Nothing to show for loans: Court

The two accused claim, in reality, Bill Conway, above, ran the business. Photo / Dean Purcell

The director and accountant of a failed scrap metal business are accused of gaining loans from finance company UDC for $1.2 million worth of equipment that didn't exist.

Carol Down and Raymond Moorhead are on trial in the Auckland District Court charged with creating five fake invoices for scrap metal bins, a Hitachi digger and a mobile baling press.

ANZ Bank-owned UDC Finance gave South Auckland scrap dealer Cash For Scrap loans based on the invoices, and registered its security over the equipment on the Ministry of Economic Development's PPSR register.

When Cash For Scrap and associated businesses collapsed in 2008 liquidators Waterstone Insolvency went looking for the gear.

Principal Damien Grant told the court last week they quickly came to the conclusion "the assets were never in the possession of the company".

The Crown alleges four of the invoices were from companies that didn't exist, and the bank account number on all five belonged to Moorhead's firm. Even the phone number on the documents was his, it says.

Down is the sole director and shareholder of Cash For Scrap, and was the partner of the business' controversial principal Bill Conway. Moorhead was the financial controller.

The two say in reality Conway ran the business, and they had nothing to do with creating the invoices.

In 2004 Conway became the first person in New Zealand to be jailed for pollution, and last year was convicted again alongside Down on more polluting offences.

Conway has been sentenced to six months' jail and Down to 250 hours of community service on the latest charges, but the two are appealing.

The Crown says Down and Moorhead created five fake invoices between 2005 and 2007 and presented them to UDC. The first three were for 325 scrap metal bins, worth $612,000, supplied by a company called Steel Fabrications. The Companies Office told the court Steel Fabrications does not exist.

The fourth invoice was for a $140,000 Hitachi excavator from Heavy Machinery Services. This company told the court it had never dealt with Cash For Scrap and had never owned a Hitachi digger.

The final invoice was for a $410,000 mobile baling press from Orbit Machinery Wholesale. The Companies Office also gave evidence that Orbit does not exist.

Down told police she was a director of Cash For Scrap in name only and had taken on the position because Conway was banned from being a company director at the time. "I hardly went into the business."

However she said Moorhead put regular payments through to her of up to $2000 a week.

"I did say to Bill I was surprised as I was in name only," she told Detective Constable Nick Mayer.

Mayer told the court between mid-2005 and December 2007 Down received at least $380,000 in regular payments onto her Visa card.

Down also said most of Conway's money came through her account. "I did find it strange and I asked him if everything was legal."

Moorhead also told the court Conway was the brains behind the business.

"He says 'it's not me, and I was just a middle man, as it were, doing all the books and Mr Conway is the person who should be here'," his lawyer Cliff Lyon said.

The trial continues.