Kiwi financial directors guilty of theft, misleading investors during global financial crisis

Bruce McKay, Paul Bublitz and Richard Blackwood were found guilty of financial crimes this morning. Photo / Doug Sherring

Three businessmen accused of multi-million-dollar crimes committed during the global financial crisis have been found guilty of many of the more than dozen charges they faced.

The long-running saga involving Paul Bublitz, Bruce McKay and Richard Blackwood finally reached a head today with Justice Kit Toogood delivering his verdicts after a lengthy judge-alone trial last year.

The trio were accused of deliberately misleading investors and potential investors in an attempt to rescue failing investments during the financial collapse of 2007–2008.

McKay and Blackwood were serving as directors of Viaduct Capital, while Bublitz was a board member for Mutual Finance, when the two firms went into receivership in 2010 - owing investors $17 million.

Paul Bublitz was found guilty of six total charges. Photo / Greg Bowker

Bublitz was found guilty on four and not guilty on six charges of theft by a person in a special relationship and also guilty of two charges of making a false statement by a promoter.

McKay was guilty of all three charges of theft by a person in a special relationship he faced, but not guilty on two counts of making a false statement by a promoter and one charge of making a false statement to a trustee.

Blackwood was found guilty on all four charges of theft by a person in a special relationship and not guilty of one charge of making a false statement by a promoter.

All three men sat in the dock showing little emotion as the judge read his verdicts and will now be sentenced in March on the crimes they were found guilty of.

Justice Toogood said he will release his reasons and findings for his verdicts in the next couple of weeks.

Richard Blackwood was found guilty of four of the five charges he faced. Photo / Greg Bowker

The Financial Markets Authority (FMA), which began its investigation of the group in mid-2011, welcomed the result.

"This has been an important case," it said in a statement after the verdicts.

"We will consider the judgment and await any further developments in the case before making further comment."

The FMA's case accused Bublitz of using Mutual Finance and Viaduct Capital to support his property investments, while McKay and Blackwood were charged with helping him.

However, the prosecution has not been without blunder.

The first trial, which lasted nine months, was aborted in May 2017 at great cost after thousands of documents weren't disclosed to the three men's legal teams.

When the first trial was halted, New Zealand's financial markets watchdog had already spent more than $1.65m on external lawyers, investigators and other services in the case.

Bruce McKay, pictured during the first trial. Photo / Greg Bowker

The retrial eventually began in August last year in the High Court at Auckland.

During his opening address at the retrial, FMA prosecutor David Johnstone said Bublitz didn't use the two finance companies to advance its own business affairs, but rather "in the purpose of attempting to rescue his failing investment".

Johnstone told the court the all three men were deliberately misleading investors and potential investors in both companies during the GFC.

The group, he continued, "stole or enabled the theft of a substantial part of the finance companies' capital" which the Government had contributed to.

After the first trial was aborted, FMA prosecutors dropped its case against a fourth director, Lance Morrison.

He was also on Mutual Finance's board.

The FMA dropped its case against a fourth director, Lance Morrison. Photo / Greg Bowker