Rulebreaker still on trail of small investors' cash

By KARYN SCHERER

An Auckland company director found guilty in March of breaching contributory mortgage regulations is still promoting the schemes to investors.

Peter van Nieuwkoop was due to be sentenced in the Auckland District Court yesterday on more than 30 charges relating to four schemes with which he was involved in the late 1990s.

But his sentencing has been adjourned for another month.

The charges relate to van Nieuwkoop's time as loan manager at mortgage brokers Reeves Moses Hudig.

The Companies Office claimed that developments at Pauanui, Mangere, Parnell and Christchurch were left incomplete, and that his actions jeopardised about $4 million of investors' money.

Companies Office records show van Nieuwkoop remains a director of five companies: PV Investments, PVN Investments, Contributory Mortgage Nominees, Contributory Mortgage Investments, and RAM Securities.

Contributory Mortgage Investments is at present promoting investments in the former White Heron hotel site in Parnell.

Information on the company's website about the offer, which closes at the end of this month, assures investors its contributory mortgages have been "carefully appraised" and are subject to "professionally administered internal and external controls designed to ensure investors enjoy trouble free and rewarding investments".

The assurance is signed by van Nieuwkoop.

In recent days, the company has also begun a prominent newspaper advertising campaign stressing that its process of scrutinising borrowers and their proposals is "very comprehensive".

Van Nieuwkoop could not be contacted yesterday regarding his directorships.

The other directors of Contributory Mortgage Investments, Stephen Robert Kelly and John Leonard Martin, were also unable to be reached.

Securities Commission chairwoman Jane Diplock referred queries about the case to the Companies Office, which did not return calls by press time.

Diplock confirmed the commission was continuing to investigate a further four or five such schemes.

It has already ordered Christchurch-based NZ Commercial Mortgage Brokers to cease acting as contributory mortgage brokers, and last week banned Auckland-based Money Managers from offering its clients contributory mortgages for 12 months.

The commission believes small investors have ploughed around $500 million into such schemes.

The schemes pool small investors' money and lend it to borrowers or developers and usually offer high interest rates, often because the borrowers or developers have been unable to obtain finance from banks or other traditional sources.

But the commission believes many promoters are not following the rules, and that investors are unaware of the risks.

Van Nieuwkoop argued during his trial that bad decisions were made because of work pressures and under-staffing. He said he was unaware of regulations surrounding contributory mortgages.

Judge Barry Morris rejected the arguments, saying it was his "clear view" all the allegations were proven.

Last August, Judge John Hole dismissed similar allegations against two other Reeves Moses Hudig directors, Roger Moses and Gary Stevens. The Companies Office has appealed against the dismissal.

Last year, Reeves Moses Hudig owner Sovereign sold the company to Harts Australasia, and repaid $23 million to small investors, including a large sum relating to van Nieuwkoop loan decisions. But investors lost out on interest of around 11 per cent.

The contributory mortgage business is now called Harts Contributory Mortgages and is owned by Dorchester Pacific.