Jackie and Mike Bradley: The missing millions

Mike Bradley, pictured outside his Bassett Rd home, has declined to give his side of the story, but says the situation is 'very complex'. Photo / Richard Robinson

To their neighbours, Jackie and Mike Bradley probably seem like a fairly typical Remuera couple. They live in a large, elegant house in Bassett Rd, which in 2008 was valued at $4.7 million. There are two Audis regularly parked in their driveway and they enjoy overseas travel.

It's not too much of a stretch to imagine these comforts might be the result of two successful careers in insurance and financial planning spanning at least two decades.

So at least some eyebrows were raised when the Herald revealed last month that the Serious Fraud Office had been asked to investigate the collapse of the couple's financial advisory business, B'On Financial Services Ltd, just before Christmas last year.

The business, which had an office in Auckland's swanky Vero Centre for several years, traded as Bradley & Bradley.

Liquidators Brian Mayo-Smith and David O'Connor from BDO Auckland say they have so far been unable to find proper financial and accounting records for Bradley & Bradley, and other related businesses. So far, they believe around $15 million is owed to at least 40 investors - but they fear there may be many more who have not yet come forward.

Companies Office records show the Bradleys set up a new company, Juniper Associates, just a few weeks ago.

When the Herald visited Mike Bradley at home last week, he declined to give his side of the story and said the couple would prefer to wait "another couple of weeks". He insisted the situation was "very complex".

But some investors are getting impatient. Most of those owed money live in Auckland, but there are also investors in Kerikeri and Tauranga. While the amount owed to each person averages out at just under $400,000, some have handed over much more than that. One investor is believed to be owed several million dollars.

Many have been persuaded by the Bradleys that talking to the media or the liquidators will jeopardise their chances of ever seeing their money again. But the liquidators describe such suggestions as "bizarre". Either the money is missing, or it isn't, they say - it can't be in between.

At least one investor has had enough - and has chosen to speak out.

John Johnson (not his real name) was looking forward to a comfortable retirement. He had accumulated a sizeable nest-egg and had no qualms about handing over the entire sum to the Bradleys, who he had known for some time.

When he received a letter from BDO telling him the Bradleys' company had been placed in liquidation, he felt physically ill.

"Immediately Mike phoned me up and told me that it was alright and my money was safe and he'd pay me out within a week. And I thought 'How can he do that?' - because it's in the liquidators' hands."

Johnson has already decided it is possible that he might never recover a large chunk of his money.

"I gave them my life savings," he says. "And I wasn't taking big payments back, because I didn't want to diminish the scheme when I got my final payout. Their attitude was: 'If you bail out of the scheme it affects everyone else'."

Nevertheless, his investments appeared to "truck along" at a "reasonable" rate, he says. "It was better than the bank."

While he is too embarrassed to reveal his real name, he is keen to prevent anyone else landing in his situation and is therefore willing to highlight what he believes, in hindsight, were some foolish decisions on his own part.

For a start, he did not diversify his investments, but trusted the Bradleys to invest all of his savings as they saw fit, after being persuaded by their claims they had strong overseas connections that others didn't.

He recalls being told some of the money would be invested in a Macquarie Bank "capital guarantee scheme", and being shown what he believed were Macquarie Bank documents. But most of the information the Bradleys gave him were just simple six-monthly statements on a foolscap sheet showing how much interest his money had earned.

He admits he was also impressed by their offices in the Vero Centre. "Everything looked kosher. We gave them carte blanche to move it wherever they thought was advantageous."

When the credit crunch hit, he was told all of his money had been moved into bonds in the United States and Europe. He has since been told by investigators that the international funds he thought he was investing in do not appear to exist.

Former colleagues describe the Bradleys as a couple who have always adored the high life. "They were the kind of people who used to go to Sydney for the weekend - back in the '80s when that was still pretty rare," one recalls.

Several mentioned that they treated investors as lifelong friends but appeared to put much less effort into ensuring their business relationships did not turn sour.

Jackie, whose maiden name is Jacqueline O'Neill, is understood to have originally been a teacher. She met Mike when they both worked at insurance company T&G Mutual. The firm later merged with National Mutual and is these days known as Axa.

The couple are credited by some as pioneers who helped create the financial advice industry as a profession in this country.

In 1988 Jackie published a book called The Winning Woman. It offers plenty of sensible advice. "Just as money won't necessarily buy happiness, sometimes it won't buy good advice. With so many new places offering financial services, it's possible to end up with a loser," it warns.

The '80s was a heady period in finance and like many other investors, the Bradleys were fans of Rod Petricevic's Euro-National finance company. As is now well known, the company collapsed in the '87 crash and Petricevic went on to found Bridgecorp, which also collapsed two decades later.

