ACK Contractors director Colin Fitzgibbon gets home detention for invoice fraud

A construction company director who admitted invoice fraud has been sentenced to nine months home detention and ordered to pay $83,563.64.

Colin Fitzgibbon of ACK Contractors Limited was sentenced in the Christchurch District Court yesterday for falsifying records and dishonestly incurring debts.

Fitzgibbon fraudulently produced invoices of $668,392.95 to mitigate cash flow issues between January and March 2020.

Fitzgibbon’s offending only came to light when the company went into receivership in April 2020.

According to a summary of facts, in December 2018, ACK Contractors Limited entered into a contract (Agreement for the Purchase of Accounts Receivable) with Canterbury Invoice Finance Limited, trading as FIFO Capital, to purchase invoices.

At the beginning of 2020, ACK Contractors held a contract to undertake work on a roading project known as the Christchurch Northern Corridor Alliance (CNC Alliance).

Around the same time the company was also sub-contracted to HEB Construction Limited, undertaking road maintenance for the Christchurch City Council.

Between January and March 2020, ACK Contractors fraudulent provided invoices valued at $668,392.95 based on which FIFO Capital advanced $535,665.05.

Invoicing issues were detected during receivership when the receivers sought to recover the purported debts from the CNC Alliance and HEB Construction Limited.

At this time, both companies advised the receivers that the invoices were fraudulent, and no monies were owed to ACK Contractors Limited.

On the date receivers were appointed, April 28, ACK Contractors owed FIFO Capital about $470,000.

According to the Companies Register, the receivership ended in May 2021.

The company owes FIFO Capital $90,000, after all payments were received including guarantor payments and costs were deducted.

Vanessa Cook, national manager of criminal proceeds integrity and enforcement, said this was moderately sophisticated offending where Fitzgibbon generated invoices based on the company’s forecasted data for the month ahead.

“He sold the invoices to FIFO Capital so that his company could get cash faster than it would have received if it had waited for monthly payments made by the client companies.

“The offending was pre-meditated. While Fitzgibbon intended to complete the work, he was aware that there was a risk of causing loss.”

At the sentencing, Judge GM Lynch took into account Fitzgibbon’s remorse and preparedness to participate in restorative justice, his previous good character, steps he had taken to ensure reparation was paid including selling his family home, his co-operation during the investigation and early plea.

The final receivers report on ACK Contractors Limited also shows outstanding monies owed to creditors.

Inland Revenue had filed a preferential claim of $262,000 for outstanding GST and PAYE.

Unsecured creditors were owed $355,000.

“There are no funds available in the receivership for preferential or unsecured creditors,” the receivers said in their report.

“We consider that all receivership matters have been concluded. We confirm that control of the company has been returned to the directors.”