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Capital + Merchant directors face criminal charges over misleading prospectuses
The Securities Commission has laid criminal charges against Capital + Merchant Directors Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland, alleging they issued prospectuses that mislead investors over related party lending, cashflow and liquidity. The charges could result in up to 5 years jail or NZ$30,000 in fines, the Securities Commission said.
Capital and Merchant was put into receivership in November 2007 owing 7,000 investors NZ$167 million. Receivers have said none of this will be recovered. See our DeepFreeze list here.
See the full Securities Commission statement below:
The Securities Commission has laid criminal charges and issued civil proceedings against Capital + Merchant Finance directors Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland. Criminal charges have also been laid against Wayne Douglas, who resigned as a director in February 2007.
These proceedings follow extensive investigations by the Commission since Capital + Merchant Finance went into receivership on 23 November 2007 owing approximately $167 million to some 7,000 investors. According to the receivers it is likely that none of this will be recovered.
"The Commission alleges that Capital + Merchant Finance's offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to related party lending, insurance cover and liquidity," Commission Chairman Jane Diplock says.
The Commission alleges that the directors made untrue statements in the registered prospectus and investment statement dated 15 August 2006, mainly in respect of related party lending and loan management. The Commission also alleges that the current four directors made similar untrue statements in the registered prospectus and investment statement dated 10 September 2007, as well as untrue statements about liquidity and cashflow and in the prospectus incorrectly stated that no loans were impaired and the company's financial position had not materially and adversely changed since its last balance date.
In addition, the Commission alleges that five advertisements distributed during 2007 contained untrue statements about insurance cover for capital secured debenture stock and some of the matters referred to above. These claims do not apply to Mr Douglas who had resigned his directorship by then.
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The Commission further alleges that Mr Nicholls and Mr Ryan knowingly misled the Commission.
Criminal charges
Most of the criminal charges are laid under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000. Criminal charges are also laid against Mr Nicholls and Mr Ryan under section 59A of the Securities Act and carry a maximum fine of $300,000. The charges were filed at the District Court at Auckland on 18 December 2009. First Court appearances are scheduled for 8 April 2010.
Civil proceedings
The Commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the current four directors. Under the Securities Act these applications must be made together.
The Commission's main purpose in making them is to take the first step towards compensation for investors who invested under the 10 September 2007 prospectus. A declaration of civil liability is conclusive evidence that can be relied upon by either the Commission or investors themselves in any subsequent claims against the directors for compensation. The Commission will consider pursuing compensation claims in due course should it be in the public interest to do so.
Investors can take their own civil compensation proceedings whether or not the Commission also has power to do so.
The civil proceedings are issued under section 55C and related sections of the Securities Act. They were filed on 30 November 2009 at the High Court at Auckland.
Other investigations
The Commission acknowledges the assistance of Grant Thornton, the Capital + Merchant Finance receivers, with this investigation.
As these proceedings are now before the Court it would not be appropriate for the Commission to comment further.
12 Comments
Whats a few grand in
Whats a few grand in fines when $167,000,000 has gone up in smoke and affected the lives of 7000 investors.I hope the judge gives then 5 years.Why do white collar criminals aways seem to walk away with a small fine, with the damage they have caused and the lives they have ruined.
May this be the first
May this be the first of many.
The prospectus sent out by Lombard to their unfortunate investors a matter of weeks before the whole outfit went belly up was worse in many ways than C&M's.
Signed off by none other than Sir Doug Graham. The PTB are donkey deep in this crap.
May they rot in hell.
@KiwiDave, Aren't Nathans Finance directors
@KiwiDave, Aren't Nathans Finance directors also under the same charges? http://www.sec-com.govt.nz/new/releases/2008/2312081.shtml
Haven't heard anything more about that, and that was announced well over a year ago. These things take far too long to get to court. In the US, they are far better at treating these people properly. NZ is far too weak.
By the time it gets to court, many people would have forgotten all about it.
@john , And the stress
@john , And the stress has caused a few early deaths and illnesses I am sure.
In the old days they
In the old days they used to cut your hands off for stealing,if that was the case now, these crooks would have stumps below their shoulders
@john I don't think too
@john I don't think too many people would disagree to that, and I am sure a lot of people also wouldn't mind seeing these people who rip others off, being put in prison for life, considering the lifetime effects they have had on people. Despite it's flaws, I think the USA are far better at handling this type of situation. We really need to make an example of these people if they are guilty.
From memory related loans of
From memory related loans of more than $250,000 had to be aproved by the trustee. however there were loans of $5,000,000 from Capital Merchant Finance being advanced to Numeria Finance/ leasing as it could not raise enough funds from Debenture holders or Bank funding lines. I am not sure if the trustee’s were aware of this or how it was recorded. Also loans for non land assets, ie plant, vehicles and so forth for borrowers of Capital Merchant were being funded by Numeria. These assets tended to go belly up as well and in some cases vehicles were sold to staff members rather than pubic tender for these failed assets. The whole thing is a mess and a maze of deception that will take the SFO and Securities commisson considerable time to untangle. My suggestion is they get hold of the staff at the time who will be able to point them in the right direction. A lot of what was done was not recorded directly on paper however staff would be able to point them in the right direction.
Goodness oh deary me...we can't
Goodness oh deary me...we can't have members of the old boys club being sent down just because they ripped off a few oldies for tens of millions...think of the damage it would do...the party donations that wouldn't happen....no no no it must not be allowed...find them jobs in the finance sector where they can be of benefit to the nation driving property investment to keep the ponzi bubble intact.....
Good one Wally
Good one Wally
Wally, that was seriously funny.
Wally, that was seriously funny.
Below articles are a great example of how creative sophisticated financial products have made this predatory lending cycle the most damaging in history, the article shows how sophisticated sellers were selling investments with a premium paid to purchase with a Put option attached that basically said if the product does not make a capital gain in a set period of time the seller would buy back the product at the price on the day of sale, when the market suffers a corrections many of the "writers" of these Put Options cant cover their liabilities, leaving the investor dubed of what many had been told is an insurance policy:
http://www.stuff.co.nz/business/industries/3478655/I-can-t-pay-19m-in-da...
http://www.theoptionclub.com/put-option.html
these bubbles are pumped and pumped until they must burst, but if the assets they involve, such as mortgages and shares, make up part of the capital backing upon which the banking sector has expanded much more created credit, we are told they can't be allowed to lose value or loans will have to be called in, in line with the declineing asset values, contracting the amount of money in circulation, causing calamity, thus there is nothing more that can be done except the PAYE taxpayer having the debt gun held to their head and being volunteered to pledge many years of future taxes to refloat the rorted system, no option, that is if you fall for the propaganda that our only option is to borrow our money supply of foreign third party elements who create money out of freshair then issue it as credit with interest attached secured against the borrowers own resources they put up as colateral, when infact we can cut out the middlemen, create our own money and issue it as a grant or as credit without interest attached to unlock the potential of our own resources that would then back it.
If what these mongrels are doing to us was not so serious it would be quite laughable what they get away with so easily, I'm sure they must be falling about the place.
I wonder how many people
I wonder how many people in Aotearoa would happily give up 6 years of their freedom, (Let's say 3 - 4yrs on good behaviour) for $18m? Why is it that legislation like the 'RICO' Act can seize ALL the assets of a person selling drugs, but limit fines levied against financial gangsters to $500k? The game is rigged from top to bottom. However, from time to time, revolution and blood-letting brings things back into balance.
He's at it again, Owen
He's at it again, Owen Tallentire is on the prowl in Brisbane QLD, we heard he is involved with property group Wardell Investments/ Private Equity, the sooner the courts put him away the better.