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The Serious Fraud Office (SFO) today said it was pleased that John Gray, the former Accountant for National Finance 2000 Limited (“National Finance”) had pleaded guilty in the District Court in Auckland to theft by a person in a special relationship, whic

National Finance defendant pleads guilty to SFO charges

The Serious Fraud Office (SFO) today said it was pleased that John Gray, the former Accountant for National Finance 2000 Limited (“National Finance”) had pleaded guilty in the District Court in Auckland to theft by a person in a special relationship, which related to misuse of National Finance funds in breach of its Trust Deed requirements.

Gray also pled guilty to a charge of False Accounting whereby he concealed the true recipient of funds by creating a false document.   

SFO Chief Executive, Adam Feeley, said “This is a very satisfying result, and the outcome of a very comprehensive investigation.”

Mr Feeley said that in the past 12 months the SFO had significantly shifted its priorities to ensure there were speedier outcomes on the corporate failures which had generated the most public concern. “Results such as this demonstrate that there are serious consequences for breaching the law and help ensure the investing public can have greater confidence in the integrity of our financial markets.”

Mr Feeley said that the SFO were currently investigating 19 cases of suspected serious fraud involving an estimated $630M, and prosecuting a further 32 cases involving and estimated $265M.

“There are enormous challenges with cases of this scale and complexity. However, our strategy of focusing on fewer, but larger cases which have had greater public impact, and achieving faster results, is beginning to pay dividends.”

Former National Finance director, Trevor Ludlow, is also charged by the SFO with offences relating to the misuse of funds.  A trial date has yet to be set.

For further information

Adam Feeley
Chief Executive
Serious Fraud Office
Phone 021 333 539

Notes to editors

Background to National Finance

National Finance 2000 Limited was placed into receivership on 10 May 2006.  It had operated in the financial sector since 1999, primarily in the motor vehicle finance business.  It operated in connection with the Payless Cars group.  On its receivership the company owed secured depositors of approximately $25M.  Over 2,000 depositors invested in the company, and have received less than 50% of their original investment.  Unsecured creditors were owed over $3M and have received no return.  The total loss is approximately $14M. 

The role of the Serious Fraud Office

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act 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.
Section 260: false accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—
(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.