SFO seek to appeal Capital + Merchant verdicts

Published

SFO seek to appeal Capital + Merchant verdicts

The Serious Fraud Office will seek to appeal not guilty verdicts against Neal Medhurst Nicholls and Wayne Leslie Douglas.
 
Nicholls and Douglas were found not guilty at a trial in July on charges related to the non-disclosure of alleged related party lending totaling approximately $14.4 million, involving a Palmerston North development known as ‘The Hub Properties'.

However, the pair, together with Owen Francis Tallentire, were found guilty following a second trial on separate charges involving fraudulent transactions valued at approximately $28 million that occurred between 2004 and 2006.

SFO Chief Executive, Mr Adam Feeley said that the decision to appeal had not been taken lightly.

"There are important points of law that have significance not only to this case, but also the ongoing finance company prosecutions." said Mr Feeley.

Nicholls and Douglas will appear for sentencing in relation to the second trial on 31 August 2012.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Capital + Merchant Finance Limited (Capital + Merchant) was incorporated on 18 January 2002. It operated as a finance company providing financial accommodation and mortgage facilities for commercial and residential property development. Funds for lending were sourced primarily from the issue of securities to the public in the form of debenture stock and convertible capital notes.

Neal Medhurst Nicholls and Wayne Leslie Douglas were the founding directors and beneficial owners of Capital + Merchant. Owen Francis Tallentire was appointed Chief Executive of the company. Mr Tallentire was also later appointed a Director. Mr Nicholls was a Director until the company was placed in receivership in November 2007. Mr Douglas resigned as a Director in February 2007.

Capital + Merchant were placed into liquidation under the control of the Official Assignee in December 2009.

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 Annual Report 2011 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz