Archive | District court

“Cynical & deliberate” repossession practices earn Allan Hawkins’ companies fines & refund orders, commission seeks banning orders

on Friday 1 June 2018 in Commerce Commission, Court, District court, Finance, Financiers, Gainz, Regulation, Sectors

2 finance companies headed by former Equiticorp boss Allan Hawkins – Budget Loans Ltd & Evolution Finance Ltd – were fined $720,000 in the Auckland District Court yesterday on 125 charges under the Fair Trading Act.Judge David Sharp also ordered the companies to pay $53,000 emotional harm reparations to 9 victims and $38,000 in refunds & credits to borrowers for repossession tactics he described as “cynical & deliberate”.

The Commerce Commission is seeking banning orders against Mr Hawkins, now 76, and his elder son, Wayne Hawkins, who was also a director at the relevant times, following this sentencing & the earlier conviction of Budget Loans on 34 charges under the Fair Trading Act in 2010.

6 years of misrepresenting repossession rights

The Commerce Commission’s general counsel for competition & consumer, Mary-Anne Borrowdale, set out the companies’ practices. She said that, over 6 years from 2009 until 2014, Budget Loans misrepresented its right to repossess goods and recover interest & costs from borrowers. It also misrepresented amounts borrowers were required to pay under attachment orders and made misrepresentations about the benefits of refinancing existing loans.

Budget bought the distressed loan books of National Finance 2000 Ltd in 2006 and Western Bay Finance Ltd in 2008, and has twice been convicted for its handling of them. After the company was fined in 2010, it undertook to return $500,000 in overcharged interest & fees to borrowers.

In 2016, Budget Loans was convicted on 106 charges but 19 charges were dismissed. The Commerce Commission successfully appealed the dismissal decision, and Budget Loans’ application for leave to appeal to the Court of Appeal was dismissed in November 2017.

Mr Hawkins founded 1980s high-flier, the Equiticorp group. After its demise in the 1987 sharemarket collapse, he & other Equiticorp executives & an advisor were tried in relation to financing arrangements behind the group’s $166 million purchase of NZ Steel Ltd from the Government in 1987. Mr Hawkins was sentenced to 6 years’ jail in 1993.

After yesterday’s court hearing, Ms Borrowdale said: “The court acknowledged today that Budget Loans attempted to create cashflow by getting Western Bay & National Finance borrowers to pay as much as possible for as long as possible. It continually added costs & interest to loans and then repossessed essential goods from borrowers without notice when they couldn’t pay, regardless of whether it was legally entitled to do so. “The costs of the repossession were, for the most part, higher than the value of the goods and sometimes Budget Loans simply threw repossessed goods away rather than selling them. It also obtained judgments against some borrowers, but continued to add interest & costs and demanded more from borrowers than the courts had awarded, and to misrepresent its right to repossess.

“Where loans were not secured, Budget Loans sought to convince some borrowers to sign new, secured loans by telling them that they would get a discount on their loan balance. However, the amount of the discounted loan was higher than the amount the borrower was actually required to pay.

“Budget Loans’ conduct & misrepresentations kept vulnerable borrowers in a cycle of debt & repossession. It knowingly engaged in illegal repossessions of essential items from people that it knew were already living in hardship. The financial & emotional distress caused by this conduct to borrowers & their families should not be underestimated.”

83 of the charges were for misrepresentations around repossession, including where there was no valid right to repossess a secured item of property, such as a vehicle or household goods, or where there was no outstanding loan balance to be paid.

“In some cases Budget Loans stripped houses almost bare. In other cases, it repossessed items that it should have known were of low value, and dumped them. Its own loan notes include such comments as ‘someone’s great idea to undertake an illegal repo’ and ‘debtor not to know we can’t repo’.”

29 charges were for adding interest & costs to a loan balance after repossession, when that is not allowed under the Credit Repossession Act.

Ms Borrowdale said: “One borrower declared herself bankrupt when told her loan had ballooned from about $9000 to $57,000. In fact she had less than $2500 to pay at that time. 10 charges were for misrepresentations about adding interest to loans, beyond amounts in attachment orders issued by the courts. One borrower’s loan balance was $8600 following an attachment order, but it was ‘recalculated’ to nearly $56,000.”

The final 3 charges were for misrepresentations about the benefits of refinancing with Budget Loans.

