Bankrupt accountant pleads guilty to financial crimes

The accountant will be sentenced on 23 March. Photo/123RF.

A bankrupt Auckland accountant has pleaded guilty this week to seven charges under the Insolvency Act at Auckland District Court.

Stuart Francis Clarke, who ran an accounting practice in Ponsonby under various names, could be facing prison for concealing property from the Official Assignee (OA) and for managing a business while bankrupt without consent the Ministry for Business Innovation and Employment (MBIE) said.

Clarke's business operated under several names including CK Accountants Ltd, and Wellpark Financial Limited.

After being adjudicated bankrupt, he continued to operate this business, despite repeated warnings from the OA that he could not do so.

On the day of his adjudication in March 2014, Clarke authorised several changes to shareholdings on the Companies Register, listing other people as company directors despite retaining underlying control.

MBIE said by doing this, Clarke hoped to put these shares out of reach of the OA.

Clarke also concealed a bank account containing more than $78,000 from the OA. MBIE said he had since spent the money which was no longer available to be used to repay creditors.

OA Ross van der Schyff said Clarke's actions had caused harm in the community.

"This individual offended in a serious way to breach acceptable commercial standards, both before and during his bankruptcy, which he would have been well aware of as an experienced accountant," said van der Schyff.

"Clarke could have acted to protect the interests of his creditors, but chose to maintain his lifestyle instead, acting with contempt for the law and seeking to put his property out of the OA's reach."

MBIE also found between December 2013 when Clarke was served with the application to adjudicate him bankrupt, and May 2014, a period of 21 weeks, Clarke spent a total on $84,160.91 in restaurant and bars, and in cash withdrawals.

"It is concerning a bankrupt who managed their financial affairs in such a way has continued to offer accountancy services to the public, and we see this kind of behaviour as an affront to the wider community who conduct business honestly and meet all their obligations," van der Schyff said.

"As Mr Clarke has refused to submit a completed Statement of Affairs to the OA, his bankruptcy has no end date as yet. So long as he is bankrupt Mr Clarke is prohibited from taking part in the management of a business without the OA's consent. To date, he has not applied for consent."

MBIE said no returns have been made to creditors to date.

Sentencing is set for March 23 at Auckland District Court.