Elaine McHardy appears in the Rotorua District Court for sentencing. Photo / Kelly Makiha
Elaine McHardy and Jenny Clouston had been best friends since they were 10 years old – so close, they were like family.
They were each other’s bridesmaids and, alongside their husbands, ran an aviation business together.
But McHardy – the company’s bean counter – was fiddling the books.
Over three years, she stole nearly $90,000 from the company in what has been described as a “devastating” act of “greed”.
Now the Rotorua 68-year-old is serving nine months and three weeks on home detention for fraud.
McHardy was sentenced in Rotorua District Court in June, but recently lost her battle to keep her name from being made public.
She and her husband, Adrian McHardy, argued publication of her name would lead to undue hardship for him, given his high profile in the aviation industry.
Elaine McHardy pleaded guilty last year to four charges of dishonestly using a document, four of theft by a person in a special relationship and two of obtaining by deception.
Five charges were representative, meaning the offending happened more than once.
There were 40 individual transactions between January 2015 and December 2017, totalling $88,445.71.
The McHardys were in partnership with Jenny and Graham Clouston – who now live in Northland – along with another associate, Kim Long, in a company called Aerologistics-GSE Limited between 2005 and 2018.
Aerologistics designed and built test stands for components of propeller aircraft engines.
Graham Clouston was responsible for the electronics, Long was the engineer and designer, and Adrian McHardy was the sales manager and assisted with concept design.
Elaine McHardy was the secretary and oversaw company finances.
In sentencing McHardy, Judge Anna Skellern said she bought personal goods, including boating items, using company credit cards between 2015 and 2017.
She also stole from the company by transferring Aerologistics funds into her personal bank accounts.
On other occasions, she used company funds to pay for travel unrelated to company business.
Judge Skellern said Jenny Clouston identified McHardy’s offending towards the end of 2017 while reviewing the company’s bank records.
Fraud allegations were put to Hardy at a company meeting in January 2018.
She acknowledged her wrongdoing and advised she had already paid back $36,900. That March, she returned another $27,510.
McHardy repaid the remaining $24,000 before her sentencing in June.
Judge Skellern said McHardy was motivated by greed.
She gave false references for the funds sent to her personal bank account, and paid herself larger amounts than she invoiced the company for.
“The breach of trust was really serious given the victims were life-long friends of yours and you were someone they should have been able to rely upon to treat them honestly.”
Judge Skellern said while the money had been repaid, the last portion came seven years after the offending began.
In sentencing, she gave discounts for McHardy’s guilty plea and previous good character.
Jenny Clouston told the Rotorua Daily Post she moved to Rotorua with her family when she was 10 and McHardy was the first person she met on the school bus.
They remained best friends as adults.
“We weren’t friends, we were family.”
She described McHardy’s fraud as “devastating”.
“Our parents and children were also close friends … We were bridesmaids and groomsmen for each other when we got married. We have supported each other through all our lives, both happy and sad times.”
Jenny Clouston said she would act as McHardy’s backup up doing the company’s books and she didn’t want to believe what she discovered.
She said McHardy’s actions had caused the company to close and the lost income impacted their retirement.
The Cloustons said it was a long road to get the final $24,000 paid back because of a delay in the police investigation.
Jenny Clouston said they laid the police complaint in 2018, but were told in a letter from police in 2019 the investigation would not proceed because of Northland police staff being deployed to the Christchurch mosque shootings.
The Cloustons complained to the Independent Police Conduct Authority and told their story to Stuff, which reported police said it was incorrect to say the file was closed because of the mosque shootings, and it was rather that complex cases were prioritised at district level.
Jenny Clouston said the case progressed slowly. McHardy was charged and appeared in the Rotorua District Court for the first time in July last year.
McHardy fought for permanent name suppression, given Adrian McHardy’s senior position with a US-based aircraft engineering company and his role as deputy chairman of the Aircraft Engineering Association of New Zealand.
In a recently delivered name suppression decision, Judge John Bergseng said Adrian McHardy was a safety adviser who engaged with New Zealand and Australian transport accident investigation commissions, and sometimes gave evidence in courts.
It was submitted any suspicion relating to his honesty would impact on his reliability as an expert witness and could result in him losing his job with the US company and position on the association.
Judge Bergseng ruled there was insufficient evidence to establish extreme hardship.
“That Mr McHardy’s wife has been convicted of theft and fraud does not in any logical way impact on his credibility or reliability within his area of expertise.”
While Judge Bergseng accepted it was humiliating for Adrian McHardy to be associated with his wife’s offending, the impact on him personally was overstated.
“Throughout the investigation, there has been no suggestion of any wrongdoing on Mr McHardy’s part.”
Kelly Makiha is a senior journalist who has reported for the Rotorua Daily Post for more than 25 years, covering mainly police, court, human interest and social issues.