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Marcus Arthur MacDonald, a former director of Five Star Consumer Finance Limited (“Five Star”) has today pleaded guilty in the District Court in Auckland to charges of theft by a person in a special relationship, which related to misuse of Five Star funds

Five Star Finance defendant pleads guilty to SFO charges

Marcus Arthur MacDonald, a former director of Five Star Consumer Finance Limited (“Five Star”) has today pleaded guilty in the District Court in Auckland to charges of theft by a person in a special relationship, which related to misuse of Five Star funds in breach of its Trust Deed requirements.

SFO Chief Executive, Adam Feeley, said “This is the first result in relation to a major finance company collapse, and is hopefully indicative of things to come.”

Mr Feeley said the SFO was pleased that successful resolutions had been secured in relation to a number of the numerous finance company collapses that have occurred since 2007. 

“The SFO’s strategy of focusing on larger scale cases involving significant losses is helping to reassure the investing public that there is an effective law enforcement response to the financial sector fraud of recent years.”
 
He warned, however, that there was still a large amount of work to be done. 

“We expect to conclude a further four major investigations this calendar year, but some of the more recent matters are likely to continue into next year.”

Former Five Star directors Nicholas George Kirk and Anthony Walpole Bowden and Five Star manager Neill Alan Williams, have also been charged by the SFO with offences relating to the misuse of funds.  These defendants are yet to be committed for trial.

Mr McDonald was remanded to appear for sentencing on the 22 December 2010, in conjunction with the sentencing of himself and other former directors of Five Star in relation to Securities Act charges brought by the National Enforcement Unit of the Ministry of Economic Development.

For further information

Adam Feeley
Chief Executive
Serious Fraud Office
Phone 021 333 539

Note to editors

Five Star Consumer Finance Limited traded as a finance company accepting deposits from the public and investing those deposits in consumer and commercial lending.  The directors were Marcus MacDonald, Nicholas Kirk and Anthony Bowden.  Neill Williams was not appointed as a director of the company but the SFO allege that he was heavily involved in the management of the company.  Five Star was placed into receivership on 29 August 2007 owing investors approximately $46 million. 

Five Star Finance Limited, Five Star Debenture Nominees Limited and Antares Finance Holdings Limited were related companies, and formed the wider Five Star group.  The SFO investigation has concentrated on transactions entered into between members of the Five Star group and entities related to or controlled by the directors.

The role of the Serious Fraud Office

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act(external link) in response to the collapse of financial markets in New Zealand at that time.

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…”

The SFO’s Statement of Intent 2010-2012 sets out the SFO’s three year strategy and goals for contributing towards the Government’s Justice and Economic Development goals. It is available online at http://www.sfo.govt.nz/f56,555/SFO_Statement_of_Intent_2010.pdf(external link)(external link)

Crimes Act 1961 offences:

Section 220: Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.