Multi-million dollar Marlborough racing fraud comes to an end

The scheme netted millions from pokie machines, over several years. Photo / Andrew Warner.

A Marlborough racing scandal has finally come to a close, with the last man involved in a $6.9 million pokies fraud sentenced to home detention.

Michael O'Brien has already been sentenced to four years and six months jail for the scheme, and his co-accused Kevin Coffey to 12 months home detention.

Now the last man to face court over the matter, Paul Max, 60, has also been sentenced to 12 months home detention.

Max was found guilty of holding O'Brien's interests in his name, in order to conceal O'Brien's involvement.

In the High Court at Wellington this morning, Justice Robert Dobson said he was "troubled" by letters of support presented to the court, which showed a community perception that Max's offending was minor.

"You might have thought that your part was only some slight naughtiness, in shielding Mr O'Brien.

"But if you thought that, you were fooling yourself.

"As I said before, this is a serious type of fraud."

Justice Dobson said that home detention was appropriate because of Max's lesser role in the scheme, but only as long as the maximum term was applied because of the seriousness of the offending.

"[Gambling] brings sharp advantages and disadvantages to their communities, and it is a privilege to get a class four gambling licence," Justice Dobson said.

"Your conduct struck at the heart of the regime by hiding Mr O'Brien's activities."

The court has previously heard that that multi-million dollar fraud happened because O'Brien was a key figure for both pokie machine venues, and racing clubs that wanted to receive funding grants from pokies.

At O'Brien's sentencing two weeks ago, Crown lawyer Grant Burston said the offending was "selfish and greedy".

"He directed the trust's grants application process," Burston said.

"Michael O'Brien was running a dishonest scheme for which he received a backhander of a third of the grants given out while he was running the scheme.

"The racing clubs believed they had no other choice but to pay him a third funding, if they were to get any grant money at all."

Internal Affairs' gambling compliance director Gareth Bostock said the final sentences showed that misleading the regulator was a serious issue.

"New Zealand communities should expect the highest integrity from the gambling sector.

"Community organisations must be able to access grants from gambling societies without the concern that funding is being directed unlawfully.

"Operation Chestnut was necessary because gambling grant funding was being diverted away from the communities it was meant to serve.

"The sector needs to create a culture of integrity where this type of behaviour is not tolerated and everyone involved in the industry 'does the right thing' by communities."

Serious Fraud Office director Julie Read said the office was happy with the outcome of the prosecutions.

"The SFO thanks its partners in this matter, DIA and OFCANZ.

"Collaboration on this investigation has not only led to the successful prosecution but the agencies involved should be satisfied that our co-operation has also resulted in measures to ensure the sector is more vigilant towards the risk of fraud and community money gets to where it is intended."