Allan Hawkins is now sole director of Budget Finance & its shareholder, Cynotech Securities Ltd. He & his wife, Laurel, own 99.98% of Cynotech.

He is also sole director of Evolution Finance. Its owner, the previously NZX-listed Cynotech Holdings Ltd, went into liquidation in 2013 after close funding supporters decided they’d no longer pay its overhead & infrastructure costs.

Earlier stories:
19 April 2017: Judge told to reconsider 19 dismissed charges against Hawkins loan companies
118 July 2016: Hawkins’ finance companies guilty on loan contract enforcement
7 December 2014: Commission files criminal charges against 2 Allan Hawkins finance companies
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
12 August 2010: NZX refuses Cynotech request for waiver
11 August 2010: Cynotech suspended
4 August 2010: Cynotech talks departure, NZX talks suspension
28 July 2010: “Welcome letter” from Hawkins’ Budget Loans to National Finance borrowers came with an illegal $15 fee
16 June 2010: Cynotech slips to loss
14 April 2010: Remaining Cynotech shares to move to NZAX
20 January 2010: Hawkins renews Cynotech privatisation bid
23 December 2009: Hawkins withdraws Cynotech bid after Takeovers Panel asks questions
21 April 2008: Cynotech doubles receivables book to $60 million-plus in 4 months
9 October 2006: Allan Hawkins buys National Finance (Payless Cars) loan book

Attribution: Commission release.

Gubb jailed for fraud again

on Thursday 24 May 2018 in Court, District court, Gainz, Sectors

Former Auckland property consultant Stephen Rolf Gubb, 62, was sentenced to jail for fraud for a second time yesterday, this time for defrauding the Selwyn District Council in Canterbury over commission payments at its Izone business hub.

Mr Gubb admitted the charges in March and had been remanded in custody. In the Christchurch District Court yesterday, Judge David Saunders sentenced him to 2 years 9 months in jail.

For his first fraud conviction, in Auckland in 2003, he was sentenced to 4 years’ jail.

Serious Fraud Office director Julie Read said: “The sentence reflects the seriousness of offending which was not only deliberate, planned & long running, but a repetition of previous offending. Stephen Gubb defrauded a government body of $300,829, took advantage of his position and betrayed the trust his employer had placed in him. Mr Gubb was given an opportunity to rebuild his life following his previous fraud convictions but instead chose to offend again.”

As an employee of Hughes Developments Ltd, Mr Gubb sold land, leases & design-build packages for Izone in Rolleston, Christchurch.

The Serious Fraud Office charged Mr Gubb with fraudulently obtaining 13 commission payments of over $300,000 from the Selwyn District Council between March 2007 & July 2015. Nearly $150,000 of these payments were eventually transferred into a bank account controlled by Mr Gubb & his co-defendant, who has name suppression.

The Serious Fraud Office alleges that the co-defendant was complicit in obtaining the commission payments.

Mr Gubb also obtained $10,500 by submitting an invoice to the council for services that weren’t provided.

Mr Gubb’s previous prosecution by the Serious Fraud Office on fraud charges involved about $1.18 million. Victims then included the property consultancy where he was a director & shareholder, Grafton Group Ltd, and another company where he & his second wife, Helen, were shareholders, Beauford Properties Ltd.

Attribution: SFO release.

First companies sentenced arising from steel mesh investigation

on Thursday 26 April 2018 in Commerce Commission, Court, District court, Gainz, Regulation, Sectors

2 related companies, Timber King Ltd & NZ Steel Distributor Ltd, have been fined $400,950 for making false & misleading representations relating to their steel mesh products, which are used to strengthen buildings. NZ Steel Distributor imports steel from China and Timber King was the retailer.

They’re the first companies sentenced after Commerce Commission investigations into steel mesh sales, which began after the commission received a complaint from a Timber King customer in August 2015.

Auckland District Court judge Robert Ronayne heard the case in December and handed down his decision on Tuesday, fining Timber King on 5 charges and NZ Steel Distributor on 2 charges under the Fair Trading Act. The 2 companies pleaded guilty to making false, misleading & unsubstantiated representations relating to their TS10 steel mesh between June 2015 & February 2016.

