Published 19 September 2012
National Finance 2000 Ltd director Carol Braithwaite, 53, was sentenced yesterday to 10 months’ home detention and to complete 300 hours of community work for distributing a registered prospectus which included untrue statements.
Her ex-husband, Allan Ludlow, 53, was sentenced in July 2011 to 5 years 7 months’ jail on 7 charges brought by the Serious Fraud Office, and in January to another 9 months’ jail on a further 8 charges brought by the Financial Markets Authority.
National Finance 2000’s third director, lawyer Tony Banbrook, 66, pleaded guilty in June to making untrue statements in a National Finance prospectus but hasn’t been sentenced yet. The charges against Ms Braithwaite & Mr Banbrook were brought by the Financial Markets Authority.
Justice Pamela Andrews told Ms Braithwaite at her sentencing in the Auckland High Court today: “You were described in the prospectus distributed for investment as having a wide range of skills which equipped you very well for your directorship. Your relationship to Mr Ludlow was not disclosed.
“National Finance was in the business of offering finance to people buying cars from licensed motor vehicle dealers. The majority of the loans were made to people who bought second-hand vehicles from companies controlled by Mr Ludlow, in the Payless Cars Group. National Finance also provided business loans to motor vehicle dealers – in particular dealers in the Payless Cars group.
“Members of the public invested in debenture stock & subordinated unsecured notes in National Finance, on the basis of National Finance’s registered prospectus issued on 22 September 2005, and the financial statements for 30 March 2005 which were contained in the prospectus. You accepted in an admission of facts that you signed the prospectus. You also admitted that the untrue statements were material (that is, significant) to investors’ decisions whether to invest in the company. About $2.5 million was invested in National Finance after the prospectus was distributed.
“You failed to take even basic steps to ensure that the information given in the prospectus & extension certificate was true. Investors were therefore misled to the risks of investing in National Finance.
National Finance was put into receivership on 9 May 2006. At that time, there were just over 2000 investors, with investments totalling around $24.8 million. Since then, secured debentureholders have been repaid about half of their investment, but no interest. Unsecured noteholders have received nothing.
“The net loss to investors was in the order of $15 million (that is, about $12 million for secured debentureholders and $3 million for holders of unsecured notes), and that is exclusive of interest.
“You largely abdicated your responsibilities as a director and, as I have said earlier, that abdication does not excuse you. That said, as I have noted earlier, it does not appear from the victim impact statements provided to the court that any of the investors placed any particular reliance on your particular skills & training when deciding to invest in National Finance.”
14 December 2011: Ludlow pleads guilty to another batch of 2005 prospectus charges
21 October 2011: National Finance 2000 & Payless director Ludlow gets 6 years’ jail
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Attribution: Judgment, story written by Bob Dey for the Bob Dey Property Report.