Two jailed Capital+Merchant directors serving the longest jail terms given to failed finance company bosses to date have had their sentences extended this morning.

Wayne Douglas and Neal Nicholls, the founding directors and beneficial owners of Capital+Merchant Finance, were found guilty in July last year of three charges of theft by a person in a special relationship.

In a case brought by the Serious Fraud Office, both men were each jailed for seven and a half years - the lengthiest sentence handed out in these types of cases so far.

In separate proceedings brought by the Financial Markets Authority, Douglas and Nicholls pleaded guilty earlier this year to Securities Act charges concerning misstatements in Capital + Merchant offer documents.


Nicholls, 57, admitted two Securities Act charges for signing a registered prospectus in December 2006 that included an untrue statement and for a prospectus first distributed in September 2007.

He also pleaded to another charge of distributing an advertisement that included an untrue statement.

Douglas, 59 admitted two charges relating to statements in a prospectus and an advertisement that included an untrue statement.

The men's lawyer Bruce Gray QC said while the pair's offending was at the "top end", the gravity of it had already been recognised.

But in sentencing this morning for the FMA case, Justice Geoffrey Venning said he could not accept the submission that the directors should receive concurrent sentences.

The judge said if the men had been before the court on both sets of charges at the same time, they would have got more than the 7.5 years they originally received.

Referring to impact statements from elderly C+M investors, Justice Venning recorded that some lost their retirement savings, felt betrayed and that the stress of the loss had exacerbated existing medical conditions.

These victims would be affected by the directors' offending for the rest of their lives, he said.

Justice Venning ordered Nicholls should serve another 12 months in jail, bringing his total sentence to 8 and a half years.

In Douglas' case, the judge sentenced him to another 8 months, bringing the total sentence to 8 years 2 months in jail.

Capital+Merchant collapsed in 2007 owing $167 million to about 7500 investors. No funds are expected to be recovered.

Former C +M director and chief executive Owen Tallentire sentenced to five years in jail in the SFO case and had an extra year added to his sentence on the FMA charges, which he also pleaded to.