Archive | Fraud

Propbd on Q T14Oct14 – South Canterbury verdicts, Turners takeover

2 acquitted & one guilty on 5 charges after South Canterbury trial
Dorchester at 72.4% of Turners

11.30am:
2 acquitted & one guilty on 5 charges after South Canterbury trial

Justice Paul Heath has acquitted South Canterbury Finance Ltd’s former chief executive, Lachie McLeod, and one director, Robert White, on all charges in their fraud trial.

The judge has found another director, Edward Sullivan, guilty on 5 charges, not guilty on 4. He’s been remanded on bail and will be sentenced on 12 December.

All defendants were acquitted on the charge relating to the Crown retail deposit guarantee scheme.

The Serious Fraud Office laid the charges in December 2011 after a 14-month investigation and the trial ran for 5 months in the Timaru High Court, ending in August.

Most of the charges related to specific transactions entered into by South Canterbury Finance involving allegedly undisclosed, related-party lending.

The Serious Fraud Office also alleged that persons associated with South Canterbury unlawfully obtained the benefit of the guarantee scheme for South Canterbury Finance by failing to disclose to the Government that the company had entered into related-party lending.

The Serious Fraud Office estimated the total value of the allegedly fraudulent transactions at $1.7 billion, which included an estimated $1.58 billion from entering the guarantee scheme.

Link: Judgment, R v Sullivan & Ors

Dorchester at 72.4% of Turners

Dorchester Pacific Ltd’s hold on Turners NZ Ltd rose to 72.4% yesterday, from 68.5% on Friday. Dorchester Pacific lodged a full takeover offer for Turners on 18 September.

Attribution: Company & SFO releases.

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Fagan jailed for forgery & false statements

John Grant Fagan (54) has been sentenced in the Palmerston North District Court to 3 years & one month in jail following a Serious Fraud Office prosecution.

Mr Fagan pleaded guilty last September to 15 offences under the Crimes Act of false statement by promoter, forgery & using forged documents.

Serious Fraud Office director Julie Read said today: “The charges arose out of Mr Fagan’s attempts to promote a number of technology & property companies between 2009-11. He used false & forged documents which overstated the value or success of the businesses in an attempt to encourage people to invest with him. He also made false statements overstating the position of the companies.  Mr Fagan’s actions relate to investments of $1.285 million and attempts to gain a further $4.564 million from various individuals & entities.

Mr Fagan was a director of Isthmus Builders Ltd in Auckland in the mid-1990s and, in Palmerston North, companies including Fagan Group Ltd, Manukau Super Developments Ltd & Pacific Properties One Ltd.

Attribution: SFO release.

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Belgrave Finance lawyer jailed

Former Waipukurau lawyer Hugh Hamilton (63) was sentenced to 4 years & 9 months’ jail today on 14 fraud charges arising out of the collapse of Belgrave Finance Ltd.

Justice John Faire found Mr Hamilton guilty in May after a trial in the Auckland High Court on charges brought in a joint prosecution by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA).

Belgrave’s 2 Auckland-based directors both pleaded guilty earlier and were jailed for their roles, Shane Buckley for 3 years and Stephen Smith for 4 years. The alleged controller of the company, Ray Schofield, originally from Waipukerau but more recently from Whitford, was granted a stay of prosecution on the grounds of terminal illness, conditional upon review.

The charges related to more than $12 million of loans Belgrave made to various entities related to Mr Schofield & the company between 2005-08.

Mr Hamilton, a legal advisor to Mr Schofield & the 2 directors, was found not guilty on 25 charges – 11 of false statement by a promoter, 11 Companies Act charges of making a false statement to a trustee & 3 theft charges.

Earlier stories:
18 May 2014: Lawyer guilty on 14 Belgrave charges
16 September 2011: SFO & new authority both lay charges over Belgrave Finance collapse
28 May 2008: Belgrave Finance into receivership

Attribution: FMA release.

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Lawyer guilty on 14 Belgrave charges

Former Waipukurau lawyer Hugh Hamilton (62), who was Central Hawke’s Bay mayor for 6 years, was found guilty at the Auckland High Court on Friday on 14 charges arising out of the collapse of Belgrave Finance Ltd.

