Sentenced for exploiting relationships with investors

Sentenced for exploiting relationships with investors

Christopher John Collecutt (57) has been sentenced to two years, two months and three weeks' imprisonment in the Auckland District Court following a Serious Fraud Office (SFO) investigation.

Mr Collecutt, a foreign exchange (forex) trader operating under the name CFX Trading, pleaded guilty in August to three charges under the Crimes Act, including theft by person in special relationship, obtaining by deception or causing loss by deception, and false statement by promoter.

A total of 59 investors, mostly family and friends, lost approximately $1.5 million through investing with Mr Collecutt.

Mr Collecutt traded foreign currency on behalf of investors located both in New Zealand and overseas, and had been forex trading since around 2007.

Acting Chief Executive for the SFO, Simon McArley, said "Over the past 18 to 24 months, the SFO has investigated more than six of these Ponzi-type schemes, where investment advisors appear to have failed to invest funds as promised and produced false statements to disguise losses or missing money. This is the second sentencing for this type of offence this week. It should serve as a continuing reminder to approach investment decisions with extreme care. Check facts and figures, be suspicious of out-of-the-ordinary returns, get things in writing and be wary of investments based on personal relationships rather than strong verifiable facts," he said.

The investigation into Mr Collecutt's activities commenced in August 2011 and charges were laid in May this year.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Mr Collecutt had been forex trading (from his home) for himself and his wife since 2004, and on behalf of other investors since 2007. Mr Collecutt predominantly traded in US Dollars, Australian Dollars, and Japanese Yen.

Mr Collecutt traded through the C & J Collecutt Partnership under the name CFX Trading.

From late 2008 onwards, Mr Collecutt created false weekly investment reports that were emailed to investors, calculated commission income on false profits, and used investor funds for his personal benefit.

Crimes Act offences

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.

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.

242 False statement by promoter, etc
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent-
(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978; or
(b) to deceive or cause loss to any person, whether ascertained or not; or
(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.

(2) In this section, false statement means any statement in respect of which the person making or publishing the statement-
(a) knows the statement is false in a material particular; or
(b) is reckless as to the whether the statement is false in a material particular

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