National Finance director Carol Anne Braithwaite has been sentenced to ten months' home detention at a waterfront Devonport property for misleading investors of the failed firm.
The 53-year-old was convicted in July on one charge of making untrue statements in a prospectus of National Finance 2000, which collapsed in 2006 owing $24.8 million to more than 2000 investors.
Those investors are still owed around $15 million.
Justice Pamela Andrews, when handing down the sentence in the High Court at Auckland this morning, said these investors struggled financially and emotionally.
Many of those with money in the firm were retirees, who have now lost "significant part of their retirement income", the judge said.
Although Braithwaite argued during her trial that she did not know what was expected of her as a director and had relied on others, Justice Andrews said this did not get her off the hook.
"You did not turn your mind or exercise any independent judgement as to whether what was in the prospectus was true, you simply relied on what others told you. You largely abdicated your responsibilities as a director...that abdication does not excuse you," Justice Andrews said.
The judge sentenced Braithwaite to ten months home detention to be served at a rented property on Devonport's Queens Parade and 300 hours community work
Although the judge took a sentencing starting point of 2 years 8 months' imprisonment, she gave Braithwaite a discount of 8 months for her previous good character, remorse and her family circumstances.
This brought the former director's sentence within the threshold of where home detention can be granted.
Crown lawyer Steve Symon said this morning that Braithwaite's offending amounted to "gross negligence".
Symon said the 53-year-old had abdicated her duties as a director to her former de- facto husband, National Finance boss Trevor Allan Ludlow, or the company's accountant, John Gray.
"That amounts to gross negligence - a complete abdication of your responsibilities as a director," he said,
While the defence submitted Ms Braithwaite was unschooled in financial affairs, Symon said the former director did not portray herself that way to investors.
"At all times she was representing that she was capable to this job," Symon said.
The Crown pushed for a starting point of 3 years in prison with a 15 per cent discount for her previous good character.
"In terms of remorse, we are at odds," Symon said.
"Ms Braithwaite is sorry about the circumstances she finds herself in..there is no genuine remorse indicated here," he said.
Symon said a sentence was imprisonment was an "inevitable result" and the only thing to determine was the length of it.
But Braithwaite's lawyer, Arlan Arman, said the former director's offending "was a crime of ignorance not one of intent".
"She made a serious error in judgement," he said.
During her trial, the defence argued that Braithwaite did know what responsibilities were expected of her as a director.
"She was really there to sign a piece of paper," Arman said today.
He submitted an appropriate starting point was a sentence between 2 and 2.5 years in prison and that former director deserved a discount for her good character, remorse and personal circumstances.
Braithwaite was looking after two children on the domestic purposes benefit and wouldn't be living in a mansion or driving a Lamborghini after serving her sentence, Arman said.
"It's a stretch to say that any other finance company director would know what that's like," he said.
Because of these mitigating factors, Arman suggested that a sentence of home detention could be suitable.
Today's sentence highlighted the fact that directors were accountable for disclosure obligations and could not rely on what others told them, said Financial Markets Authority head of enforcement Belinda Moffat.
"All directors are responsible for having proper oversight and understanding of the business and its financial performance."