Capital + Merchant directors guilty
Thu, 19 Jul 2012 4:02p.m.
By Tony Field
Capital + Merchant directors Wayne Douglas and Neal Nicholls and former chief executive Owen Tallentire have been denied bail while they await sentencing at the end of next month.
The charges related to transactions involving approximately $28 million that occurred between 2004 and 2006. It was alleged that these transactions (collectively known as the Clyde 1 & 2 and Numeria 1 & 2 transactions) were entered into in breach of the restrictions contained in the company's trust deed, and resulted in trusts controlled by the accused receiving benefits totalling approximately $15.9 million.
All three men were found guilty in respect of the charges relating to Clyde 1 & 2, and Nicholls and Douglas were also found guilty ion the charge relating to the Numeria 1 transaction.
Tallentire was found not guilty in respect of Numeria 1 & 2, and Nicholls and Douglas were found not guilty in respect of Numeria 2.
Justice Wylie denied all three men bail while they await sentencing at the end of next month.
They face potential jail terms of up to seven years.
Their lawyers had applied for bail, arguing that it was far too soon to say whether prison sentences were inevitable.
The Crown opposed bail on the grounds that the men had been found guilty on significant charges and the transactions involved in the offending were substantial.
Justice Wylie said although prison sentences were likely they were not inevitable.
Wayne Douglas and Neal Nicholls were also found not guilty on three counts laid under the Crime Act of theft by a person in a special relationship and of making a false statement by a promoter. Those charges related to a $14.4million loan made in relation to a Palmerston North property development known as The Hub.
SFO Chief Executive, Mr Adam Feeley said that although the collapse of Capital + Merchant had not received the same attention as some other failed finance companies, the two investigations into its affairs had been one of SFO's highest priorities.
"Thousands of New Zealanders' lives were irrevocably changed for the worse from the collapse of Capital + Merchant. Its failure was as bad as anything which occurred in the industry, with $190 million invested in it by approximately 7,000 members of the public. Nothing has been recovered for them, in contrast to most other finance company collapses where at least some recoveries have been made."
He said that the case was one of the most important commercial fraud cases in recent years.
"This was a hugely complicated case involving deeply cynical transactions. The defendants used convoluted legal structures and opaque accounting methods to fool the public into investing for one purpose and then using that money for other, unauthorised, purposes. The decision makes it clear that directors will be held accountable where they fail to act in accordance with their obligations to investors."
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