Swindler Peter Austen falsely claimed to investors that his Couch Potato blanket pillow product was sold at hundreds of retail outlets.
A swindling Auckland businessman who fabricated a company to cheat investors out of hundreds of thousands of dollars has been sentenced to prison.
But Coatesville resident Peter Austen, 65, would have received an even lengthier term had he not been tortured while in a Zimbabwe prison during the regime of dictator Robert Mugabe, a judge informed him this week.
“It would not be jail, it would be a death sentence,” the defendant had told a pre-sentence report writer of the prospect of going to prison.
Judge Pippa Sinclair reckoned Austen was being overly dramatic about how his post-traumatic stress disorder from the Zimbabwe experience would affect a New Zealand prison sentence.
He was not considered the most trustworthy witness, having been called out by prosecutors during his July fraud trial for trying to introduce altered documents to support his case.
But the judge said she did believe he spent time in an African prison, allowing a 15% reduction for the added stress Austen might feel as a result.
He was ordered to serve three years and three months’ imprisonment, with the judge attributing part of the sentence to a lack of remorse.
“You genuinely believe you had set the business up legally,” she noted. “I don’t accept that, Mr Austen. To put this colloquially, you conned [them].”
His explanations, she said, were “implausible and disengenuous”.
Jurors were told during Austen’s trial that he registered a company called The Couch Potato Ltd – its sole proclaimed product being a pillow that unrolled into a blanket.
Between 2012 and 2019, he put on a ruse that the company was a success, even creating a fake email at one point suggesting the product would be distributed to retail outlets throughout New Zealand.
But there never was a product, and much of the nearly $400,000 he gathered from investors went into his personal account, the court was told.
He met the first victim in 2011 through friends and eventually convinced him to invest $200,000 for a 25% stake in the business.
Two years later, he went back to the victim and said the company needed more investors. The original victim was able to find three more investors – including his mother – to pony up about $110,000 combined.
In 2015, he convinced his personal trainer and her husband to invest $39,000, lying that the company was profitable and the product was sold at 1330 retailers.
“She believed you,” the judge noted.
In 2017, when she confronted him after realising something was amiss, Austen showed her a forged bank transaction purporting to pay her what was owed.
But in reality, there was no way he could pay, the judge said. He had $1.03 in his account.
Austen also convinced his cleaner and her husband to invest $100,000 – an amount that took years of scrimping, saving and foregoing holidays to save up on their working-class salaries, the couple said in their victim impact statements read aloud in court this week.
“We now have to work into our 70s to save this amount again,” the wife said, explaining that her trust in others had vanished.
The couple said they had expected $473,000 once their investment matured, but they would be content for the court to order Austen to pay the $97,600 lost from their investment.
The crime has affected their marriage, the husband said, with each blaming the other “for being drawn into his web of deceit”.
“Peter gained our trust and deliberately fleeced us while smiling at us,” he said.
The first victim said in a written victim impact statement that he has lost 20kg due to the frustration, anger and guilt of having lost his retirement fund and having brought his 87-year-old mother into the scam.
“I’m no longer the man I was before I met the accused,” he said, explaining that he used to own and run his own business but he now lacks the self-confidence to make big financial decisions.
He estimated he was out about $900,000 when also considering what he should have made on the investment.
“I rue the day I met the accused,” he said.
Judge Sinclair described the victim accounts as “raw and sobering”.
At the conclusion of Austen’s trial, jurors had quickly found him guilty of three representative charges of obtaining by deception, punishable by up to seven years’ imprisonment.
Crown prosecutor Matthew Nathan advocated for a starting point of four to five years’ jail, to be followed by modest reductions for his lack of prior convictions and the impact PTSD would have on his time in prison.
Defence lawyer Shane Kilian sought a starting point of two to three years, with a much more substantial 35% reduction for a range of personal mitigating factors. He said his client hoped the end sentence would be home detention.
“There were some sales being made,” Kilian said of the business. “There was a product. There was actually something happening.”
But Nathan described the company as “effectively non-existent” despite Austen’s brazen “false narrative of this thriving, successful business” in which he claimed millions of dollars were being made.
Austen, he said, was “the sole author of this fraudulent scheme and the sole recipient”.
“This was to enable him to maintain his lifestyle,” Nathan said, adding that the defendant created “a facade of being wealthy” by claiming to own property he rented – “not for need but purely for greed”.
Judge Sinclair was unpersuaded by the defence’s non-custodial sentence request.
“The safety of the community requires a sentence which may be a deterrent to others,” she said before reviewing all the aggravating features of Austen’s scheme.
“Your deceit was layered,” she said, describing the swindle as sophisticated, long-running and financially lucrative. “You manufactured documents, including fake transactions, cheques and emails.”
He was also responsible, she said, for repeatedly breaching the trust of his victims – exploiting them “in a deliberate and high-handed manner” and conveying “a false narrative of a thriving and successful business... for the purposes of maintaining your lifestyle”.
She ordered a starting point of four years and three months’ imprisonment before allowing a 5% discount for his previous good character and the 15% for his PTSD.
Born in Zimbabwe, Austen said he studied architectural drafting and got involved in the building sector. According to his own unverified account, he at one point owned the largest home construction business in Zimbabwe but he lost the business when Mugabe took power in the 1980s.
The controversial President, who spent decades in power before a 2017 coup, was both lauded and fiercely criticised for his steps to erode the power of the nation’s white minority.
Austen said he immigrated to New Zealand with only a few thousand dollars in 2005, three years after he was detained by soldiers for two months and tortured.
“The court is not unsympathetic to someone who has been detained and tortured,” the judge said.
But, she added, she had confidence the New Zealand prison system could help him cope with any mental health strains.
“You have functioned in the community since 2002,” she noted. “I have gained the impression you have overstated the significance of your PTSD.”
The judge agreed with lawyers there was little hope of Austen ever repaying the $238,000 still owed to his victims. Since his arrest, he said, he has gone bankrupt, his wife has left him and he is surviving on a benefit.
Given the circumstances, Judge Sinclair said, ordering restitution would be futile.
Craig Kapitan is an Auckland-based journalist covering courts and justice. He joined the Herald in 2021 and has reported on courts since 2002 in three newsrooms in the US and New Zealand.
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