SFO lays 110 charges in loan fraud case

SFO lays 110 charges in loan fraud case

The Serious Fraud Office (SFO) announced today that it has laid a combined total of 110 charges against seven people alleged to have participated in a scheme to defraud  Dunedin-based vehicle finance company, MTF.  All seven of the accused appeared in the Auckland District Court today.

Mark James Whelan (38), formerly an Auckland-based retail dealer for MTF and later a franchisee of the company, is facing 25 individual charges and 41 joint charges of obtaining by deception under the Crimes Act.

It is alleged that while in those positions and between July 2005 and February 2009, Mr Whelan wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. He is accused of obtaining loans totalling $4.9 million and using those funds for personal gain, including the purchase of land, servicing of personal debts, and investing in a futures trading scheme.

SFO Chief Executive Adam Feeley says: “These individuals have allegedly colluded together to defraud MTF, to the detriment of the business. Where we see instances such as this, in which any party is suspected of knowingly taking advantage of their role or association with a company, the SFO will take decisive action to ensure that those involved are held to account.”

Six other individuals are facing joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan’s scheme. They are: Richard Michael Barnett (43), 16 charges; Jonathan Earle Chiswell (35), three charges; Clark Antony Lewis (35), six charges; Brett Royce Donaldson (49), seven charges; Stewart Travis Saunders (42), one charge; and Karl Sean Toussaint (40), five charges. Mr Chiswell, Mr Lewis and Mr Whelan are also facing a further three joint charges.

The SFO opened its investigation into Mr Whelan in September 2010.

For further information

Sarah Knowles
Serious Fraud Office
Phone: 021 675 998

Note to editors

Case summary

From March 2005 Mark James Whelan was a Retail Dealer for Motor Trade Finances Ltd (‘MTF’), and became a franchisee of the company in January 2008.  While Mr Whelan was in those positions he is accused of writing a number of loans in the names of family, friends and associates using various non-existent assets as security.  In early 2009 these loans went into default and MTF were unable to locate those assets for repossession.

A complaint was submitted to the SFO on 17 September 2010.   

After considering the complaint the Director determined that there was reason to suspect that an offence involving serious or complex fraud may have been committed.  An investigation under Part I of the Serious Fraud Office Act 1990 (“Act”) was commenced in September 2010.  This was elevated to a Part II investigation on 15 November 2010.

Crimes Act offences

Section 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.

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:

• 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 2011-14 sets out the SFO’s three year strategic goals and performance standards.  It is available online at: www.sfo.govt.nz(external link)