A former board member of a failed financial firm is now seeking costs after he was partially exonerated of fraud charges and freed from prison.
Paul Bublitz's nearly decade-old legal saga and the maligned Financial Markets Authority prosecution against him returned today to the High Court at Auckland as he sought compensation for the criminal charges he was acquitted of.
The businessman, Bruce McKay and Richard Blackwood were all found guilty in February last year of some of the charges the FMA laid after an investigation into the group began in mid-2011.
However, after a successful challenge to the Court of Appeal, several of the men's convictions were overturned in August, while Bublitz also walked free from his prison sentence.
The trio had been accused by the financial watchdog of deliberately misleading investors and potential investors in an attempt to rescue failing investments during the financial collapse of 2007/2008 (GFC).
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.
Both Viaduct Capital, which was also investigated by the Serious Fraud Office and Treasury, and Mutual Finance were part of the government's GFC insurance scheme - meaning any losses would be passed on to the taxpayer.
Bublitz, represented by Rachael Reed QC, is now seeking costs under the Costs in Criminal Cases Act 1967 for the charges he was acquitted of.
The court heard at a brief hearing this morning before Justice Fitzgerald that the Crown is also seeking costs for the charges Bublitz was convicted of - if he is successful in his own application.
Bublitz, who began his financial career as an 18-year-old, was at the hearing and sitting in the public gallery. The case is due to return to court in September.
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The Herald understands such applications are relatively rare for people convicted of offending in the same proceeding.
When ruling on such an application, a judge can consider if the prosecution acted in good faith in bringing and continuing the proceedings, whether at the commencement of the case the prosecution had sufficient evidence to support a conviction, and whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty.
The FMA prosecutions also included former Mutual Finance board member and chartered accountant Lance Morrison, who managed the financial affairs for Hunter Capital.
A first trial of Bublitz, McKay, Blackwood and Morrison, which lasted nine months, was aborted in May 2017 after the prosecution failed to disclose some 14,619 documents.
The FMA's foul-up was described as an "extreme example of procedural failure" by Justice Mark Woolford and several charges were dropped against the four men as a result.
"The volume of late disclosure is seemingly unprecedented in New Zealand," Justice Woolford said.
After the first trial was abandoned, the FMA also dropped its case against Morrison.
As a result, Justice Woolford earlier ordered the FMA to pay $10,000 each to Bublitz, McKay, Blackwood and Morrison and $10,000 to the Ministry of Justice for the aborted trial.
Morrison was paid a further $75,000 towards the costs of his defence.
The Court of Appeal set aside two of the six charges Bublitz was found guilty of. He had earlier been acquitted of six charges of theft by a person in a special relationship.
His three year and two month prison sentence was also quashed by New Zealand's second-highest court and he was ordered to serve a home detention sentence of 11 months.
Blackwood, who had been sentenced to nine months' home detention, was completely exonerated by the Court of Appeal. He had been found guilty of 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.
But McKay, who was a chartered accountant and also sentenced to home detention, saw his appeal against his convictions dismissed after being found guilty of all three charges of theft by a person in a special relationship.
He was also found not guilty on two counts of making a false statement by a promoter and acquitted on one charge of making a false statement to a trustee.
Former chief executive of Blue Chip and director of Viaduct Capital Nick Wevers was also charged as part of the case but died in 2014. The FMA withdrew the charges against him after his death.
The Blue Chip group of companies failed in 2008 owing $84m to investors. Founder Mark Bryers was fined $38,000 and sentenced to 75 hours' community work for poor record-keeping.
Property developer Peter Chevin was also charged and pleaded guilty to nine charges of theft by a person in a special relationship. He was sentenced in 2017 to nine months' home detention.
In 2017, the trustee of Viaduct Capital, Prince and Partners, also settled civil proceedings brought by the FMA for $4.5m after admitting a series of failings.