Justice John Faire remanded Mr Hamilton on bail until sentencing on 4 July.

Belgrave’s 2 Auckland-based directors both pleaded guilty earlier and were jailed for their roles, Shane Buckley for 3 years and Stephen Smith for 4 years. The alleged controller of the company, Ray Schofield, originally from Waipukerau but more recently from Whitford, was granted a stay of prosecution on the grounds of terminal illness, conditional upon review.

The Serious Fraud Office and the Financial Markets Authority brought the charges in a joint prosecution. They related to more than $12 million of loans Belgrave made to various entities related to Mr Schofield & the company between 2005-08.

Mr Hamilton, a legal advisor to Mr Schofield & the 2 directors, was found not guilty on 25 charges – 11 of false statement by a promoter, 11 Companies Act charges of making a false statement to a trustee & 3 theft charges.

Justice Faire said he was satisfied Mr Hamilton “had knowledge that Mr Schofield, Mr Smith or Mr Buckley, through their borrowing, were causing Belgrave to be in breach of the debenture trust deed.”  Justice Faire also found beyond reasonable doubt that Mr Hamilton “intended to assist in the offending”.

Belgrave, incorporated in 2000, was placed in receivership in May 2008, owing 1000 investors about $22 million. It was wound up in April 2010, making it the 20th finance company collapse in 2 years.

Belgrave lent heavily on second mortgages for commercial & residential property developments, sourcing its funds primarily from the public in the form of debentures & convertible notes.

Receivers entered 3 of Mr Schofield’s companies in December 2008 – Kiwi Freeholds Queen Street Ltd, Kiwi International Hotel Queen Street Ltd & Schofield Kiwi Freeholds Ltd. He also owned the Kooralbyn Resort in south-eastern Queensland & the Airport Gateway Hotel at Mangere.

Earlier stories:
16 September 2011: SFO & new authority both lay charges over Belgrave Finance collapse
28 May 2008: Belgrave Finance into receivership

Attribution: Judgment, FMA release.

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Propbd on Q T18Feb14 – Mayer jailed for 6 years, Precinct profit soars & waterfront deal looms

Mayer gets 6 years’ jail for $47 million mortgage fraud
Swaps gains lift strong Precinct profit, company in talks on exclusive waterfront deal

1.34pm:
Mayer gets 6 years’ jail for $47 million mortgage fraud

Former Auckland property developer & investor Malcolm Duncan Mayer (57) was sentenced today to 6 years’ jail for orchestrating a $47 million mortgage fraud.

He was found guilty in December of 16 charges of dishonestly using a document & 10 charges of using forged documents, in a prosecution brought by the Serious Fraud Office.

Mr Mayer had used false loan applications and submitted them to fund management company Trustees Executors Ltd (TEL) for 26 properties in & around the Auckland region, between December 2003 & August 2007.

Swaps gains lift strong Precinct profit, company in talks on exclusive waterfront deal

Precinct Properties NZ Ltd increased net profit after tax by 67% to $39.5 million in the December half on net operating income up 22% to $32 million – up from 2.63c to 3.1c/share. The company has lifted its first-half dividend by 5.5%, from 2.56c to 2.7c/share.

Precinct also announced today that it is in exclusive negotiations with Waterfront Auckland to become its development partner for commercial office within the Innovation Precinct at the Wynyard Quarter, on the Auckland waterfront.

A big factor in the increase was the $10.6 million fair-value gain in interest rate swaps ($1.7 million a year earlier), which chief executive Scott Pritchard said reflected the increase in market interest rates since 30 June 2013 and the unwinding of interest rate positions.

Rental revenue for the 6 months was up 20% to $82.6 million ($68.9 million), primarily due to new rental income from recent acquisitions. Excluding that, rent was up 3%.

Attribution: SFO, company release.

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Forex trader jailed for putting client funds to own use

Currency trader Rene Alan Chalmers (43) was sentenced in the Auckland District Court yesterday to 4 years 3 months’ jail for accessing client funds for his own benefit.