From a starting point of $660,000, Judge Ronayne reduced the penalties by 10% for co-operation and 25% for early guilty pleas, and another 10% for claimed inability to pay a fine that big, although the judge was sceptical about the audit & accounting evidence provided to him.

Fake certificate

Judge Ronayne said the customer above bought 3 sheets of TS10 steel mesh from Timber King, noted the mesh had no tags and asked for a copy of the test certificate demonstrating compliance with the standard. After he received a photograph of a batch tag, the customer sought further verification of compliance. In reply, Timber King sent the customer a certificate on the letterhead of external building product testing laboratory SGS NZ Ltd.

Judge Ronayne: “As a result of further enquiries, it was revealed that the certificate was fake and had not been produced by SGS. SGS had not carried out testing of the mesh to determine compliance with the standard. Instead, the certificate had been created by an employee of Timber King using a genuine SGS test certificate that had been obtained in relation to testing of a different product and altering it so that it appeared to show that TS10 had been tested & found to comply.”

Jackie Liu is a director of both companies and, Judge Ronayne said, was for all intents & purposes the controlling mind of both companies. He owns 75% of the shares in Steel Distributor and effectively controls a 55% holding in Timber King through holding companies, Three Brothers Group Ltd & NZ Liu Family Trustees Ltd. He’s sole director of both.

Ringo Liu is also a director of both Timber King & Steel Distributor. He owns 25% of the shares in Steel Distributor and effectively controls a 45% holding in Timber King through Three Brothers.

This in a quake-prone country?

Judge Ronayne said: “It is quite obvious in New Zealand, given our history of earthquakes & the consequences of them, that there is a vital need for consumers to rely on representations as to standard compliance and, in particular, earthquake standard compliance.”

He concluded that the companies were “grossly negligent” in the steps they took to ensure that the product complied with the standard: “The creation of the fake certificate can only have been deliberately carried out in order to provide an additional false assurance of compliance with the standard.

“The use of non-compliant steel mesh, especially in the context of earthquake compliant mesh, has actual & potentially enormous consequences for consumers, for competitors and for the reputation of the building industry. Very strong specific & general deterrence is required in these circumstances.”

Mesh went into 32 homes

Timber King sold 2600 sheets of TS10 over a 9-month period, of which 614 are known to have failed both aspects of the standard and the others to have failed its testing requirements. Judge Ronayne said it appeared the 614 sheets went into the ground slabs for 31 homes and a suspended concrete floor of another home: “5 homes were considered to be high risk, 24 medium risk & 3 low risk. The 5 high risk homes were then referred to an engineer who considered one of them to be ‘of concern’. Obviously, this exercise has not been without cost.”

The judge added: “The misleading conduct appears to have been carried out with a focus to remain competitive in the market. It can therefore be assumed that this gave an unfair competitive advantage over compliant competitors.”

Background

The Commerce Commission has filed charges against a number of companies relating to false & misleading representations about 500E steel mesh. In 500E, the ‘E’ stands for earthquake, and the NZ Standard specifies strength & ductility (elasticity) requirements for steel reinforcing materials. The standard also specifies the procedures (ie, sampling & testing) that must be followed to comply including:

manufacturing methods that must be used by steel manufacturers
chemical, mechanical & dimensional requirements of mesh sampling & testing of each batch of mesh, and
identification & labelling of different grades of mesh.

To be sold in New Zealand as 500E grade steel mesh, the mesh must be produced in accordance with the requirements of the standard. If mesh is produced in any other way, it cannot be described as 500E mesh. The Ministry of Business, Innovation & Employment is the building regulator, and sets & enforces the standards & Building Code. The commission can investigate misleading or deceptive claims about compliance with the standard.

Other inquiries

The commission has carried out a series of investigations into steel mesh following the complaint in August 2015. Following its investigations:

Fletcher Steel Ltd was issued with a warning
United Steel Ltd & Pacific Steel (NZ) Ltd were issued with compliance advice
Brilliance Steel Ltd pleaded guilty to 20 charges and will be sentenced on 25 May
Steel & Tube Holdings Ltd pleaded guilty to 24 charges and is awaiting sentencing
The commission filed 59 charges against Euro Corp Ltd in December 2017.

