Archive | District court

SFO alleges fraud in Celestion development loan deal

The developer of the Waldorf Celestion apartments hotel at the foot of Anzac Avenue in Auckland, Tasman Cook Ltd owner Leonard Ross, and 3 associates were charged in the Auckland District Court yesterday on 4 Crimes Act counts of obtaining by deception and 2 of using forged documents.

The defendants with Mr Ross (50) are company director Michael James Wehipeihana (45), self-employed consultant Vaughn Stephen Foster (54) & one other. Their next appearance in court is scheduled for Wednesday 12 April.

The Serious Fraud Office, which laid the charges, said name suppression had been lifted on 2 of the defendants and wasn’t sought by another.

SFO director Julie Read said the charges arose in relation to allegedly making false statements & using forged documents to obtain a credit facility from the ANZ Bank NZ Ltd to allow the project company, Emily Projects Ltd, to develop the Waldorf Celestion, which opened in 2009. It’s alleged that a loan facility of about $40 million was obtained.

“The SFO alleges that the defendants conspired to mislead ANZ to secure a loan facility. The banks are entitled to expect that businesses will provide accurate information in support of their loan applications and a failure to do so may have cost implications for all.”

Emily Projects, 88% owned by Mr Ross, went into voluntary liquidation on 22 December 2011. Original liquidator Chris Horton was replaced in 2014 by Tim Downes & Greg Sherriff (Grant Thornton), who said in their final report in 2015 they’d recovered $610,244 of assets. 2 unsecured creditors claimed $671,000 and 53 investor claims totalled $2,890,951.

The one distribution to unsecured creditors was 11.8c in the dollar for a total $420,310.

The whole project was controversial because Mr Ross, who’d developed property for Mark Bryers’ Blue Chip NZ Ltd, acquired the Celestion site at mortgagee sale from a lender to Blue Chip.

A Blue Chip company bought the 1081m² site between Anzac Ave & Emily Place, on the eastern fringe of the cbd, for $4 million in 2004 and it was transferred in 2006 for $10.9 million to another of Mr Bryers’ companies.

Under Blue Chip, the development was known as the Emily and it was to have had 149 units. 85 were sold and investors paid an estimated $11.2 million in deposits.

Emily Projects bought the property after it was put up for mortgagee sale in 2008 by The NZ Guardian Trust Co Ltd, owed $4.475 million. The purchase price covered the Guardian Trust debt and Guardian Trust stayed in behind ANZ Banking Group Ltd as second mortgagee on the new project.

Earlier stories:                    
9 October 2009: Apartments at centre of Blue Chip case go on market
8 May 2009: Ross’ Emily Projects starts work on ex-Blue Chip site

Attribution: SFO release.

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SFO charges former Henderson solicitor Edward Johnston

Former Henderson solicitor Edward Errol Johnston (59) appeared in the Auckland District Court yesterday on 3 charges of dishonestly taking or using document, brought by the Serious Fraud Office. He didn’t enter a plea and was remanded until Tuesday 17 May.

Mr Johnston was struck off by the Lawyers & Conveyancers Disciplinary Tribunal in 2013.

The charges relate to properties Mr Johnston owned in December 2011-January 2012, on which his bank loan repayments had fallen into arrears. The SFO alleges that, when faced with a requirement to reduce his debt, he submitted false sale agreements to his bank, which accepted the fictitious transactions, when, in reality, the properties were either sold for a higher price than he’d stated or transferred to another trust and refinanced with a loan from another bank. In January 2012, Mr Johnston submitted an allegedly false statement of assets & liabilities to the bank when obtaining the refinanced loan.

Mr Johnston was a sole practitioner in Henderson under the name Ed Johnston & Co. He was adjudged bankrupt in November 2012 and struck off the role of barristers & solicitors in July 2013. He was a director & shareholder of a long list of companies which owned properties around Auckland.

Attribution: SFO release.

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Propbd on Q Th25Jun15 – Barfoot auction results, Swney jailed, quake-prone buildings law, city rail link start, Arvida buys

Wide array of units sell at Barfoots
Swney jailed for 5 years 7 months
Select committee seeks feedback on quake-prone buildings bill changes
First rail project works to start in October
Arvida buys Aria Villages

Also this morning: I’ll be reporting on progress at the Town Hall meeting of Auckland Council’s governing body, where the rates for the next year and the 10-year budget are up in the air.

