Guilty plea in relation to $2million SFO fraud charges

Published

Guilty plea in relation to $2million SFO fraud charges

Ian Victor Petersen, a 61 year old man from Waikanae, pleaded guilty today in the Porirua District Court to 13 counts of theft by a person required to account, 19 counts of theft by person in special relationship, one count of using a document with intent to defraud and one count of dishonestly using a document, laid by the Serious Fraud Office (SFO).
 
The charges relate to the misuse of client funds which were paid to Mr Petersen by various clients for specific purposes, including the payment of tax, various investments and forestry management fees, and the use of certain documents for the purpose of reducing a tax liability. 

The SFO says that Mr Petersen, while acting as an accountant, tax agent and investment advisor, obtained a total of $2,000,292.97 relating to 17 clients over a 13 year period. 

Chief Executive, Adam Feeley, said the result was the continuation of a very busy and successful year for the SFO and the result of interagency cooperation with the Inland Revenue and the NZ Police.

“In the first five months of this financial year we have commenced 15 new investigations; laid almost 400 charges in 9 cases; and secured 9 convictions or guilty pleas including this matter.”

Mr Feeley said that further cases would be concluded prior to the end of the year.

“Having reduced our investigation times by 70% in the past 18 months, the public can reasonably expect to see more timely justice in the case of white collar crimes.”

A number of Mr Petersen’s clients are still in discussions with Inland Revenue regarding their outstanding tax liabilities which arose as a result of Mr Petersen failing to pass on funds given to him by his clients for the purpose of making tax payments on their behalf. 

Mr Petersen was remanded in custody for sentencing on 4 February 2011.

For further information

Nick Paterson
General Manager, Fraud and Corruption
Serious Fraud Office
Phone: 021 675647

Note to editors

Case summary

Background

Ian Victor Petersen acted as an accountant, tax agent and investment advisor for a number of clients between 1993 and 2009.  Mr Petersen operated under the name Sorrel Financial Services offering accounting and financial services to members of the public.

Mr Petersen held himself out, on occasion, to be a member of the New Zealand Institute of Chartered Accountants (NZICA) and holding a Bachelor of Business Studies.  Enquiries have confirmed that Mr Petersen does not hold a Bachelor of Business Studies nor is he a member of the NZICA.

Payment of Tax/ACC/Forestry Management fees

Between April 2000 and June 2009, Mr Petersen obtained a total of $986,737.30 from 15 clients for the stated purpose of making tax, ACC and/or Forestry Management fees on behalf of the clients.  Financial analysis shows that Mr Petersen either made minimal or no payments to the IRD, ACC, or Forestry Management companies on behalf of his clients.

Tax Write-Off

In 2001, Mr Petersen, acting as tax agent for a client, filed an IR315 Business Cessation form with the IRD for that client.  The IRD wrote to Mr Petersen’s client in August 2002 via Mr Petersen stating that the outstanding tax liability was $133,629.50.  The cause of the tax liability was Mr Petersen’s failure to properly act as a tax agent as instructed. 

By November 2006 Mr Petersen’s client’s outstanding tax debt totaled $308,749.86.  The IRD accepted a proposal advanced by Mr Petersen to pay $120,150.00 in full and final settlement of the debt, the balance of $188,599.86 being written off. 

Tax Refunds

Between October 2001 and June 2008 Mr Petersen received $74,667.45 from the IRD as tax refunds for three clients where he acted as their tax agent.  The clients either did not know they were receiving a refund or had instructed Mr Petersen to use the refund to settle an ACC debt.  In all three cases, the refunds were either not passed on to the client or was not used to settle the ACC debt as instructed.

Investments

Two clients paid Mr Petersen a total of $603,302.36 for the purpose of investing the funds on their behalf.  Both clients believed they were to receive a return of between 9.4% and 10.0% per annum.  Both clients received regular monthly “interest” payments equating approximately to the amount of their supposed investment.  It appears on analysis that the “interest” payments were made by either using these particular clients’ own funds, or fraudulent use of other clients’ funds.  Financial analysis shows that no investments were made on behalf of these clients by Mr Petersen.

Property Investment

Another client paid Mr Petersen $75,000.00 for the purpose of purchasing an investment property in May 2006.  In February 2008 Mr Petersen advised his client in February 2008 that a house had been purchased in Levin and tenants installed.

Land Information New Zealand searches confirm that no property had been purchased in the name of Mr Petersen’s client during the relevant time period.  Financial analysis shows that the $75,000.00 was spent on travel, cash withdrawals, motor vehicle purchases, personal debt, entertainment expenses and “interest” payments.

Forestry Management

Between April 2002 and October 2008 Mr Petersen received funds totaling $71,986.00 from two clients for the purpose of making fee payments to a forestry management company.

Mr Petersen advised the clients the amounts required, however, the amounts advised were far in excess of the true amounts, of which Mr Petersen did make some payments.  On occasion, Mr Petersen did not pass on correspondence from the forestry management company to the clients which included correspondence advising that particular invoices were not required to be paid as pruning plans had been abandoned.

The role of the Serious Fraud Office

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