SFO charge gold trader

SFO charge gold trader

The Serious Fraud Office (SFO) has today laid criminal charges against Kairuaiti Tangata Oropai Robert Kairua (52), the director of Grace Holdings NZ Limited (Grace NZ).

Mr Kairua faces 29 Crimes Act charges of theft by person in special relationship and false statement by promoter.

Trading under the name BullionBuyer, the core business of Grace NZ was the provision of gold and other precious metal leverage trading to investors.

The SFO charges allege that:

• False statements were made regarding the company and Mr Kairua to solicit investors;
• Investors' funds were applied for purposes other than the investments promoted. The SFO allege that Mr Kairua misapplied a total of over NZ$400,000 equivalent; and funds were invested contrary to investor requirements.
• Investors were provided with false statements that failed to report the true position of their investments.

Information obtained by the SFO showed that at the time of its collapse, Grace NZ claimed to hold investor funds of approximately US$3.3 million.

Acting Chief Executive of the SFO, Simon McArley noted that this was the latest in a string of cases involving investment advisors and the application and reporting of the investment funds they received.

"While poor investment decisions or performances are not a crime, investment advisors and managers must be truthful with investors as to the purpose to which funds will be applied and the performance of those investments," he said.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Grace Holdings NZ Limited (Grace NZ) traded under the name BullionBuyer. BullionBuyer offered a precious metals trading service to New Zealand investors.

From October 2010, Mr Kairua was in partnership with another individual (an American trader) at Grace NZ, the American trader left Grace NZ in September 2011. Mr Kairua became a director of Grace NZ in September 2011 and took over the role as trader.

Grace NZ went into liquidation in February 2012.

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.

Section 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