Wide array of units sell at Barfoots

7 apartments & townhouses, 2 units on cross-leases, 3 units sold prior, another 3 in a package, an Ellerslie commercial property and a Panmure section sold at $943/m² were among the still-heavy lineup of residential properties sold at Barfoot & Thompson’s auction yesterday. Auction results:

Grey Lynn, 3 Millais St, sold for $1.95 million, Jill Jackson & Emma John
47 Wakefield St, unit 504, sold for $185,000, Aaron Cook & Betty Shao
Glendowie, 119 Riddell Rd, unit 2, sold for $7126,000, Kelly Midwood
SugarTree, 27 Union St, unit 713, sold for $514,000, Livia Li & Alan Guo
Tower Hill, 1 Emily Place, unit 2D, sold for $611,000, Stephen & Leo Shin
Ellerslie, 95-97 Main Highway, commercial property sold for $1.625 million, Murray Tomlinson
Panmure, 109 Pilkington Rd, 880m² section with cottage, sold for $830,000 at $943/m² land, Rain Diao
Argent Hall, 2 Eden Crescent, unit 13E, $280,000 offer made at pre-auction, sold for $311,000, Stephen & Leo Shin
Remuera, 674 Remuera Rd, unit 2, sold prior, Dennis Dunford & Kathy Bower
207 Federal St, unit 1210, sold prior, Stephen & Leo Shin
St Heliers, 22 Devore St, unit 2, sold prior, Karin Cooper
Pt Chevalier, 1038 & 1040 Great North Rd, units 1, 2 & 3, sold for $2.575 million, Heather Hannah & Dee Huxtable
Pt Chevalier, 357 Pt Chevalier Rd, unit 3, cross-lease, sold for $789,000, Rosemary Giborees
Birkdale, 8 Flynn St, unit 10, sold for $457,000, Kevin He & Zoe Zhou
Mt Albert, 14 Seaview Terrace, unit 2, cross-lease, sold for $587,000, Kim Tilly & Jo van Kan

Swney jailed for 5 years 7 months

Former Heart of the City chief executive Alex Swney (57) was sentenced to 5 years 7 months in jail yesterday on a representative charge of dishonestly using a document and tax charges.

has appeared in the Auckland District Court today. Mr Swney has been sentenced to five years and seven months’ imprisonment for charges brought respectively by

The Serious Fraud Office charged Mr Swney in April with the representative Crimes Act charge of dishonestly using documents to obtain $2.5 million. He pleaded guilty at his first appearance, admitting that while at Heart of the City he created fictitious invoices which, when submitted, resulted in payments into accounts controlled by him.

The Inland Revenue charges were in relation to unpaid tax of about $1.8 million plus penalties & interest.

Other stories this morning:
Select committee seeks feedback on quake-prone buildings bill changes
First rail project works to start in October
Arvida buys Aria Villages

Attribution: Auction, SFO.

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2 developers fined for resource management breaches

2 property developers have been fined in the Auckland District Court for residential developments carried out in breach of the Resource Management Act.

Union Development Ltd (Chen Qiong & Jin Yu Chen) was fined $42,750 for the discharge of a large quantity of concrete from a residential development to the Wairaki Stream in Lynfield while a retaining wall was being constructed. The concrete was up to 25cm thick in places in the stream and extended for about 100m through Lynfield Reserve, killing eels & fish.

SCD Ltd (Anthony Stewart) was fined $17,812 for continually failing to comply with resource consent conditions by carrying out works in the dripline of scheduled kahikatea & rimu trees, including severing several of the tree roots and pruning trees without consent. Council staff had warned the company several times and issued abatement notices. The trees were over 100 years old.

Attribution: Council release.

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Commission files criminal charges against 2 Allan Hawkins finance companies

The Commerce Commission has filed criminal proceedings in the Auckland District Court against 2 finance companies controlled by former Equiticorp boss Allan Hawkins, Budget Loans Ltd & Evolution Finance Ltd, alleging their repossession & debt recovery practices breached the Fair Trading Act.

The commission has charged the 2 companies with misleading debtors, including by:

  • repossessing or threatening to repossess debtors’ property when they did not have a right to repossess
  • adding interest & costs to loan balances after debtors’ property had been repossessed & sold
  • telling debtors they had to make loan payments at a higher rate than had been set by the court,  and
  • telling them they had a shorter time to remedy a loan default before their goods were repossessed than they were allowed under law.

Commerce Commission competition general counsel Mary-Anne Borrowdale said today it was concerning that Budget Loans was again facing criminal charges, having admitted 34 charges under the Fair Trading Act in 2010.

Allan Hawkins & his son Wayne Hawkins are the directors of Budget Loans & Evolution Finance, which bought old loan books from a number of failed finance companies, including National Finance Ltd, Western Bay Finance Ltd & Equality Finance Ltd. Most of the loans originated between 2001-06.

In July 2010, Budget Loans admitted 34 charges of breaching the Fair Trading Act by charging interest & fees after it had repossessed & sold items of security on National Finance loans. It agreed to make substantial repayments and was fined $30,750 in the Auckland District Court.

