petricevic and Mr Roest were laid indictably under section 377 of that Act and carry a maximum penalty of five years imprisonment or fines of up to $200,000. Under section 382 of the Companies Act there is an automatic five year management ban if a person is convicted of an offence under section 377.

Civil proceedings - The proceedings are issued under section 55C and related sections of the Securities Act. FMA has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the five directors.

Criminal charges -12 December 2008 (non-executive directors), 11 May 2009 (executive directors) in the District Court at Auckland.

Civil proceedings -12 December 2008 at the High Court in Auckland.

Criminal charges - High Court trial commenced 25 October 2011.

Mr Davidson entered a guilty plea and was sentenced on 7 October 2011 to nine months' home detention, 200 hours community work and ordered to pay reparation of $500,000.

Mr Urwin pleaded guilty on 9 November, 2011. On 17 April 2012 he was sentenced to two years imprisonment.

On 5 April 2012 Mr Petricevic and Mr Roest were found guilty on charges of breaching the Crimes Act 1961, the Companies Act 1993, and the Securities Act 1978. Mr Steigrad was found guilty on charges of breaching the Securities Act 1978. Mr Steigrad was found guilty on charges of breaching the Securities Act 1978 for the period after 7 February 2007.

Mr Petricevic was sentenced on 26 April 2012 to six and a half years imprisonment on all charges. Mr Roest and Mr Steigrad were sentenced on 18 May 2012. Mr Roest was sentenced to six years six months imprisonment. He has appealed his sentence and conviction. A date is yet to be set for his appeal. Mr Steigrad was sentenced to nine months home detention, 200 hours community service and $350,000 reparation. He appealed his sentence and this was dismissed on 24 August 2012.

The convicted directors are all subject to automatic five year management bans under s60E of the Securities Act. Mr Davidson is banned until 2 September 2016. Mr Urwin is banned until 9 November 2016. Mr Petricevic, Mr Steigrad and Mr Roest are banned until 5 April 2017.

Civil proceedings - stayed pending resolution of the criminal case.

FMA alleged that Lombard Finance & Investments' offer documents and advertisements misled investors.

FMA alleged that the directors made false statements in the registered prospectus dated 7 September 2007, as amended by a memorandum of amendments dated 24 December 2007, and investment statements dated 28 December 2007.

In addition, FMA alleged that a DVD advertisement distributed during 2007 and 2008 contained similar untrue statements.

The defendants denied the charges.

Criminal charges - these charges were laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000 plus $10,000 for every day the offence is continued. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

Civil proceedings - the proceedings were issued under section 55C and related sections of the Securities Act. FMA has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the four directors.

Criminal charges -14 April 2010 in the District Court at Wellington.

Civil proceedings -1 April 2010 in the High Court at Wellington.

Criminal charges - High Court trial commenced 17 October 2011. On 23 February 2012 the accused were each found guilty on four out of five counts in the indictment.

Sentencing was on 29 March 2012. Sir Douglas Graham and Mr Bryant were each sentenced to 300 hours community service and ordered to pay reparation of $100,000. Mr Jeffries and Mr Reeves were each sentenced to 400 hours community service. The convicted directors are each subject to automatic five year management bans under section 60E of the Securities Act until 29 March 2017.

The defendants all appealed their convictions. The Solicitor General appealed their sentences. On 30 May 2013 the Court of Appeal rejected the defendants' appeals against conviction and accepted FMA's appeal that the original sentences were inadequate. A decision on sentence will be made once the Court has received sentencing reports on the suitability of home detention.

Civil proceedings - stayed pending resolution of the criminal case.

Civil and criminal proceedings - Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland

Criminal charges only - Wayne Douglas, Executive Director (resigned as a director in February 2007)

FMA alleged that Capital + Merchant Finance's offer documents and advertisements misled investors.

FMA alleged that the directors made untrue statements in the registered prospectus and investment statement dated 15 August 2006 and  that the current four directors made similar untrue statements in the registered prospectus and investment statement dated 10 September 2007.

