Home Detention sentence for Motor Trade Finance fraud

Home Detention sentence for Motor Trade Finance fraud

Karl Sean Toussaint (41) appeared in the Auckland District Court today and was sentenced to nine months Home Detention and 200 hours of community work.

Mr Toussaint is the third of seven defendants to be sentenced for his role in a scheme to defraud Dunedin-based vehicle finance company Motor Trade Finances Ltd (MTF), following an investigation by the Serious Fraud Office (SFO).

Mr Toussaint pleaded guilty in February to five charges under the Crimes Act of obtaining by deception.

Two others accused, Clark Anthony Lewis (35) and Stewart Travis Saunders (44) have pled guilty to charges of obtaining funds by deception for their roles in the scheme.

The SFO laid a combined total of 110 charges against seven individuals, including Mr Toussaint, in August 2011, as a result of allegations made against Mark James Whelan (39), formerly an Auckland-based retail dealer for MTF and later a franchisee of the company.

It is alleged that while in those positions and between July 2005 and February 2009, Mr Whelan wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. He is accused of obtaining loans totaling $4.9 million and using those funds for personal gain, including the purchase of land, servicing of personal debts, and investing in a futures trading scheme.

Mr Toussaint signed five contracts that falsely represented that a loan from MTF was secured against specified assets. These assets did not exist.

Mr Whelan is still facing 25 individual charges and 41 joint charges of obtaining by deception under the Crimes Act.

The other individuals facing joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan's scheme are: Richard Michael Barnett (43), 16 charges; Jonathan Earle Chiswell (36), three charges; and Brett Royce Donaldson (50), seven charges. Mr Chiswell and Mr Whelan are also facing a further three joint charges. They have been remanded for trial beginning 4 March 2013.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

From March 2005 Mark James Whelan was a Retail Dealer for Motor Trade Finances Ltd (‘MTF'), and became a franchisee of the company in January 2008. While Mr Whelan was in those positions he is accused of writing a number of loans in the names of family, friends and associates using various non-existent assets as security. In early 2009 these loans went into default and MTF were unable to locate those assets for repossession.

A complaint was submitted to the SFO on 17 September 2010.

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.

(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.

Section 241: Punishment of obtaining by deception or causing loss by deception
Every one who is guilty of obtaining by deception or causing loss by deception is liable as follows:
(a) if the loss caused or the value of what is obtained or sought to be obtained exceeds $1,000, to imprisonment for a term not exceeding 7 years:
(b) if the loss caused or the value of what is obtained or sought to be obtained exceeds $500 but does not exceed $1,000, to imprisonment for a term not exceeding 1 year:
(c) if the loss caused or the value of what is obtained or sought to be obtained does not exceed $500, to imprisonment for a term not exceeding 3 months.

Role of the 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.

The SFO operates three investigative teams:

• Fraud Detection & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.

The 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..."

The SFO's Statement of Intent 2011-14 sets out the SFO's three year strategic goals and performance standards. It is available online at: www.sfo.govt.nz