Capital + Merchant directors face SFO charges
The Serious Fraud Office (SFO) has arrested one current and one former director of Capital + Merchant Finance.
Thursday, December 9th 2010, 2:05PM
The Serious Fraud Office (SFO) has arrested one current and one former director of Capital + Merchant Finance.
Neal Nicholls and Wayne Douglas face six charges under the Crimes Act involving nearly $14.5 million in loans made between 2002 and 2004 to three companies that converted two Palmerston North high rise office blocks into student accommodation.
When C+MF was placed into receivership in November 2007 the company owed $167.1 million to approximately 7,000 investors.
The SFO alleges that as directors of C+MF Nicholls and Douglas held investors' funds subject to a special relationship with investors, and that they used their position to apply those funds in a manner "inconsistent with that relationship."
SFO chief executive Adam Feeley said the charges relate to one set of transactions and that the SFO "is continuing to investigate a number of other transactions that are of concern to us."
Nicholls and Douglas have been remanded on bail and will next appear on December 16.
The SFO began its investigation in March 2010 after a complaint from C+MF receivers Grant Thornton.
The SFO has now laid serious Crime Act charges against persons involved with a number of finance companies including National Finance, Bridgecorp, Five Star Finance and Capital + Merchant.
"The confidence and financial security of New Zealand investors will not be restored without thorough and timely investigations into all of these companies and, where appropriate, serious criminal charges will need to be laid," Feeley said.
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