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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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Belgrave Finance into receivership

Published 28 May 2008

Belgrave Finance Ltd’s directors said today they’d opted for receivership rather than a possible survival mechanism after learning an expected funding line was no longer available.

 

The small Auckland-based financier was also struggling because reinvestment rates had been slashed.

 

Managing director Shane Buckley & fellow director Steve Smith sent an open letter today to their secured debenture investors today, saying Belgrave’s trustee, Covenant Trustee Co Ltd, had called in Grant Graham & Brendon Gibson (KordaMentha) as receivers.

 

Belgrave’s last prospectus – for up to $100 million – shows it increased mortgage advances from $27 million in March to $35.7 million in September.

 

The directors said the company had enough funds to mitigate liquidity risk at 30 September, with $257,000 on bank deposit. That was down from $5 million in March.

 

The prospectus showed 92% of its loans were on property assets, and 78% of those were on second mortgages. The weighted average loan:value ratio was 70.5%.

 

Of its $27 million on deposit, $15.7 million was for less than 12 months and the weighted average interest rate was 10.24%. Funds on deposit almost matched advances for periods less than 6 months ($10 million advanced, $9 million on deposit), but in the next batch of 6-12 months advances totalled $27 million compared to $6.6 million on deposit.

 

$11.3 million was on deposit for terms beyond one year but nothing lent for longer than a year.

 

The directors said they decided on 16 May to seek help to identify the best outcome: “These discussions have included assessing the various merits of a proposed moratorium, capital restructure & seeking approval of alternative funding lines.

 

“Our future thoughts have been tempered by the realisation of the tough market conditions we currently face. A majority of our remaining loans are mezzanine in nature, with many loans being secured by land with development potential. We have been affected by the current property market downturn and the inability of developers to raise alternative funding from other financiers.

 

“Due to the significant lack of investor confidence in the finance industry, resulting from well publicised previous failures, our reinvestment rates for secured debenture stock investments have fallen alarmingly. Based on current market information, we do not expect any improvement in the reinvestment rate in the foreseeable future.

 

“After considering numerous options, including the merits of a moratorium, we have made a decision, that we believe is in the best interests of our investors, for the company to be placed in receivership.”

 

Website: Belgrave Finance

 

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Attribution: Company statement, story written by Bob Dey for this website.

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