'Parasites on the advertising industry' - Crown

James Burns has pleaded guilty in the Wellington High Court to his part in a false invoicing scam which sold advertising in magazines that were either never printed, or the number printed and circulated was exaggerated. Photo / Thinkstock

The trial of three people accused of running an advertising scam will call at least 150 witnesses.

Today, the Crown said one of the defendants, Anthony John Hendon, was a "parasite" but the defence said some people who bought ads from him were "stupid" and Hendon had no intention of defrauding anyone.

Hendon was one of a group arrested two years ago for selling advertising in magazines that allegedly did not exist or were only produced in tiny numbers.

He faced 24 charges of reproducing a document with intent to cause loss and 24 alternative charges of dishonestly using a document.

At a pre-trial hearing in Wellington High Court today, the Crown alleged Hendon would cold-call advertisers and confuse them into believing they'd already committed to buying ads.

Prosecutor Grant Burston said the defendants were "parasites on the legitimate commercial advertising industry."

He said Hendon and his co-defendants made false statements to clients about how widely the magazines were distributed.

In one case, it was alleged advertisers were suckered into buying ads for a magazine of which only ten copies were printed.

Mr Burston said Hendon and his co-defendants knew what they were doing was wrong.

"They thought they were geniuses [and] they had a winning formula," Mr Burston said.

Before Justice Jillian Mallon, both sides made submissions and outlined the positions they expected to adopt at trial.

Hendon's lawyer Chris Nicholls said his client may have engaged in dishonest conduct, but had no intention of defrauding anyone.

"It only becomes fraud if they didn't intend to deliver on what they said they would. If they did intend to deliver, it doesn't matter if they used deceptive techniques."

Mr Nicholls said some advertisers agreed to buy ads simply to get Hendon off the phone and the Crown could not prove those advertisers sustained a loss.

He said ads were always sold with the intention of actually producing magazines.

Mr Nicholls also disputed the Crown's claim Hendon promised advertisers the magazine would print any specific number of copies.

"I've seen no evidence at all in what's been disclosed to me as to how many magazines were produced."

He said in some cases advertisers were "stupid" and didn't ask questions before agreeing to buy ads.

The Serious Fraud Office earlier alleged the magazines were "generally titled in a way that suggested worthwhile causes in subjects such as road safety or parenting."

A judge-alone trial for Hendon and two co-defendants, Noelene Kay Banton and Johannes Hendrik Maria Middeldorp, begins on February 9 and was set down for six to eight weeks. Banton and Middeldorp faced nine charges each of reproducing a document with intent to cause loss and nine alternative charges of dishonestly using a document.

All three deny the charges.

About 155 witnesses from around New Zealand were expected to give evidence in person and by audio-visual link.