Former National Finance Director convicted
Former National Finance Director convicted following SFO investigation
Trevor Allan Ludlow (52), the former director of National Finance 2000 Limited (National Finance), has been convicted in the Auckland District Court of seven charges relating to theft by a person in a special relationship and false accounting, following an investigation by the Serious Fraud Office (SFO).
Mr Ludlow was charged under sections 220 and 260 of the Crimes Act. He had earlier pleaded guilty to one count of theft, and was found guilty of the remaining six charges by Judge Bouchier last night.
Mr Ludlow, who represented himself throughout the trial, was found to have breached the terms of the Trust Deed under which National Finance operated, defrauding investors of an estimated $3.5 million. This included approximately $2.7 million of unauthorised or unsecured advances made to his Payless Car group of companies; as well as undisclosed related party transactions totalling over $800,000 to an audio company; a property in Fiji; and land purchased for another company he owned.
SFO Acting Director, Simon McArley, said Trust Deeds play an essential role in regulating the finance industry and that apparent breaches of these requirements was a common element across a number of companies being investigated by the SFO.
“This is a positive conclusion to what has been a complex investigation. The SFO is committed to rebuilding investor confidence in New Zealand’s finance industry and this result demonstrates that those guilty of misapplying investor funds will be held to account,” he said.
In November 2010, John Gray (42), the former accountant for National Finance, pleaded guilty to theft by a person in a special relationship and one charge of false accounting. Mr Gray was sentenced to a term of 18 months imprisonment, later reduced after an appeal to nine months home detention.
Mr Ludlow is expected to next appear in court on 12th August.
For further information
Serious Fraud Office
Phone: 021 675 998
Note to editors
Background to Investigation
National Finance 2000 Limited, traded as a finance company, accepting deposits from the public and investing those deposits mainly in motor vehicle loans, through motor vehicle dealers including the related Payless Cars group of companies. Trevor Allan Ludlow was the sole shareholder and a director of the company. John Gray was employed by the company as an accountant.
National Finance operated under the terms of a Trust Deed, as required under the Securities Act and Regulations. Such Trust Deeds are common to all finance companies. The Trust Deed imposed restrictions on what investors’ money could be used for, to whom it could be lent, and how much could be lent to parties related to the directors, such as spouses and relatives.
National Finance was placed into receivership on 9 May 2006 owing investors approximately $21 million.
After considering a complaint received from the Receiver, PricewaterhouseCoopers, the Director determined that an investigation into the affairs the National Finance 2000 Limited may disclose serious or complex fraud. An investigation under Part One of the Serious Fraud Office Act was commenced on 30 June 2006. This was elevated to a Part Two investigation on 08 May 2007.
Charges were laid against Trevor Allan Ludlow and John Gray in October 2009.
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 260: False Accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—
(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.
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