SFO welcomes custodial sentence for National Finance defendant

Published

SFO welcomes custodial sentence for National Finance defendant

John Gray, the former Accountant for National Finance 2000 Limited (National Finance) was today sentenced to a term of 18 months imprisonment.  Mr Gray has indicated that he will appeal the decision not to grant him home detention in relation to his sentence, and remains on bail pending determination of that matter.  

Mr Grey had earlier plead guilty in the District Court in Auckland to theft by a person in a special relationship, which related to misuse of National Finance funds in breach of its Trust Deed requirements. 

Gray also pled guilty to a charge of False Accounting whereby he concealed the true recipient of funds by creating a false document.
 
SFO Chief Executive, Adam Feeley, said “This is a very significant result. The delivery of a custodial sentence sends a clear message as to the Courts view on serious white collar crime.”

Mr Feeley said that the decision would have important ramifications for the additional finance company cases under investigation and prosecution by the SFO.

“Results like this demonstrate that the seriousness of white collar crime. It will be of great comfort to investors, and sends a positive message to the investing public about the integrity of our financial markets, and the consequences for breaching the law.”

Former National Finance director, Trevor Ludlow, is also charged by the SFO with offences relating to the misuse of funds. 

He is yet to enter a plea in relation to the charges and a trial date has yet to be set.

For further information

Adam Feeley
Chief Executive
Serious Fraud Office
Phone 021 333 539

Note to editors

Background to National Finance

National Finance 2000 Limited traded as a finance company accepting deposits from the public and investing those deposits mainly in motor vehicle loans, originated through the related Payless Cars group of companies.  Trevor Alan Ludlow was sole shareholder and a director of the company.  John Gray was employed by the company as an accountant.

National Finance was placed into receivership on 9th May 2006 owing investors approximately $21 million. 

The SFO investigation was commenced on 30th June 2006.

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

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.