The first of two Serious Fraud Office cases against former directors of the failed Capital+Merchant Finance is due to begin today in the High Court at Auckland.
Capital+Merchant offered property and investment loans and went into receivership in November 2007 owing $167 million to around 7500 investors. The SFO has laid two sets of charges against Capital+Merchant directors following the collapse.
Former directors Neal Medhurst Nicholls and Wayne Leslie Douglas face criminal charges for theft by a person in a special relationship and the publishing of false statements. Some of the charges carry a maximum penalty of 10 years' jail.
Today's case concerns loans of about $14.5 million made to three companies that converted two Palmerston North office blocks into student accommodation, a project called "the Hub".
The second set of charges were laid in July and involve Nicholls, Douglas and former director Owen Francis Tallentire.
They relate to transactions worth $28 million made between 2004 and 2006. These transactions allegedly gave trusts controlled by the three defendants $15.9 million in benefits.
A further Financial Markets Authority case is pending against Nicholls, Tallentire, Douglas and fellow directors Colin Ryan and Robert Sutherland which alleges the company's offer documents and advertisements misled investors. This trial is expected to start in February.