Directors of failed finance company, Capital + Merchant Finance Limited (Capital + Merchant), were sentenced to prison terms in the Auckland High Court on August 31, 2012.
Neal Medhurst Nicholls (56), Wayne Leslie Douglas (58) and Owen Francis Tallentire (65) were found guilty in July of fraud charges brought by the Serious Fraud Office (SFO).
Mr Nicholls and Mr Douglas were sentenced to seven and half years, and Mr Tallentire was sentenced to five years.
The charges relate to an SFO investigation into 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 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 defendants were found guilty in respect of the charges relating to Clyde 1 & 2. Mr Nicholls and Mr Douglas were also found guilty in respect of the Numeria 1 transaction. They were found not guilty in relation to the Numeria 2 transaction.
The SFO is seeking to appeal not guilty verdicts against Mr Nicholls and Mr Douglas from a separate Capital + Merchant trial in April-May. These relate to the non-disclosure of alleged related party lending totalling approximately $14.4 million.
Capital + Merchant Finance Limited (Capital + Merchant) was incorporated on January 18, 2002, and operated as a finance company providing financial accommodation and mortgage facilities for commercial and residential property development. Funds for lending were sourced primarily from the issue of securities to the public in the form of debenture stock and convertible capital notes.
Mr Nicholls and Mr Douglas were the founding directors and beneficial owners of Capital + Merchant. Mr Tallentire, who was appointed as Chief Executive, also became a director later. He resigned as a Director in February 2007.
Capital + Merchant were placed into liquidation under the control of the Official Assignee in December 2009.
SFO Chief Executive Adam Feeley said, “We have long maintained that the collapse of Capital + Merchant represented some of the worst excesses of the finance companies saga, and these sentences support that point of view.
“They will send a strong message to the commercial sector regarding the severity of punishment that will follow cynical crimes of this kind.”
Source: Serious Fraud Office Press Release