Guilty plea to SFO charges in Five Star Finance investigation

Guilty plea to SFO charges in Five Star Finance investigation

Neill Allan Williams (78), a key management figure at Five Star Consumer Finance Limited (Five Star), has today pleaded guilty in the Auckland High Court to two charges of theft by person in special relationship under section 220 of the Crimes Act 1961.

These Crimes Act charges brought by the Serious Fraud Office (SFO) relate to approximately $43 million of related party lending that occurred between 2003 and 2007. In the course of undertaking this lending, the defendants including Mr Williams, have intentionally applied funds in breach of the company’s obligation under its trust deed.

The charges carry a maximum penalty of seven years’ imprisonment.

Acting Chief Executive of SFO, Simon McArley said “We are pleased to bring this long running case to an end, and take another step closer to completing the prosecutions arising out of the finance company collapses. This will enable SFO to increasingly apply resources to its early intervention strategy, driven by intelligence led detection and cross agency cooperation.”

Five Star traded as a finance company accepting deposits from the public and investing those deposits in consumer and commercial lending.

Williams is the last of the four Five Star defendants to plead guilty. The other three individuals involved in this investigation were Nicholas George Kirk, Marcus Arthur MacDonald and Anthony Walpole Bowden.

Mr Kirk and Mr McDonald received sentences in December 2010 of two years and eight months’ imprisonment, and two years and three months’ imprisonment respectively. Mr Bowden was sentenced to nine months’ home detention and 100 hours’ community work.

Mr Williams will reappear for sentencing on 22 August 2013.

ENDS 

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

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 SFO believe 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.

Crimes Act 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.

About SFO

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

SFO's role is the detection, investigation and prosecution of serious or complex financial crime. SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:

• business and investor confidence in our financial markets and economy
• public confidence in our justice system and public service
• New Zealand's international business reputation.

SFO operates three investigative teams:

• Evaluation and Intelligence;
• Financial Markets and Corporate Fraud; and
• Fraud and Corruption.

SFO operates under two sets of investigative powers.

Part I 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 II 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..."

SFO's Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2013-2016 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz(external link)