Five Star director pleads guilty to SFO charges

SFO chief executive Adam Feeley Photo / Brett Phibbs

Former Five Star Finance director Marcus MacDonald pleaded guilty to Serious Fraud Office charges at the Auckland District Court this morning, while his three fellow directors have yet to enter a plea.

SFO chief executive Adam Feeley said former directors Nicholas Kirk, Anthony Bowden and manager Neill Williams have not yet entered a plea and there has been no indication when this will happen.

These defendants have not yet been committed for trial.

MacDonald pleaded guilty to charges of theft, which related to the misuse of company funds.

Five Star was at the time in breach of its trust deed requirements.

Feeley said the guilty plea was the first major result in the collapse of a finance company.

He added that it was "hopefully indicative of things to come".

The SFO's focus on large scale cases, involving significant losses, is helping to reassure investors that there is an effective law enforcement response to the financial sector fraud of recent years, Feeley said.

"We expect to conclude a further four major investigations this year, but some of the more recent matters are likely to continue into next year."

Feeley said there was still a large amount of work to be done.

Kirk, Bowden and Williams have also been charged with offences relating to the misuse of funds.

MacDonald was remanded on bail to appear for sentencing on December 22.

MacDonald and the other directors will also be sentenced that day for breaches of the Securities Act - this case was brought by the National Enforcement Unit of the Ministry of Economic Development.

All the directors, and Williams, pleaded guilty to the charges laid by the NEU.

The charges relate to securities being offered and allotted to members of the public without a registered prospectus, investment statement or trustee appointed.

MacDonald and Kirk were on the board of Five Star Debenture Nominee, in liquidation, and Macdonald, Kirk and Bowden were also on the board of Five Star Consumer Finance, in receivership.

All four directors were banned in April 2009 by the Registrar of Companies from holding board or management positions in New Zealand companies for five years.

Five Star went into receivership on September 5, 2007, while Five Star Debenture Nominee went into liquidation on November 5, 2007.

When the largest company in the group, Five Star Consumer Finance, collapsed in August 2007, it owed $63 million, of which $54.43 million was owed to debenture holders. In total more than $90 million of investors' money is estimated to have been lost.