Nathans directors sentenced

Nathans Finance directors Mervyn Doolan and Roger Moses will each serve more than two years in jail and have to pay hefty fines for making misleading statements in prospectuses.

Friday, September 2nd 2011, 2:03PM 3 Comments

by Jenny Ruth

Doolan, Moses and a third director, Don Young, were convicted in July of five criminal offences involving offer documents containing untrue statements.

Nathans went into receivership in August 2007 owing 7,082 “mums and dads” investors about $174 million. Investors have been repaid 3.7 cents in the dollar of their principal with the last distribution in December 2009.

Justice Paul Heath of the High Court sentenced Doolan to two years and four months in prison and ordered to pay $150,000 in reparation. Moses, who had been Nathans' chairman, was sentenced to two years and two months in prison and ordered to pay $425,000 in reparation.

Young was ordered to serve nine months home detention and to do 300 hours community work and to pay $310,000 in reparation.

The maximum penalty each director faced was five years in jail and a fine of up to $300,000 and “if the offence is a continuing one, to a further fine not exceeding $10,000 for every day or part of a day during which the offence is continued.”

According to the New Zealand Herald, Heath said on sentencing the three men's offending “did not involve any element of dishonesty, rather the performance of directors was inept. It was far below the standard any investor would expect.”

The Financial Markets Authority (FMA) welcomed the sentencing, chief executive Sean Hughes saying it sends a clear message the courts regard untrue statements in offer documents as a serious breach of the law.

“The guilty verdict in this case, and the penalties imposed, show financial markets participants can expect to be held accountable for their conduct,” Hughes says.

John Hotchin, who was also a director and who founded Nathans and its parent company VTL Group in partnership with Doolan, pleaded guilty to three of the same charges in March and was fined $200,000 and sentenced to 11 months home detention and 200 hours community service.

Stevens and Moses had charges of breaching securities law dismissed in 2001 although an employee was fined $12,000 in 2002 on similar charges.

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Comments from our readers

On 2 September 2011 at 5:32 pm Independent Observer said:
$174,000,000 less 3.7 cents in the dollar leaves mums & dads out of pocket to the tune of $167,562,000 (not counting interest lost).

Deduct the reparations of $885,000 (which will never find their way to the investors) – and you’re left with a debt of $166,677,000

This works out at $801,331 for each month served behind bars by Moses & Doolan ($1.6m for the pair).

Whilst this can be diluted further when the various community hours are factored in by the others – it demonstrates the relativities of the crime & the punishment
On 4 September 2011 at 10:48 pm Forthright said:
I disagree that these men were in anyway inept or honest with what they did. These men were professionals, intelligent men, articulate greedy men who simply put their personal interests, egos and wealth ahead of all their investors and tried to get the High Court to agree that they acted honestly and without malice. Somewhat surprisingly, the reports say Justice Heath found they were honest men. Honest men don’t steal life savings from people with a pen, printed statement and a bunch of lying words. These men did. The result of their failed attempts at mitigation are these rotten men are now convicted criminals and the only sad thing is they will only spend a year in jail before being paroled back to their multi-million dollar homes.
On 6 September 2011 at 8:04 am Independent Observer said:
Forthright: my point exactly!!
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