The Commerce Commission started the current investigation into Budget Loans & Evolution Finance in 2012. It issued a “Stop now” letter to the 2 companies in November 2013 with regard to one aspect of their conduct while its investigation continued. The charges filed include the conduct outlined in the “Stop now” letter, as well as further conduct the commission investigated.

Mr Hawkins headed the listed Equiticorp Group, which was placed in the new insolvency control of statutory management in 1989 after collapsing in the wake of the 1987 sharemarket crash. The Serious Fraud Office prosecuted Mr Hawkins & other Equiticorp directors and he was sentenced to a 6-year jail term in 1991. He was released in 1995.

He controls Budget Loans & Evolution Finance through formerly NZX-listed Cynotech Holdings Ltd and the private company which bought out other Cynotech Holdings investors, Cynotech Securities Ltd.

Cynotech Holdings took over the NZX-listed Rocom Wireless Ltd in 2004 and sold out of all information & domestic telecommunications-related interests to focus on satellite communication and satellite phone sales & rentals, finance lending and merchant banking fee-based activities.

Trading in Cynotech Holdings securities was halted in July 2013 after the company told the NZX its major shareholder & other close funding supporters had decided they would no longer pay its overhead & infrastructure costs. Liquidators Peri Finnigan & Tony Maginness were appointed at the end of that month, but were replaced I November 2013 by Derek Farrelly, now of Rotorua.

Earlier stories:
9 November 2013: Commission tells Allan Hawkins’ finance companies to stop repossessions
31 July 2013: Hawkins goes to McDonald Vague for Cynotech liquidation
11 July 2013: Cynotech share trading halted after backers end support
15 June 2011: Cynotech loss increases as it clears decks
28 July 2010: “Welcome letter” from Hawkins’ Budget Loans to National Finance borrowers came with an illegal $15 fee
20 January 2010: Hawkins renews Cynotech privatisation bid
9 July 2008: Hawkins says conservative policy wins for Cynotech
21 April 2008: Cynotech doubles receivables book to $60 million-plus in 4 months

Attribution: Commission release.

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Insurance broker Grant Herbert jailed

Published 17 October 2014
Herbert Insurance Group Ltd owner & director Grant Herbert, 62, was sentenced in the Auckland District Court yesterday to 4 years 6 months in jail on 24 charges relating to diverting $2.5 million of client money & corruption.

A jury found him guilty last month of 17 Crimes Act charges & 7 Secret Commissions Act charges brought by the Serious Fraud Office.

The insurance broking firm had received premiums from clients but failed to forward about $2.5 million of this to insurers, in some cases leaving the customers uninsured. He diverted this money to pay operating expenses for his company.

Mr Herbert had also given an employee of an insured customer secret commissions for referring insurance business to Herbert Insurance Group. That company was overcharged about $220,000 for its insurance.

Before the trial, Mr Herbert pleaded guilty to using a forged document in relation to obtaining a $250,000 credit facility.

Herbert Insurance Group had 4000 clients throughout New Zealand. After an attempt to voluntarily liquidate the company & sell assets, it was placed in receivership in March 2011, with a shortfall of $3.1 million owed to insurers which should have been held in an insurance premium account.

Mr Herbert was a director of MFS NZ Ltd (which also had other MFS names and ended as OPI Pacific Holdings Ltd; Mr Herbert resigned in October 2008 and liquidators were appointed 15 December 2008, when it owed its Australian parent $8.5 million). He was also a director of Herbert 3 Trustee Ltd, Herbert Family Trust Trustee Ltd, Herbert Finance Ltd, Herbert Insurance (F&G) Ltd, Herbert Insurance Wholesale Ltd, Herbert NZ Ltd, Herbert Underwriting Agencies Ltd & London Underwriting Agencies Ltd.

Attribution: SFO release.

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Herbert Insurance owner guilty on 24 charges

Herbert Insurance Group Ltd (HIG) sole director & shareholder Grant Herbert, 62, was found guilty of 17 Crimes Act charges & 7 Secret Commissions Act charges yesterday following a jury trial in the Auckland District Court. He was found not guilty of one Crimes Act charge & one Secret Commissions Act charge.

Mr Herbert was remanded on bail and will be sentenced on 16 October.

He originally appeared to face charges in May 2012 following a Serious Fraud Office investigation into the failed insurance brokering company.

Between 2005 & March 2011, Mr Herbert received premiums from clients but failed to forward about $2.5 million of this to insurers, in some cases leaving the customers uninsured. He diverted this money to pay operating expenses for the group.

