Hamish Fletcher reports on the court cases still to come following the collapse of a string of money-lenders
Former Bridgecorp directors Rod Petricevic and Rob Roest were found guilty last week of misleading investors and are due to be sentenced on April 26 and May 18 respectively.
However, the pair are due to reappear together later this year to face criminal charges brought by the Serious Fraud Office. These are due to go to trial in September in a session expected to take three weeks.
The SFO alleges Petricevic used Bridgecorp money to pay $1.2 million to a sham business run by beauty-product distributor Janita Wright.
It alleges Wright operated ABb Group, which invoiced Bridgecorp for marketing consultancy work, database management, operation of an after-hours call centre and other business expenses. But the work was allegedly either not done or the sums invoiced were out of proportion to the quality and quantity of the services provided and to Wright's qualifications, skills and experience.
Announcing the charges in May 2010, the SFO said the business was "in essence a sham to enable Mr Petricevic to make alleged fraudulent payments from Bridgecorp".
Wright is expected to be called as a witness in the trial.
Petricevic and Roest have been charged over the purchase of the luxury vessel Medici. It was allegedly bought and operating costs paid for with $1.8 million in Bridgecorp money but was owned by Poseidon, a firm Petricevic directed and owned. The charges involve a total of $5.2 million.
Capital+Merchant Finance offered property and investment loans and went into receivership in November 2007 owing $167 million to around 7500 investors. They are unlikely to recover any of their losses.
The SFO has laid two sets of charges against Capital+Merchant directors. Six criminal charges were laid in December 2010 against directors Neal Medhurst Nicholls and Wayne Leslie Douglas concerning loans of about $14.5 million made to three companies that converted two Palmerston North office blocks into student accommodation. The duo's trial is expected to start later this month.
The SFO last July laid a further 11 charges under the Crimes Act against Nicholls, Douglas and former director Owen Francis Tallentire relating to transactions worth $28 million made between 2004 and 2006. It is alleged these transactions breached the company's trust deed. No trial date has been set for these charges.
There is also a Financial Markets Authority case pending against Nicholls, Tallentire, Douglas and fellow directors Colin Ryan and Robert Sutherland. The Crown alleges the company's offer documents and advertisements misled investors. The alleged breaches of the Securities Act carry a maximum penalty of five years' imprisonment or fines of up to $300,000. This trial is expected to start in February 2013.
Dominion Finance Group and North South Finance were operating subsidiaries of the NZX-listed Dominion Finance Holdings. Both companies offered property and commercial loans. DFG went into receivership in September 2008 and NSF went into receivership in July 2010.
DFH entered voluntary administration in October 2008 and was placed into liquidation in February 2009. In total, it is estimated the group owes creditors $400 million. The FMA alleges six former Dominion directors - Terence and Ann Butler, Richard Bettle, Vance Arkinstall, Paul Forsyth and Robert Barry Whale - misled investors by misrepresenting investment risks and made false statements in the group's registered prospectuses. This trial is set down for June 2013. As well as the FMA allegations, the SFO has laid Crimes Act charges of theft by a person in a special relationship against Butler and Whale.
Former Dominion Finance chief executive Paul William Cropp and an accused with name suppression also face charges in the SFO case, which is due to go to trial in February 2013.
The SFO alleges that between 2004 and 2008, they participated in unauthorised related party lending totalling over $20 million in breach of trust deeds.
It was revealed last month that the Butlers are trying to sell their Remuera home, which has a rateable value of $6.8 million.
Five Star Finance
Former Five Star director Anthony Walpole Bowden faces nine criminal charges brought by the SFO, including two of theft by a person in a special relationship.
His associate Neill Williams, who the Crown argues was a de facto Five Star director, also faces criminal charges.
The pair have pleaded not guilty and their trial, expected to last up to four weeks, is due to start in the High Court at Auckland in June.
Five Star marketed itself as a low or modest-risk finance entity which made small consumer loans for household purchases such as fridges.
Instead, it was allegedly investing large sums in complex commercial and related-party loans totalling more than $50 million.
In 2007, Five Star Consumer Finance collapsed with losses of $42 million. Five Star Finance and Five Star Debenture Nominee owe a further $43 million.
Bowden's fellow Five Star directors - Marcus MacDonald and Nicholas Kirk - pleaded guilty in 2010 in the Auckland District Court to charges brought by the SFO of theft by a person in a special relationship. The pair also pleaded guilty to Securities Act charges. Kirk and MacDonald were sentenced to more than two years in jail in late 2010 but have since been released on parole.
Bowden pleaded guilty to Securities Act charges and was sentenced to nine months' home detention.
Williams originally pleaded guilty to the charges but made two attempts to reverse it.
The application to vacate the guilty plea was rejected for a second time last month by Judge David Harvey.
Williams is now due to be sentenced following a disputed facts hearing.
The FMA has filed civil action against Mark Hotchin, Eric Watson, Greg Muir, Bruce Gordon, Sir Tipene O'Regan and Dennis Broit for allegedly misleading or untrue statements made in Hanover offer documents.
The FMA is seeking compensation for investors who put $35 million into Hanover between December 2007 and July 22, 2008.
The market watchdog is also seeking penalty orders against the defendants and if the claim is successful, the former directors and promoters could each face fines of up to $500,000.
The civil proceedings relate to statements made in Hanover's December 2007 prospectus, advertising and a March 2008 certificate extending the life of the prospectus.
FMA chief executive Sean Hughes said late last year that Hanover's "advertising and promotional material painted a far rosier picture of the true state of affairs than was the case".
About 16,000 people with investments totalling more than $500 million have lost most of their money following the failure of Hanover and related companies, and the sale of assets to Allied Farmers.
No trial date has been set and the FMA indicates it may not be until 2013 or 2014.
Belgrave Finance offered property loans and went into receivership in May 2008, owing around 1000 investors $20 million. Receivers anticipate a recovery of around 21c in the dollar. The FMA alleged two Belgrave directors - Stephen Charles Smith and Shane Joseph Buckley - and associate Raymond Tasman Schofield breached the Securities Act by making untrue statements in the company's offer documents. Charges were filed last year and carry a maximum of five years' imprisonment or fines up to $300,000. The SFO also laid 60 criminal charges against the three for allegedly misrepresenting how funds would be used. No trial date has been set.