Second guilty plea in Five Star Finance case

Second guilty plea in Five Star Finance case

A second Five Star Finance defendant has plead guilty to charges laid by the Serious Fraud Office (SFO). 

Nicholas George Kirk, a former director of Five Star Consumer Finance Limited (Five Star) today pleaded guilty 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. 

Marcus McDonald, also a director of the company, plead guilty to the same charges in late October.  

SFO Chief Executive, Adam Feeley, said “This is a great result for us.  SFO is making real progress in relation to the finance company collapses with a number of the Office’s major investigations being successfully concluded.”

Mr Feeley said that further decisions would be reached prior to Christmas. 

“It has been a year of hard work at SFO which has steadily gained momentum and is now producing important results.  Along with the Securities Commission and the Companies Office, we are seeing the benefits of an effective law enforcement response to the financial sector fraud of recent years.  With these results comes greater public and investor confidence.”
 
Former Five Star director Anthony Walpole Bowden and Five Star manager Neill Alan Williams, are also charged by the SFO with offences relating to the misuse of funds. 

These defendants are yet to be committed for trial.

Mr Kirk was remanded to appear for sentencing on the 21 December 2010, with Mr McDonald and in conjunction with the sentencing of him, Mr McDonald  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.   

Role of SFO

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 three investigative teams:

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

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 strategic goals and performance standards.  It is available online at: www.sfo.govt.nz(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.