Seven days of evidence in the trial of a retired Napier lawyer alleged to have misappropriated more than $500,000 of client funds has ended with an accountant rejecting claims he helped backdate invoices to save the business.

The claims were made by Gerald McKay, 74, a former partner and eventual sole principal in Napier firm McKay Hill, also known as the Property Centre, which folded amid a Law Society investigation almost five years ago.

As a result, McKay faces five charges of theft, five of misusing documents and one of criminal breach of trust.

He denied the charges at a trial before Judge Colin Doherty and a jury of eight women and three men. Last week the jury was told a Law Society investigator arrived at the firm on May 25, 2010 after about three days' notice of a trust funds compliance review, which was prioritised because of a complaint.


Finding ongoing Lawyers Trust account deficits had not been reported in monthly statements, investigator John Hicks filed an interim report to the Hawke's Bay legal standards committee which immediately secured funds and accounts held by the firm. During almost nine hours of evidence, McKay claimed no knowledge of the position until October 2009.

He said he started a remedial strategy, which included accountant and longtime friend Rodney De Terte, who suggested calling-in fees not previously billed on long-term projects as one way of rectifying the situation.

McKay said he was away from work sick when Mr De Terte came to his home the day before the investigation started, asked about McKay's preparation of the invoices and then waited while McKay dictated details for Mr De Terte to take back to the firm's office for filing.

Called by defence counsel Scott Jefferson as the only other defence witness, Mr De Terte said he was was approached by McKay in October 2009 when the firm's Interest in Trust account was in deficit by $900,000, and discussed right to call-in fees as one of the "first things to look at."

Asked by Crown prosecutor Chris Lange to confirm he was involved in "intensive" discussions with McKay regarding the problems, Mr De Terte said: "I don't know what you're referring to. I had one or two meetings, that was it. There wasn't much I could do there."

He said he saw McKay at home and asked if anything had been done about calling-in fees, but there hadn't.

Mr De Terte said he knew nothing about the invoices McKay said were dictated, and did not take recordings back to the firm for writing.

Prosecution and defence closing addresses will be given today.