Swney's parents watch as son jailed

Ex-Heart of City boss sentenced to 5 years for ‘gross breach of trust’.

Alex Swney's parents say it was hard to see their son jailed for more than 5 years over a multimillion-dollar rip-off but they are proud of the way he accepted his punishment.

The 57-year-old former Heart of the City boss was sentenced in Auckland District Court yesterday after admitting charges laid by the Inland Revenue and Serious Fraud Office covering "sophisticated" offending spanning more than a decade.

Judge Grant Fraser said the offending involved a "gross breach of trust" and nearly drew a maximum penalty.

"All your offending involved a high level of premeditation where your actions were planned and deliberate involving ... a sophisticated web of instruments," he said.

But the judge refused to impose a minimum period of imprisonment, as prosecutors suggested, because the jail term was enough in itself to hold him accountable.

Swney's father, Gordon, came up from the Waikato town of Morrinsville for the sentencing and said it was difficult to watch his son get locked up. He was proud of the 57-year-old's resilience over the past 14 months since being charged.

"We were pretty pleased with the way he was standing up to it over this long period.

"It's been a tough day."

The ex-mayoral candidate recently admitted offending, after a Serious Fraud Office probe, which involved using 229 false invoices to misappropriate $2,527,005 from Heart of the City between February 2004 and October 2014.

In January, he pleaded guilty to four representative charges laid by the Inland Revenue Department covering 12 years of offending and $1,757,147 of unpaid taxes.

"His motivation seems to be that he felt he had been underpaid for his contribution to HOTC and ... should have got more credit for building it into the successful organisation that it is," prosecutor Nick Williams said.

The judge discounted the sentence for genuine remorse as well as his guilty plea and previous good character.

The court heard Swney sold a bach - understood to be at Langs Beach - which raised $331,961 or 13 per cent of his debt.

His lawyer Murray Gibson said there were ongoing efforts to raise more. But the judge said most of the money had been spent. "All the offending was for your personal gain."

Heart of the City - a city-centre business association registered by Swney in 1994 - has income-tax exemption on the basis that it was created to develop or increase amenities for the Auckland public.

A summary of facts filed by the IRD showed how Swney issued "various fictitious invoices" from which he benefited, the extent of which was only unravelled as investigators dug through historical records.

The IRD welcomed the prison term and said Swney deliberately tried to "cheat the system" to avoid tax.

He said the department was already taking steps through the District Court to recover the stolen cash, which he said was up to about $4.6 million with penalties and interest.

Mr Gibson said the court should not lose sight of his client's achievements while at the helm of Heart of the City. "He was an effective and hard-working spokesman for his organisation and through his efforts this city is a better place."

Mr Gibson also highlighted the fact that Swney was a "supportive son and devoted family man" to his partner and two children. "You can sentence him secure in the knowledge he'll never be here again."

Swney's timeline of events

1994

- Swney registers Heart of the City as an incorporated society and becomes chief executive

2007

- Fails in a bid to become Auckland mayor

Sept, 2011

- During a routine review IRD finds anomalies with a GST refund claimed by Heart of the City (HOTC). The invoice number does not match the name of the company and leads them to Swney

April, 2014

- He appears in Auckland District Court facing 39 tax evasion charges laid by the IRD

May, 2014

- Judge Grant Fraser suppresses Swney's name and that of HOTC

Sept, 2014

- His contracted is terminated by HOTC

Oct, 2014

- Swney pleads not guilty to 39 charges laid by IRD and his name suppression lapses

Dec, 2014

- HOTC confirms an independent investigation had been completed and they would be pursuing the former CEO through civil proceedings

Jan, 2015

- Swney pleads guilty to four representative IRD charges covering $1.8m offending

Feb, 2015

- HOTC confirms seven events will miss out on funding because of costs incurred on investigative and legal efforts

April, 2015

- The Serious Fraud Office lays four charges alleging a decade of false invoices covering more than $2.5m. Swney pleads guilty to the charges

April, 2015

- The defendant gets a last-minute reprieve when Judge Fraser falls sick and postpones the scheduled sentencing

May, 2015

- The civil case between Swney and HOTC is called behind closed doors in the High Court at Auckland for the first time

June, 2015

- He is jailed for five years seven months for what the judge calls a "gross breach of trust".