Guilty plea in Belgrave Finance case
Guilty plea in Belgrave Finance case
Belgrave Finance Limited Director, Shane Joseph Buckley, today pleaded guilty in the Auckland District Court to charges arising out of a Serious Fraud Office (SFO) investigation into the collapse of Belgrave.
Buckley pleaded guilty to 19 charges of theft by a person in a special relationship, and four charges of false statement by promoter under the Crimes Act. The charges carry a maximum penalty of seven years and 10 years, respectively.
SFO Chief Executive, Adam Feeley, said the outcome continued the good headway towards concluding the finance company investigations.
"We have now secured convictions in respect of four of the nine finance companies we have investigated and charged. Other trials are currently under way or are imminent. Those responsible for serious crimes are progressively being held to account."
Earlier this year, former Belgrave Finance Director, Stephen Charles Smith (43), and an associate, Raymond Tasman Schofield (49), were committed for trial on similar charges with a date yet to be set.
The SFO laid a total of 60 charges against the three, alleging the defendants misrepresented to investors how their investments in Belgrave Finance would be used, and subsequently used those funds in an unauthorised manner.
The charges relate to more than $18 million of loans made by Belgrave Finance to various entities allegedly related to Mr Schofield and the company, between June 2005 and March 2008.
The Financial Markets Authority (FMA) has also laid charges against the three under the Securities Act and Companies Act, and is prosecuting those charges jointly with the SFO.
Mr Feeley said the SFO had been working closely with the FMA and both agencies would continue to share information and resources.
"We have a number of major cases coming to trial this year and, when coupled with ongoing investigations, it is a matter of commonsense to ensure that we maximise the skills and resources available across the public sector."
Belgrave Finance was placed into receivership in May 2008, owing an estimated 1,000 investors approximately $22 million.
The Securities Commission (now FMA) made initial investigations into the company's collapse before referring it to the SFO in June 2010.
Mr Buckley was been remanded at large to next appear for sentencing on 30 August.
For further information
Serious Fraud Office
027 705 4550
Note to editors
Background to investigation
Belgrave Finance Limited was incorporated in September 2000.
Belgrave Finance provided financial accommodation and mortgage facilities for commercial and residential property developments. Funds for lending were sourced primarily from the issue of securities to the public in the form of debenture stock and convertible capital notes.
Belgrave Finance was placed into receivership in on 28 May 2008 owing around $22 million to approximately 1,000 investors. The company was placed into liquidation in April 2010 and at the time, was the 20th finance company to collapse in two years.
Following the collapse of Belgrave, the (then) Securities Commission made initial investigations into the company before referring the matter to the SFO in June 2010. The Director determined that an investigation into the affairs of Belgrave Finance may disclose serious or complex fraud, and the SFO commenced an investigation under Part II of the Serious Fraud Office Act in July 2010.
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 223: Punishment of theft
Every one who commits theft is liable as follows:
(a) in the case of any offence against section 220, to imprisonment for a term not exceeding 7 years; or
(b) if the value of the property stolen exceeds $1,000, to imprisonment for a term not exceeding 7 years; or
(c) if the value of the property stolen exceeds $500 but does not exceed $1,000, to imprisonment for a term not exceeding 1 year; or
(d) if the value of the property stolen does not exceed $500, to imprisonment for a term not exceeding 3 months.
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.
Chronological summary of SFO finance company investigations
1) Waipawa Finance - Charges laid and conviction secured.
2) Clegg Finance - Closed without charging. Prior conviction secured by Ministry of Economic Development.
3) National Finance - Charges laid and conviction secured against Trevor Ludlow and John Gray, further charges to be tried by the FMA.
4) Bridgecorp - Charges laid, trial pending 24 September 2012.
5) Capital + Merchant Finance (No.1) - Trial concluded and Judge's decision reserved.
6) Five Star Finance - Charges laid and convictions secured against three directors, further charges to be tried in June 2012 against a forth person.
7) Nathans Finance Limited - Closed without charging. Prosecution completed by FMA.
8) Kiwi Finance - Closed and referred to FMA.
9) Mutual Finance - Closed and referred to FMA.
10) Viaduct Capital Limited - Closed and referred to FMA.
11) Capital + Merchant (No.2) - Further charges laid, trial continuing.
12) Belgrave Finance - Charges laid, trial date to be set down.
13) Rockforte Finance - Charges laid against three former directors, trial date yet to be set down.
14) Dominion Finance - Charges laid, trial date Feb 2013.
15) South Canterbury Finance - Charges laid, trial date yet to be set down.
16) Hanover Finance - Under investigation.
17) NZF Group - Under investigation.
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 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 Statement of Intent 2011-2014 sets out the SFO's three year strategic goals and performance standards. It is available online at: www.sfo.govt.nz