FMA alleged that five advertisements distributed during 2007 contained untrue statements. These claims do not apply to Mr Douglas who had resigned his directorship by then.

FMA further alleges that Mr Nicholls and Mr Ryan knowingly misled FMA.

The defendants denied the charges.

Criminal charges - most of the criminal charges are laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000. Criminal charges are also laid against Mr Nicholls and Mr Ryan under section 59A of the Securities Act and carry a maximum fine of $300,000 plus $10,000 for every day the offence is continued. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58 or section 59A.

Civil proceedings - the proceedings are issued under section 55C and related sections of the Securities Act. FMA has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the current four directors.

Criminal charges - 17 December 2009 in the District Court at Auckland.

Civil proceedings - 30 November 2009 in the High Court at Auckland.

Criminal charges - In early 2013 all five directors separately pled guilty to the charges under section 58 of the Securities Act. Messrs Ryan, Sutherland and Tallentire were sentenced on 15 March 2013. Mr Tallentire was sentenced to 12 months' imprisonment. Mr Ryan was sentenced to seven months' home detention, 300 hours community work and ordered to pay $100,000 reparation. Mr Sutherland was sentenced to six months' home detention, 300 hours community work and ordered to pay $60,000 reparation. Mr Douglas and Mr Nicholls will be sentenced on a date to be determined. The charges against Mr Nicholls and Mr Ryan under section 59A remain on foot.
Civil proceedings - stayed pending resolution of the criminal case.

Vance Arkinstall, Richard Bettle, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale

FMA alleges that Dominion Finance Group's offer documents and advertisements misled investors.

FMA alleges that the directors made false statements in the Dominion Finance Group registered prospectus dated 13 September 2007, as amended by an extension certificate 20 December 2007 and the North South Finance registered prospectus dated 11 September 2007, as amended by an extension certificate 20 December 2007.

In addition, FMA alleges that a quarterly newsletter of Dominion Finance Group and a letter to the investors of both Dominion Finance Group and North South Finance distributed during 2008 contained similar untrue statements.

The defendants deny the charges.

Criminal charges - these charges are laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000 plus $10,000 for every day the offence is continued. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section58.

Civil proceedings - The proceedings are issued under section 55C and related sections of the Securities Act. FMA has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the directors.

Criminal charges - filed on 22 June 2010 in the District Court at Auckland.

Civil proceedings - filed on 4 June 2010 in the High Court at Auckland.

Criminal charges - High Court trial commences 1 July 2013.

Mr Butler passed away on 28 March 2013 and, accordingly, the prosecution against him has been permanently stayed. Mrs Butler pleaded guilty on 10 May 2013. She will be sentenced on 14 June 2013. Mr Whale pleaded on 23 May 2013 and will be sentenced on 14 June 2013.

The proceeding against Mr Arkinstall, Mr Bettle and Mr Forsyth continues.

Civil proceedings - stayed pending resolution of the criminal case.

Stephen Charles Smith, Shane Joseph Buckley, Raymond Tasman Schofield and Hugh Edward Staples Hamilton

FMA alleges the directors breached section 58 of the Securities Act by making untrue statements in documents offering securities to the public. FMA alleges that in substance Mr Schofield acted as a director of Belgrave. Mr Hamilton, a former barrister and solicitor, was a legal advisor to the other individuals charged in relation to Belgrave. It is alleged that Mr Hamilton was a party to the conduct of the Belgrave directors.

FMA further alleges the defendants breached section 377 of the Companies Act 1993 by making a false or misleading statement to the trustee appointed to safeguard the interests of investors in Belgrave secured debenture stock.

The SFO has also laid charges against the men under the Crimes Act 1961. The SFO and FMA charges will be tried together. The defendants deny the charges.

Criminal charges - these charges are laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000 plus $10,000 for every day the offence is continued. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

The maximum penalty for a breach of section 377 of the Companies Act is five years imprisonment or a $200,000 fine

Criminal charges - filed against Mr Smith, Mr Buckley, and Mr Schofield on 14 September 2011 in the District Court at Auckland. Charges were filed against Mr Hamilton on 23 November 2012 in the District Court.