But one of their biggest disasters, say former colleagues, was getting involved in Microworld. The brainchild of Auckland GP Dr Lannes Johnson, the attraction was based on the idea that people would pay to see beasts, bugs and other objects hugely magnified and shown on television screens. It set up in the Viaduct in 1986.

Mike Bradley saw global potential for the idea and there were plans to list the company in Canada. But the '87 crash killed the project and the company collapsed. Former colleagues claim the Bradleys invested a significant amount of money in it.

At that stage their firm was known as Gardner Bradley O'Neill. Some believe that former National Mutual agent Peter Gardner fell out with the Bradleys over their involvement in Microworld, and remains bitter that he ended up paying a significant price himself for their involvement - including losing his home on Paritai Drive.

Gardner, who is these days better known as a veteran administrator with Tennis Auckland, declined to comment.

Other former colleagues say they were concerned by the risks the Bradleys were prepared to take. One person recalls Mike Bradley saying that it was sensible to invest 20 per cent of your money in something that was going to return 50 or 100 per cent a year, and offering to put him in touch with some people they were dealing with in Europe.

"It was very, very curious," he says. "That was four years ago and it was obviously something they had been dealing with for a while."

According to Companies Office records, both Bradleys remain directors of Boston Mint Ltd, Clear Ways Ltd and Green Horizons Ltd, and Mike Bradley is also a director of Frontier Water NZ Ltd, NZ Consultancy Group Ltd, Pronostic Technologies Ltd and Pro-Perspirant Ltd.

According to the Institute of Financial Advisers (IFA), neither of the Bradleys is a member. Mike Bradley is understood to have applied to join the IFA's previous incarnation, the International Association of Financial Planners, but the application never went ahead.

Tony Vidler, who is spokesman for a new body recently set up to cover all professional organisations in the financial advice industry, known as the Financial Adviser Associations of NZ (Faanz), notes that new regulations require all advisers to disclose whether they are members of a professional body. By the end of this year all advisers will also be required to belong to an independent dispute resolution scheme.

Like most advisers, Vidler is gutted by the bad publicity the industry has attracted. And he has enormous sympathy for the thousands of people who have lost huge amounts of money for all sorts of reasons in the past few years.

"There are people out there that will never recover from some of the things that have happened in the past few years - they just won't ever recover. It's not just money - it's people's dreams and lives."

But regulation won't eliminate all the bad apples, he notes. "I liken it to the Law Society. How many lawyer jokes do you know?"

While some advisers have already left the industry, "nowhere near the bulk" have yet moved on, he suggests.

"There will be people such as the characters that have made the front pages in the last six months - and there have been far too many of them - who will leave. And there are those still out there operating today who won't be turfed out or shot by regulators until the regulations have been bedded down, so this may well go on for a couple of years."

In the meantime, potential investors should check the Faanz website, he says, for tips on how to choose the right person.

"Most advisers don't wake up in the morning and think: 'How can I screw someone today?' They generally want to try their best to do a good job," he insists.

Serious Fraud Office head Adam Feeley says investigators have been working closely with the Companies Office and BDO on the Bradley case since late last year, and have "significant concerns" about the couple's business practices.

"Those concerns are such that we have now extended our inquiries beyond the original companies involved in the liquidation."

It is also concerning that the Bradleys have been meeting with investors without the liquidators present, he says.

The SFO is keen to hear from anyone who has previously invested with the Bradleys, and Feeley urges anyone else considering doing business with the couple to seek independent legal and financial advice "which is always prudent anyway".

John Johnson admits he would probably do a lot of things differently if he had a chance to turn back time.

"To other people I'd just say: be very wary of where you put your money, and make sure you get all the details about where it is."

Better advice

A new organisation known as the Financial Adviser Associations of NZ (Faanz) has recently been set up as an umbrella organisation for all professional bodies in the financial advisory industry, including mortage brokers and insurance agents.

Its nine key principles are:

* A consumer is better off with an adviser in their financial process than without one.

* A two-way process between the adviser and the consumer produces the best results.

* All advisers should belong to a professional association.

* Consumers should only deal with advisers who belong to a professional association.

* Advisers have a responsibility to provide competent financial advice and comply with a code of ethics.

* All financial advisers should be competent to provide financial advice and strive for ongoing professional development.

* There should be one independent industry body to hear complaints (separate from disciplinary function).

* Faanz promotes a level playing field for regulation across the financial services industry so that the same rules apply irrespective of an adviser's employment.

* Advisers should disclose the full cost to the consumer of purchasing product and advice.

The organisation recommends investors ask to see an adviser's current practising certificate and their disclosure statement, to check that they follow a six-step advice process, and for evidence that they have professional indemnity cover.

For more information: www.faanz.org.nz.