Former Wanganui businessman Steven Burlace has pleaded guilty to making more than $2.8 million in illegitimate payments with investor funds while director of a local finance company, part of which was used to "fund his lifestyle".

Burlace, 55, pleaded guilty to three counts of theft by a person in a special relationship and one count of dishonestly using a document when he appeared in front of Judge David Cameron in Wanganui District Court yesterday.

In 1992 Burlace joined with two other partners in to form Westsure Insurance Brokers, selling general insurance.

He later proposed setting up an investment business to fund insurance premiums, and in 1997, he became the sole director of Westsure Premium Finance Ltd, which offered a year-long time payment option on insurance premiums for clients


Clients were required to pay 12 monthly instalments of 10 per cent of the annual premium, resulting in a 20 per cent profit after the annual premiums were paid to be split between the company and investors.

In order to establish the capital required to pay the annual insurance premiums, $500,000 worth of investments were sought through Burlace's acquaintances and clients and associates of his two partners.

Investors signed an investment agreement that stated the purpose of the funding was to provide a monthly premium payment facility to clients and were issued with an investment certificate.

Between 11 March 1999 and 12 September 2007, 26 investments of $536,000 were made.

In 2003 the partners amalgamated all their insurance businesses into Fairways Insurance Services Ltd, and in 2004, all three men became directors.

Burlace was appointed the chief executive officer, and controlled the business bank accounts. He initially required two signatories, but later was able to sign alone, and the company took up internet banking.

Fairways struggled financially, and in mid 2007, employees became concerned that accounts were not being paid and wages occasionally not paid on time.

Burlace voiced his concerns over the company's financial position, and in May 2007 said he was going to work from home.

He took many of the Fairways accounts with him, most of which were not later recovered.

He refused to allow employees access to any of the company's financial details and a complaint was made to one of the partners.

In September 2007, the two partners held a meeting with Burlace and he denied any wrongdoing.

They asked about the state of accounts, and he them there was little money or income.

When asked where the money had gone, Burlace told them "I didn't steal it, I only used it to fund my lifestyle".

Burlace was dismissed and police called, but he left the country the following month was found almost exactly four years later in a remote area of Queensland and flown back to New Zealand in August 2011 with the help of Australian Federal Police.

A full financial investigation, carried out with the help of the serious fraud office, found at the time he left New Zealand, the company accounts had no funds.

As part of the investment scheme, Burlace was entitled to retain 10 per cent of the part paid premiums payable to Westsure Premium Finance. Between November 1999 and December 2007, Burlace overpaid funds to himself by $148,818.

Between March 2003 and April 2006, Burlace received control of investor funds on the basis that the funds were to be used to provide a monthly premium payments facility to clients of Westsure Premium Finance, but from mid 2006 the purpose of funding changed to provide a monthly premium payment facility to clients of Fairway insurance services.

Between December 2003 and March 2006 he made transfers totalling $63,595 from Westsure accounts to Fairways.

And between Nov 1999 and December 2007, a further $71,835 was transferred from Westsure to miscellaneous funds bank accounts, not in accordance with investor agreements.

And finally, between march 2003 and September 2007, Burlace secured 19 discrete investments totaling $426,000, using investment agreements while knowing there were no surplus funds in the accounts, that he had been making illegitimate payments from Westsure accounts and that clients signed up to the part payment scheme were decreasing.

At the time he left New Zealand, the company accounts had no funds and there had been no significant activity immediately prior to him leaving.

Of the $749,000 of investments made, Burlace repaid $173,000.

The remaining $536,000 in outstanding investments plus outstanding interest is owed to 21 separate investors.

Burlace will appear for sentence on September 26.