Links:
Timber King & NZ Steel Distributor judgment
Fletcher Steel warning
United Steel & Pacific Steel compliance advice

Earlier stories:
29 November 2017: Steel & Tube owns up to mesh label & testing guilty pleas
8 June 2017: Updated: Commission files 29 charges against Steel & Tube over mesh
8 April 2016: Steel & Tube undertakes dual mesh testing
5 March 2016: Suppliers recheck as commission questions steel mesh, ministry not worried
25 April 2016: Commission lifts ‘stop’ on Euro Corp steel mesh

Attribution: Judgment, commission release.

Judge told to reconsider 19 dismissed charges against Hawkins loan companies

on Wednesday 19 April 2017 in Court, Credit, District court, Finance, Gainz, High Court, Sectors

The Commerce Commission has won its appeal against a district court decision to dismiss 19 charges against 2 finance companies controlled by former Equiticorp chief Allan Hawkins.

In the Auckland High Court, Justice Rebecca Edwards found in the commission’s favour in a judgment issued on 11 April and remitted the 19 charges back to Auckland District Court judge David Sharp for determination.

Judge Sharp found the 2 companies guilty on 106 charges last year. Dismissing the other 19, he said they concerned representations about the companies’ right to charge interest & costs on contracts entered into before 6 June 2015, following repossession & sale of borrowers’ property where Budget & Evolution had security interest over multiple items.

The commission’s case was that, for loans entered into before 6 June 2015, lenders were prohibited under the Credit (Repossession) Act from charging interest & costs after the first security item had been repossessed & sold. Budget & Evolution argued that where a loan was secured over multiple items, all items had to be repossessed & sold before they needed to stop charging interest & costs.

Budget & Evolution also appealed all 106 convictions on multiple grounds, but Justice Edwards rejected all appeals.

Mr Hawkins headed the Equiticorp finance group in the 1980s but, after the 1987 sharemarket collapse, he ended up in civil & criminal trials over the group’s activities and was sentenced to 6 years’ jail for fraud.

He formed the Cynotech group of finance companies about 12 years ago, using the shells of his 1980s companies.

Mr Hawkins’ listed company, Cynotech Holdings Ltd, was delisted in September 2013 after his private company, Cynotech Securities Ltd, acquired 71% of the shares in 2010 in a bid to fully privatise it. In July 2013, Cynotech Holdings went into liquidation after his backers ended their support.

Mr Hawkins resigned as sole director of Budget Loans on 9 July 2013 but was reappointed on 13 August 2013. He remains a director of Broadway Mortgage Custodians Ltd, Cynotech Finance Ltd & Evolution Finance Ltd, and is one of 4 directors of Budget Loans Group Ltd (renamed from Cynotech Securities Group Ltd in July 2013; in liquidation November 2013).

Link:
Commerce Commission enforcement response register, including judgments

Earlier stories:
18 July 2016: Hawkins’ finance companies guilty on loan contract enforcement
17 December 2014: Commission files criminal charges against 2 Allan Hawkins finance companies
9 November 2013: Commission tells Allan Hawkins’ finance companies to stop repossessions
11 July 2013: Cynotech share trading halted after backers end support
28 July 2010: “Welcome letter” from Hawkins’ Budget Loans to National Finance borrowers came with an illegal $15 fee

Attribution: Commission release, judgments, Companies Register.

SFO alleges fraud in Celestion development loan deal

on Friday 17 February 2017 in Apartments, CBD, CBD and fringe, Court, District court, Gainz, Learning Quarter, Market, Neighbourhoods, Sectors

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.

SFO charges former Henderson solicitor Edward Johnston

on Wednesday 27 April 2016 in Court, District court, Gainz, Sectors

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.

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

on Thursday 25 June 2015 in Acquisition, Agency, Arvida, Barfoot and Thompson, Construction, Court, District court, Earthquake, Forward thinking, Gainz, Infrastructure, Land use, Law, Market, propbd on Q, Rail, Reform, Retirement villages, Sectors, Securities – NZ

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.

2 developers fined for resource management breaches

on Friday 16 January 2015 in Compliance, Court, District court, Gainz, Land use, Resource management, Sectors

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.

Commission files criminal charges against 2 Allan Hawkins finance companies

on Wednesday 17 December 2014 in Commerce Commission, Court, Cynotech, District court, Gainz, Regulation, Securities – NZ

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.

Insurance broker Grant Herbert jailed

on Saturday 8 November 2014 in Court, District court, Gainz, Sectors

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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