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16 August 2019

Viaduct Capital & Mutual Finance

Background

This case concerns criminal proceedings brought by the Financial Markets Authority (FMA) against former directors and associates of Viaduct Capital Limited and Mutual Finance Limited (later Ex‑MFL Limited), both of which entered receivership. The prosecution focused on the misuse of investor funds and false disclosures made to investors and trustees during the period surrounding the global financial crisis.

Parties Involved

The defendants were Paul Neville Bublitz, Bruce Alexander McKay, Richard Timothy Blackwood, Lance David Morrison, and Peter Louis Chevin. Charges applied across both Viaduct and Mutual entities, with some defendants charged in relation to Mutual Finance only.

Nature of the Charges

The defendants were charged with:

  • Theft by a person in a special relationship under section 220 of the Crimes Act
  • Making false statements in a prospectus under section 242 of the Crimes Act
  • False statements to a trustee under section 377 of the Companies Act (Viaduct Capital only)

The prosecution alleged that funds raised from the public were knowingly misapplied and that misleading statements were made to conceal this conduct.

Court Findings and Sentences

In February 2019, the High Court delivered guilty verdicts:

  • Paul Neville Bublitz was convicted on four charges of theft by a person in a special relationship and two charges of making false statements, and sentenced to three years and two months’ imprisonment (concurrent).
  • Bruce Alexander McKay was convicted on three theft charges and sentenced to 12 months’ home detention.
  • Richard Timothy Blackwood was convicted on four theft charges and sentenced to nine months’ home detention.
  • Peter Louis Chevin pleaded guilty earlier and received nine months’ home detention.

Appeal Outcome

In August 2019, the Court of Appeal set aside some convictions and reduced sentences for Paul Neville Bublitz and Bruce Alexander McKay. However, both men remained convicted on multiple theft charges. The courts concluded that Mr Bublitz knowingly misapplied public funds and that Mr McKay assisted in that conduct as a party.

Regulatory Position

The FMA stated that, together with the Crown Solicitor, it considered the evidence justified pursuing criminal sanctions. The conduct was characterised as a calculated and cynical abuse of public funds, and the FMA emphasised its responsibility to bring complex and serious cases before the courts, with final outcomes determined judicially.

Significance

This case is a major example of regulatory enforcement action in New Zealand following finance company failures, reinforcing accountability for directors and promoters who misuse investor funds or provide misleading disclosures to the market.

Timeline

16 August 2019

The FMA notes the judgment from the Court of Appeal, setting aside of some of the convictions, and the associated reduction of a sentence, in relation to Mr Paul Bublitz and Mr Bruce McKay.

The FMA also notes that Mr Bublitz and Mr McKay remain convicted, respectively, of four and three charges of theft by a person in a special relationship. The courts have concluded that Mr Bublitz knowingly misapplied funds raised from the public, and Mr McKay assisted him in that conduct as a party.  Both have therefore been convicted of criminal activity.

In pursuing this case, the joint view of the FMA and the Crown Solicitor was that the evidence available warranted the pursuit of criminal sanctions.  We considered the offending likely to be established, amounted to a calculated and cynical abuse of public funds. It’s our job to bring difficult cases such as this before the court and it is the court that determines the outcome.

Read the Court of Appeal judgment.

27 March 2019

One man has been jailed and two men sentenced to home detention at the Auckland High Court for their part in using finance companies to try to save commercial businesses during the global financial crisis.

Paul Bublitz was found guilty of four charges of theft by a person in a special relationship and two charges of false statement by a promoter. He was sentenced to 3 years two months imprisonment for each of the charges, to be served concurrently.

Bruce McKay was found guilty of three charges of theft by a person in a special relationship. He was sentenced to 12 months home detention for each charge, to be served concurrently.

Richard Blackwood was found guilty of four charges of theft by a person in a special relationship. He was sentenced to 9 months home detention for each charge, to be served concurrently.

The verdicts were delivered by Justice Toogood on the 5th February 2019.

A fourth man, Peter Chevin, pleaded guilty to charges under the Crimes Act in 2016 and was sentenced to 9 months home detention in February 2017.

5 and 21 February 2019

The verdicts and reasons were delivered. Mr Bublitz convicted on four charges of theft by a person in a special relationship and two charges of making a false statement by a promoter. Mr McKay was convicted of three charges of theft by a person in a special relationship, and Mr Blackwood was convicted on four charges of theft by a person in a special relationship.

Download the verdicts and reasons from the High Court

10 May 2017

Woolford J declared a mistrial. The next Court date is a callover on 5 July 2017.

8 August 2016

The trial against Mr Bublitz, Mr McKay, Mr Blackwood and Mr Morrison commenced. Mr Chevin pleaded guilty on the morning of trial to charges under s 220 of the Crimes Act. He has since been sentenced to nine months’ home detention.

12 November 2015

High Court granted an application by Mr Bublitz to adjourn the trial to 8 August 2016.

29 September 2014

Not guilty pleas were entered by each of the defendants.

The matter was transferred to the High Court and a 12-week trial was scheduled to commence on 9 February 2016.

7 May 2014

The defendants made their first appearance in court.

11 March 2014

FMA has filed charges under the Crimes Act and under the Companies Act against directors and another of Viaduct Capital Limited (in receivership) and Ex-MFL Limited (in Receivership) (formerly Mutual Finance Limited) in the District Court of Auckland.