Three former Capital + Merchant Finance directors have been warned they are likely to go to prison after being convicted on Crimes Act charges in what has been dubbed one of the most important commercial theft cases in recent years.

Directors Wayne Leslie Douglas, Neal Medhurst Nicholls and Owen Francis Tallentire faced numerous charges arising out of the affairs and demise of Capital + Merchant, which operated as a finance company and offered property loans.

It collapsed in November 2007 owing $167 million to 7500 investors, who are likely to see none of their money back.

The charges, brought by the Serious Fraud Office, alleged theft by a person in a special relationship.


The SFO alleged the accused knowingly used investor funds in ways that breached Capital + Merchant's trust deed.

Douglas, Nicholls and Tallentire jointly faced three charges over three different loans C+M advanced between 2004 and 2006 totalling almost $20 million.

Douglas and Nicholls were found guilty on all three counts by Justice Ed Wylie yesterday, while Tallentire was found guilty on two and acquitted of the other.

Nicholls and Tallentire also faced a fourth charge over an $8.2 million transaction the company made in 2007 but were acquitted on this by Justice Wylie.

SFO chief executive Adam Feeley said yesterday the proceedings were one of the most important commercial theft cases in recent years.

"This was a hugely complicated case involving deeply cynical transactions," Feeley said.

Justice Wylie indicated yesterday that prison sentences were "likely but not inevitable" for the three men. The three were remanded in custody ahead of their sentencing next month.

The charges they have been convicted of carry a maximum penalty of seven years' jail.

In a separate judgement, Justice Wylie found Nicholls and Douglas not guilty of three counts of theft by a person in a special relationship and the publishing of false statements.

That case concerned allegedly related-party loans of about $14.5 million made to three companies that converted two rundown Palmerston North office blocks into student accommodation, a project called "the Hub".