Developer and company director jailed for $41 million fraud

Two businessmen have been jailed on charges brought by the Serious Fraud Office of fraudulently obtaining a large bank loan to build an Auckland inner-city apartment block.

Property developer Leonard John Ross (52) was sentenced to four years and four months’ imprisonment, while company director Michael James Wehipeihana (46) was sentenced to four years and three months’ imprisonment.

Mr Ross and Mr Wehipeihana lied to the ANZ Bank in order to obtain a $41-million development loan for their company, Emily Projects Limited, to construct the Waldorf Celestion Apartment Hotel. The pair lied to the bank about the number of genuine presales they had made. They used forged documents, including sale and purchase agreements, to support the loan application. Later, they used additional forged documents when the apartments were on-sold to genuine purchasers.

Both men were sentenced at the Auckland High Court. A jury found them guilty in July following an eight week trial on all charges they faced, namely three charges of ‘Obtaining by deception’ and two representative charges of ‘Using forged documents’.

SFO Director, Julie Read said, “The sentences imposed today reflect the seriousness of offending. Mr Ross and Mr Wehipeihana misled the bank to ensure that Emily Projects Limited obtained the loan facility. The SFO is committed to investigating and prosecuting this kind of offending to maintain the integrity of the mortgage market for the benefit of honest borrowers.” 

The two other men involved in the fraudulent scheme were sentenced to 10-months’ home detention. Vaughn Stephen Foster (56), a self-employed consultant, pleaded guilty to one representative charge of ‘Obtaining by deception’ just before the trial commenced and was sentenced in June. Timothy Upton Slack (56), a lawyer, pleaded guilty to one representative charge of ‘Obtaining by deception’ on 1 September last year and was sentenced later that month.

ENDS

Issued by

Henry Acland
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

The Waldorf Celestion Apartment Hotel consists of two towers situated on adjacent sites on the corner of Emily Place and Anzac Avenue in Auckland. Collectively the towers have a total of 127 apartments.

Leonard John Ross (52) incorporated Emily Projects in July 2008, to develop and sell the apartments at the Celestion. 

Mr Ross was the director and majority shareholder of Emily Projects.

Michael James Wehipeihana (46) was Mr Ross’s ‘right hand man’ at the time of the offending and had a small shareholding in Emily Projects Limited.

Crimes Act offences

Section 240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person. 

(1A) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any document or thing capable of being used to derive a pecuniary advantage knowing that, by deception and without claim of right, the document or thing was, or was caused to be, delivered, executed, made, accepted, endorsed, or altered.

(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
  (i) knows that it is false in a material particular; or
  (ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person. 

257 Using forged documents

(1) Every one is liable to imprisonment for a term not exceeding 10 years who, knowing a document to be forged,—

(a) uses the document to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or

(b) uses, deals with, or acts upon the document as if it were genuine; or

(c) causes any other person to use, deal with, or act upon it as if it were genuine.

(2) For the purposes of this section, a document made or altered outside New Zealand in a manner that would have amounted to forgery if the making or alteration had been done in New Zealand is to be regarded as a forged document.

About the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act.

The SFO is the lead law enforcement agency for investigating and prosecuting serious or complex financial crime, including bribery and corruption.

The presence of an agency dedicated to white collar crime is integral to New Zealand’s reputation for transparency, integrity, fair-mindedness and low levels of corruption.

This work contributes to a productive and prosperous New Zealand and the SFO’s collaborative efforts with international partners also reduce the serious harm that corrupt business practices do to the global economy.

The SFO has two operational teams: the Evaluation and Intelligence team and the Investigations team.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”

Part 2 of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:

• the suspected nature and consequences of the fraud and/or;
• the suspected scale of the fraud and/or;
• the legal, factual and evidential complexity of the matter and/or;
• any relevant public interest considerations.

The SFO’s Annual Report 2017 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO’s strategic goals and performance standards. Both are available online at www.sfo.govt.nz(external link)

The SFO Twitter feed is @SFO_NZ(external link)