Three Capital + Merchant directors found guilty of fraud charges
Two former Capital + Merchant Finance directors and former chief executive Owen Tallentire have been found guilty on various fraud charges involving transactions worth about $28 million brought by the Serious Fraud Office (SFO).
Thursday, July 19th 2012, 4:56PM
by Jenny Ruth
"Thousands of New Zealanders' lives were irrevocably changed for the worse from the collapse of Capital + Merchant," says SFO chief executive Adam Feeley.
"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," Feeley says.
Capital + Merchant went into receivership in November 2007.-
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," Feeley says.
Tallentire, 65, was found guilty on two charges under section 220 of the Crimes Act which deals with theft by a person in a special relationship and not guilty of two other charges.
Directors Neal Medhurst Nicholls, 56, and Wayne Leslie Douglas, 58, who owned Capital + Merchant, were found guilty of three of the same four charges and not guilty of the fourth. Nicholls and Douglas were found not guilty of three other charges under section 242 of the Crimes Act which deals with false statements by a promoter.
Feeley says the SFO's two investigations of Capital + Merchant took 16 months and the two trials lasted eight weeks.
"This case involved hundreds of hours of painstaking forensic analysis and the results are a tribute to the team that worked on it," he says.
Feeley says the SFO had acted on a complaint received in March 2010 from receivers Grant Thornton and that the latter's cooperation was an important part in the success of the prosecutions.
"The support of the insolvency profession is critical to uncovering fraud."
The three men have been remanded in custody for sentencing on August 31.
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