Mr Herbert was found guilty of a number of corruption offences in relation to giving an employee of an insured customer secret commissions for referring insurance business to HIG. That employee, Christopher David Green, a commercial property manager at a home supply company, pleaded guilty to receiving secret commissions and was sentenced to 5 months’ home detention in June 2013. The home supply company was overcharged $220,000 for its insurance. This was split unevenly between Mr Herbert & Mr Green.

Before trial, Mr Herbert pleaded guilty to using a forged document in relation to obtaining a $250,000 credit facility.

Herbert Insurance Group had 4000 clients throughout New Zealand. After an attempt to voluntarily liquidate the company & sell assets, it was placed in receivership in March 2011, with a shortfall of $3.1 million owed to insurers which should have been held in an insurance premium account.

Mr Herbert was a director of MFS NZ Ltd (which also had other MFS names and ended as OPI Pacific Holdings Ltd; Mr Herbert resigned in October 2008 and liquidators were appointed 15 December 2008, when it owed its Australian parent $8.5 million). He was also a director of Herbert 3 Trustee Ltd, Herbert Family Trust Trustee Ltd, Herbert Finance Ltd, Herbert Insurance (F&G) Ltd, Herbert Insurance Wholesale Ltd, Herbert NZ Ltd, Herbert Underwriting Agencies Ltd & London Underwriting Agencies Ltd.

Earlier stories:
1 June 2012: SFO lays 28 charges against Herbert Insurance owner & director
18 March 2011: SFO investigates $3 million shortfall in Herbert Insurance client broking account

Attribution: SFO release.

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Minister puts courts on new schedule

Courts Minister Chester Borrows said yesterday he’d told the Ministry of Justice to move to set district court schedules 12 months in advance nationwide, from the current 3-6 months.

“Greater certainty around court scheduling will give parties more clarity as to their court dates and improve the way we use our court & judicial resources,” he said.

“A court case can’t proceed without everyone present – lawyers, defendants, witnesses & a judge – and too often this results in delays in cases getting to court and courtrooms sitting idle. It takes too long to get a case through our criminal courts, and any unnecessary delay should not go unchecked.

“The current situation, where judges tell us their availability and court staff schedule cases around this, is not letting us deliver justice in a timely manner.”

Attribution: Ministerial release.

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Ex-property manager pleads guilty over kickbacks

Christopher David Green (66) pleaded guilty in the Auckland District Court on Friday to charges under the Secret Commissions Act relating to kickbacks over 7 years.

Mr Green was a commercial property manager at Bunnings Warehouse Ltd, where his role included ensuring the premises Bunnings occupied around New Zealand were appropriately insured.

Herbert Insurance Group acted as an insurance intermediary for insurers and also provided an insurance broking service to insured clients, including Bunnings.

The Serious Fraud Office’s acting chief executive, Simon McArley, said Mr Green corruptly received & retained $142,000 of secret commissions between 2003-10 for referring insurance business to HIG. Bunnings was consequently overcharged by $220,000 for that insurance.

Attribution: SFO release, story written by Bob Dey for the Bob Dey Property Report.

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Capehorn cattle fattener borrowed on non-existent stock

Published 17 January 2012

Capehorn Farming Co Ltd director Peter Nitschke pleaded guilty in the Fielding District Court on Monday to 7 charges of raising $2.4 million in loans & refinancing on cattle that didn’t exist or had already been sold. He’ll be sentenced on 20 February.

The Bank of NZ, owed $6.5 million, called receivers John Fisk & Maurice Noone into the company in December 2010 (PricewaterhouseCoopers), and Grant Reynolds (Reynolds & Associates Ltd) was appointed liquidator by the Auckland High Court in May 2011 on the application of Farmlands Trading Society Ltd.

The receivers said in their first report the company was fattening 11,000 bulls at 38 properties when they were appointed. The company owed about $16 million plus cross-guarantees of $1.9 million at that time. The receivers resigned on 21 December after distributing $6 million.

The Serious Fraud Office began its investigation last March, resulting in guilty pleas by Mr Nitschke, 32, to 7 charges under the Crimes Act relating to dishonestly using a document and obtaining by deception.

Capehorn operated a beef cattle fattening farming business in the central and lower regions of the North Island, in which cattle purchases were generally financed through specialist livestock finance companies.  In late 2009 Capehorn fell into financial difficulty as a result of falling beef prices.

The Serious Fraud Office alleged Mr Nitschke obtained over $880,000 of finance in early 2010 from lenders for cattle that didn’t exist, and fraudulently sought $1.5 million in refinancing from the BNZ to repay loans for the non-existent cattle and for cattle that had already been sold.

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Attribution: SFO release, U column, story written by Bob Dey for the Bob Dey Property Report.

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