Rural accountant sentenced on SFO charges

Rural accountant sentenced on SFO charges

Gary Malcolm Hobbs (45) has been sentenced in the Hamilton District Court today to three years and seven months' imprisonment.

Mr Hobbs was a former director of Hobbs Rose Limited, an accountancy firm based in Te Awamutu. In December last year, a jury found him guilty of 14 criminal charges, laid by the Serious Fraud Office (SFO), of theft by a person in a special relationship.

The charges related to funds totalling over $320,000 which Mr Hobbs stole from his clients' bank accounts, using those funds in part for the benefit of his own accountancy firm and for another company of which Mr Hobbs was also a director, South American Tobacco Group NZ Limited.

Acting Chief Executive for the SFO, Simon McArley said that whilst this case was at the lower dollar end of SFO prosecutions, it was important to hold to account people in trusted positions. This investigation and successful prosecution sends a message about maintaining professional and honest practices.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

In September 2010, the SFO received a referral relating to complaints made by clients of Hobbs Rose Limited alleging that Gary Malcolm Hobbs had misappropriated funds they had invested with South American Tobacco Group NZ Limited. Some clients also alleged that Mr Hobbs had withdrawn funds from their bank accounts without their knowledge or authorisation.

Mr Hobbs was a qualified chartered accountant and a member of the New Zealand Institute of Chartered Accountants (NZICA). Following an NZICA investigation into Hobbs Rose and allegations of client funds being mismanaged, Mr Hobbs' NZICA membership was cancelled in 2010 and his name removed permanently from the NZICA register of members.

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.

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:

• Evaluation & 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 Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz