Struck-off lawyer faces dishonesty charges

A struck-off lawyer is facing dishonesty charges in a Serious Fraud Office prosecution.

Edward Errol Johnston, according to the SFO, appeared in the Auckland District Court today facing three charges alleging he dishonestly used a document.

The 59-year-old, who was discharged from bankruptcy last month, was struck off the roll of barristers and solicitors in 2013 after admitting charges brought by the Law Society. He had previously practised in Henderson.

Johnston, the SFO said, owned properties in Auckland and in late 2011 and early 2012 had fallen into arrears on loan repayments to his bank.

When needing to reduce his debt, Johnston allegedly gave his bank false sale and purchase agreements.

"In reality, the properties were either sold for a higher price than he had stated, or transferred to another trust and refinanced with a loan from another bank," the SFO alleged today.

Johnston, according to the SFO, also submitted an allegedly false statement of assets and liabilities to the bank when getting the refinanced loan.

The charges Johnston faces, if proven, carry a maximum penalty of seven years in jail. He is due back in court next month.

In an unrelated civil dispute, a finance company directed by businessmen Mark Hotchin and Eric Watson is chasing down a $300,000 loan it had given the struck-off lawyer.

FAI has claimed that Richard Johnston, Edward's brother, and a man named Gavin Crawley guaranteed the $300,000 loan.

Richard Johnston and Crawley were trustees of the Puketaha Trust, whose only asset was a 9000sq m Swanson property where Edward Johnston used to live and which the lawyer told FAI was worth $1.5 million.

In March 2012, FAI served proceedings on the three men, claiming Edward Johnston had defaulted on interest payments and because of the guarantees, the trustees were liable to pay all that was owed.

Edward Johnston was declared bankrupt and FAI then only pursued the trustees over the loan.

In a decision last August, a High Court judge ordered Richard Johnston pay FAI $137,000 but found that Crawley was not liable for any amount.

Both sides have challenged that decision and the case is due to go to the Court of Appeal next month.