Serious Fraud Office director Julie Read said the agreed capital loss to investors for the period relating to the charges was $1.5 million. Mr Chalmers, formerly of Christchurch and more recently of Tauranga, pleaded guilty last August to 14 charges of theft by a person in a special relationship, dishonestly taking or using a document and false statement by a promoter, relating to foreign exchange trading & 3 property purchases in 2011 & 2012.

Ms Read said many of Mr Chalmers’ initial investors were family members & friends, and later included other colleagues & acquaintances. He carried out his trading activities through his company, Chalmers Cameron Investments Ltd, which went into voluntary liquidation in May 2012.

Investors believed they were giving Mr Chalmers their money for the purpose of forex trading. Ms Read said $740,000 of investor funds was used contrary to that purpose and Mr Chalmers reported false gains to investors.

Attribution: SFO release.

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Woman confesses to mortgage fraud to help poor families

A Manukau woman has pleaded guilty to 10 charges of using false documentation to obtain mortgage finance for low-income families who wouldn’t otherwise have been able to obtain finance.

Ramni Kumar (45) entered guilty pleas to the Serious Fraud Office charges in the Auckland District Court yesterday.

Ms Kumar and an associate, Vicki Ravana Letele (32), faced joint charges under section 228 of the Crimes Act for dishonestly using a document for 10 property transactions undertaken during the second half of 2010. Ms Letele also faces one additional charge.

The Serious Fraud Office director Julie Read said the total value of the fraud was $3.9 million. She said Ms Kumar benefited by arranging for her (and allegedly, her associate’s) contacts to make the initial purchase of the properties and then onselling them to the mortgage recipients, thus generating a profit.

Ms Kumar will reappear for sentencing on Tuesday 11 March.

Ms Letele was the sole director & shareholder of Focus Property Investment Ltd, established to broker the selling & arranging of mortgages for first-homebuyers on low income. She resigned as a director on 9 July 2011 and the company was placed in liquidation on 31 January 2012.

Attribution: SFO release.

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Mayer guilty of $47 million fraud, sentencing February

Auckland property developer & investor Malcolm Duncan Mayer (57) was found guilty in the Auckland District Court on Friday of orchestrating a $47 million mortgage fraud. He was remanded on bail and is scheduled to appear for sentence on 18 February.

Mr Mayer was convicted after a 6-week trial on 26 charges under the Crimes Act laid by the Serious Fraud Office – 16 of dishonestly using a document and 10 of using forged documents.

The charges related to false loan applications Mr Mayer submitted to fund management company Trustees Executors Ltd for 26 properties between December 2003-August 2007.

Mr Mayer was found to have used a variety of means to mislead Trustees Executors into lending the money, including dishonestly using relatives’ & associates’ names to secure the loan funds, using false sale & purchase agreements and false leases to support valuations, and making false statements about the supposed applicant’s deposit or contribution to the purchase.

Mr Mayer was adjudicated bankrupt on 12 April 2011. His company, Sagecorp Ltd, went into voluntary liquidation in March 2010 with debts of $1.95 million and assets estimated at $1 million – 2 apartments in Peace Tower, 2 St Martins Lane, sold at mortgagee auction by Westpac (NZ) Ltd and another 2 at 82 Symonds St mortgaged to Rice Craig Solicitors Nominee Co Ltd. Mr Mayer’s MDM Holdings Ltd was wound up in October 2009, a month after a receiver of income was appointed for 6 of its properties – 5 at Peace Tower and one at 6 Glenside Crescent. Mr Mayer was also a director of APB 2006 Ltd, Artizanz Ltd, Champion Apartments Ltd (in liquidation May 2010), Mountain Watch Properties Ltd (in receivership August 2009) & North Star Holdings Ltd, and a former director of Malkev Properties Ltd & Sage Holdings (Ak) Ltd.

Attribution: SFO release.

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Propbd on Q Tues26Nov13 – council sends panel picks to Wellington, direct referral, LWR boss jailed

Council sends unitary plan panel recommendations to government
Warehouse’s Lunn Ave application gets direct referral on casting vote
LWR director gets 6-year jail term

Council sends unitary plan panel recommendations to government

5.12pm:
Auckland Council has made its recommendation to the Government on who should sit on the unitary plan hearings panel.

