Stephen Charles Smith (45) pleaded guilty at the Auckland High Court on April 17 to 25 charges arising out of the collapse of Belgrave Finance Limited.
The Financial Markets Authority (FMA) and the Serious Fraud Office (SFO) brought the charges in a joint prosecution.
Mr Smith pleaded guilty to 19 Crimes Act charges of theft by person in a special relationship, four charges of false statement by promoter, one Securities Act charge of making an untrue statement and one Companies Act charge of making a false statement to a trustee.
The charges relate to more than $18 million of loans made by Belgrave Finance to various related entities between June 2005 and March 2008.
Incorporated in September 2000, Belgrave Finance provided financial accommodation and mortgage facilities for commercial and residential property developments. Funds for lending were sourced primarily from the issue of securities to the public in the form of debenture stock and convertible capital notes.
Receivership & Liquidation
Belgrave Finance was placed into receivership on May 28, 2008 owing about $22 million to approximately 1000 investors. The company was placed into liquidation in April 2010 and at the time, was the 20th finance company to collapse in two years.
Following the collapse, the (then) Securities Commission made initial investigations into the company before referring the matter to SFO in June 2010.
SFO determined that an investigation into the affairs of Belgrave Finance may disclose serious or complex fraud, and SFO commenced an investigation under Part II of the Serious Fraud Office Act in July 2010.
Charges have also been laid against former director Shane Buckley (45), alleged controller of the company Raymond Schofield (51), and legal advisor Hugh Hamilton (61). Mr Buckley was sentenced to three years imprisonment following a guilty plea in August 2012. Mr Schofield was granted a stay of prosecution on the grounds of terminal illness in December 2012, conditional upon review.
Mr Hamilton has been committed for trial at a date to be set.
FMA Head of Enforcement Belinda Moffat said that all directors should treat the guilty plea as a reminder of their duties and responsibilities.
“Anyone who invests their hard-earned money relies on directors to do the right thing. There are standards of behaviour expected and consequences of getting it wrong,” she said.
Positive step
Acting SFO Chief Executive Simon McArley said that Mr Smith’s plea was another positive step towards concluding the response to the finance company collapses.
“The impact of fraud on its victims is substantial. Whether it is the loss of financial investments or jobs, many New Zealanders’ lives and prosperity are irrevocably changed through the impact of fraud. The completion of these prosecutions sends a strong deterrent message that will help ensure that we do not see a repetition of the finance company issues,” he said.
Under the Companies Act, Mr Smith’s conviction means that he is banned from managing companies for five years. He will appear for sentencing on June 7.
A Serious Fraud Office Press Release.
Read another report on some offences under the Crimes Act in this Section.