Criminal charges - High Court trial commences 29 April 2013. Mr Buckley pled guilty to 25 charges on 25 May 2012. On 30 August 2012 he was sentenced to 3 years' imprisonment. He is subject to an automatic five year management ban under s60E of the Securities Act until 25 May 2017.

On 17 December 2012 the High Court at Auckland granted Mr Schofield a conditional stay of the criminal proceeding on the grounds that he has a terminal illness. The conditional stay was granted in relation to the charges brought against him by the SFO and FMA regarding his alleged role in the affairs of Belgrave Finance Limited. On 17 April 2013 Mr Stephen Smith pleaded guilty to 25 charges under the Crimes Act, Securities Act and Companies Act. He will be sentenced on 7 June 2013. The proceeding against Mr Hamilton continues and is due to be called again on 4 July 2013. The trial is scheduled for 10 February 2014.

Mark Hotchin,  Gregory Muir, Sir Tipene O'Regan, Bruce Gordon, Eric Watson and Dennis Broit

FMA alleges that the directors and promoters made untrue statements in the registered prospectuses and investment statements of Hanover Finance, Hanover Capital and United Finance dated 7 December 2007.

FMA also alleges that the directors made further untrue statements when they signed prospectus extension certificates on 31 March 2008.

In addition FMA alleges that certain advertisements contained untrue statements about some of the matters referred to above.

Civil proceedings - The proceedings were issued under sections 55B, 55C, 55G and related sections of the Securities Act 1978. FMA has applied for compensation, declarations of civil liability, civil pecuniary penalties of up to $500,000 against each of the five directors and promoters. Under section 60E of the Securities Act there is an automatic five year management ban if a pecuniary penalty order is made against a person under the Act.

Civil proceedings - filed on 30 March 2012 in the High Court, Auckland Registry.

Defences and Statements in Reply filed. At a case management conference on 14 November 2012 interim timetabling orders were made, but a trial date is yet to be allocated.

Trevor Allan Ludlow, Carol Braithwaite, Anthony Banbrook,

FMA alleged that the directors made untrue statements in the registered prospectus for National Finance 2000 Limited, dated 22 September 2005. These statements included those relating to National's provisioning for bad debts, the loans made by National to related parties, including the purpose for which those loans were made, the security provided for them and their amount relative to National's total tangible assets, the security provided by borrowers for the loans made by National.

The directors denied the charges.

The SFO also laid charges against Mr Ludlow and National Finance's accountant John Gray.  Mr Gray pleaded guilty and was sentenced to 18 months' imprisonment on 26 November 2010.  Mr Ludlow was found guilty of all charges on 26 July 2011.  He was sentenced on 20 October 2011 to five years and seven months imprisonment.

Criminal charges - these charges are laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000. Under section 60E of the Securities Act there is an automatic five year management ban if a person is convicted of an offence under section 58.

8 September 2008 in the District Court at Auckland.

Mr Ludlow pleaded guilty to the FMA charges and was sentenced on 26 January 2012 to serve an additional nine months imprisonment cumulative on the existing SFO sentence. Accordingly he has received a total sentence of six years four months imprisonment. Mr Ludlow has since appealed his SFO and FMA sentence. The appeal of his FMA sentence was heard on 2 May 2013. The appeal judgment is awaited. Mrs Braithwaite's jury trial commenced on 9 July 2012. She was found guilty on 27 July 2012. On 18 September 2012 she was sentenced to 10 months' home detention and 300 hours of community work.

Mr Banbrook pleaded guilty on 22 June 2012. He sought a disputed facts sentencing hearing, that was adjourned until 2013 but he then abandoned that on 15 February 2013. On 12 March 2013 he was sentenced to eight and a half months' home detention and ordered to pay $75,000 in reparation. He filed an appeal against conviction and sentence which was heard on 2 May 2013. The appeal judgment is awaited.
 
The convicted directors are all subject to automatic five year management bans under s60E of the Securities Act. Mr Ludlow is banned until 13 December 2016. Mrs Braithwaite is banned until 27 July 2017.

South Canterbury Finance