The council’s governing body released the minutes today of its 14 November meeting (and the part of the meeting adjourned to 21 November). It didn’t disclose the potential panellists, saying they wouldn’t be named until the minister made appointments and contractual arrangements were concluded.

12.10pm:
Warehouse’s Lunn Ave application gets direct referral on casting vote

Auckland Council’s hearings committee resolved today – on the casting vote of new chairwoman Linda Cooper – to send The Warehouse Ltd’s application for resource consent for one of its stores plus some other shops on Lunn Avenue, Mt Wellington, directly to the Environment Court.

The company sought direct referral. The committee split 4-4 over whether the application was so complex it should bypass the council hearings process. Both Maori Independent Statutory Board members on the committee opposed direct referral, not satisfied that the Maori position would be heard as well through the court process as it would at a council hearing.

Cllr Chris Darby wanted to test the definitions which would clarify the course the committee should take, including the definition of contentious, and Cllr Cooper stopped Cllr Wayne Walker in his tracks when he sought to widen the debate to council policy issues.

  • I’ll have more on the debate this afternoon.

LWR director gets 6-year jail term

Lane Walker Rudkin Industries day Ltd director Ken Anderson (66) was sent to jail yesterday for a 6-year term on charges laid by the Serious Fraud Office.

He originally faced 82 charges arising from the collapse of the Canterbury clothing manufacturer in 2009, but pleaded guilty in the Christchurch District Court in October to 4 representative charges related to the provision of false financial statements used to obtain & retain lending facilities, and the use of false documentation to obtain funds under a letter of credit facility from Westpac NZ Ltd.

The Serious Fraud Office said the fraud resulted in losses of $70 million. Westpac appointed receivers to 8 companies in the group in April 2009, with debts estimated at $121 million – all but $10 million of that owed to the bank – and Mr Anderson was adjudicated bankrupt in 2011.

An unnamed individual faced 8 charges and pleaded guilty to a representative charge for their part in the use of false documentation to obtain funds under the letter of credit facility. They were fined $2000.

Background

A new page introduced to The Bob Dey Property Report last year, Propbd on Q has resumed appearing daily, hence fresh cut. It will, in essence, be a running commentary on the day’s news – focusing on property & business around Auckland, NZ securities and emanating from Auckland Council.

Items will be brief, with links to outside sources where quickly available, and with links to previous stories on this site. Many of the items will take the place of stories (which have frequently ended up uncompleted); some will link to stories the same day and some, such as auctions & court liquidations, will be expanded into more detailed stories.

Attribution: Council committee debate, council minutes, SFO release.

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Ross pleads guilty to Ponzi charges

Wellington financial advisor David Robert Gilmour Ross (63) pleaded guilty in the Wellington District Court yesterday to charges alleging he ran a Ponzi scheme that resulted in an overstatement of investment positions by more than $380 million.

The net loss to investors was $115 million.

The Serious Fraud Office & the Financial Markets Authority began a joint investigation into Ross Asset Management Ltd & related entities last October, resulting in 4 SFO charges of false accounting and one of theft by a person in a special relationship.

A fortnight later, the Financial Markets Authority charged Mr Ross with one count of providing a financial service when he wasn’t registered for that service, one count of knowingly making a false or misleading declaration or representation to the authority for the purposes of obtaining authorisation to become an authorised financial advisor, and one count of supplying information or producing documents to the authority which he knew to be false or misleading.

The Serious Fraud Office alleged Mr Ross conducted a Ponzi scheme which he disguised by falsely reporting clients’ investments. Large portions of client portfolios shown as invested through a broker ‘Bevis Marks’ were fictitious & never existed, resulting in the overstatement of investment positions by more than $380 million.

More than 1200 client accounts were affected by Mr Ross’s scheme.

Mr Ross has been remanded in custody to reappear on 24 October to set a sentencing date.

Attribution: SFO & FMA release.

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