Accused property developer Paul Bublitz has denied the existence of a conspiracy in a plan to purchase finance companies and his lawyer says the case was one of "commercial daring, not fraud". Bublitz took "top-shelf advice" and respected regulatory rules, his lawyer Rachael Reed told the High Court at Auckland this morning. "The issues in this case commence with the Crown's miscategorisation of commercial conduct as a conspiracy," she told Justice Mark Woolford. Bublitz and his co-accused are accused of stealing or permitting the theft of capital from two now-failed finance companies - Viaduct Capital and Mutual Finance. These companies went into receivership in 2010, owing investors a total of $17 million. Bublitz - with co-defendants Bruce McKay, Richard Blackwood and Lance Morrison - on are trial in Auckland and have pleaded not guilty to the charges they face. Bublitz, McKay and Blackwood have denied charges of theft by a person in a special relationship, making false statements in a prospectus and making false statements to a trustee. Morrison, Bublitz's long-time accountant, has denied charges of theft by a person in a special relationship and making false statements in a prospectus. McKay and Blackwood served as directors of Viaduct Capital while Morrison and Bublitz were on Mutual's board. Crown prosecutor David Johnstone alleged yesterday morning that Bublitz bought and used the two finance companies to support his property investments. The other defendants in the case allegedly helped him, the Crown lawyer told Justice Mark Woolford.
The fact that Paul Bublitz put his own assets in Viaduct with little return and lost some $5-6 million does show that he did not use those companies to benefit himself or his company.The men deliberately misled investors and potential investors of Viaduct and Mutual by failing to disclose a series of related party transactions entered into for their benefit rather than the benefit of the finance company, Johnstone alleged. Reed, in an opening statement for her client, denied the existence of any conspiracy and said Viaduct and Mutual were examples of "proper commercial evolution at play in a difficult financial market".
The Crown misconstrues the natural progression of a commercial deal and alteration of the resulting entity's structure to meet regulatory requirements as being nefarious, when it is in fact evidence of the parties' commitment to abide by and respect the regulatory regime.Reed discussed how Bublitz, "a self-made man" and the late Nick Wevers, began working together in 2008 to purchase a Crown-guaranteed finance company. They developed a strategy and sought professional advice from BDO and DLA Philips Fox on related party issues and disclosures. It was originally planned that Bublitz's company, Hunter Capital, would take an equity stake in Viaduct in the planned purchase but the landscape changed and this did not occur.
At all material times [he] held an honest belief that what he did was lawful."The Crown's misinterpretation of the change in structure infects its characterisation of the acquisition and purchase of loan assets by Viaduct. The Crown alleges that the very steps the parties took to ensure they did not breach trust deed and Crown guarantee requirements form the basis of a conspiracy to conceal Mr Bublitz's position. But there was no conspiracy to do so," she told the court. Bublitz was not a part of key management at Viaduct nor was Hunter Capital a related party, Reed said. McKay's lawyer, Greg Bradford, said he client was not party to any conspiracy.