John Gray, the former accountant for National Finance 2000, was sentenced to 18 months jail today after pleading guilty to theft and false accounting.
National Finance 2000 was the first of 61 finance companies, mortgage trusts and investment funds to be frozen or collapse between May 2006 and August this year, our Deep Freeze list shows.
National Finance 2000 director and owner (Trevor) Allan Ludlow is also charged by the Serious Fraud Office with misuing funds, but has yet to enter a plea. Used car lender National Finance 2000 owed NZ$25.5 million to 2,026 account holders and was put into receivership in May 2006. About 48% of the money was recovered and repaid to investors.
Nelson financial advisor Warren Green was sentenced to 5 1/2 years prison in May 2008 after stealing NZ$2.06 million from 65 investors via his Mobile Finance Centre operation, but it did not register a prospectus. Green was released from prison last month after serving less than half his sentence. Former Five Star Consumer Finance Director Marcus Macdonald pleaded guilty to charges of theft by the Serious Fraud Office last month, but has yet to be sentenced.
The Serious Fraud Office said it welcomed the custodial sentence for John Gray, although Gray has indicated he will appeal the decision and ask for home detention. He remains out on bail pending the appeal.
He had earlier pleaded guilty in the District Court in Auckland to theft by a person in a special relationship, which related to misuse of National Finance funds in breach of its Trust Deed requirements.
Gray also pled guilty to a charge of False Accounting whereby he concealed the true recipient of funds by creating a false document.
SFO Chief Executive Adam Feeley said the custodial sentence was a significant result.
"The delivery of a custodial sentence sends a clear message as to the Courts view on serious white collar crime," Feeley said.
He said the decision would have important ramifications for the additional finance company cases under investigation and prosecution by the SFO.
“Results like this demonstrate that the seriousness of white collar crime. It will be of great comfort to investors, and sends a positive message to the investing public about the integrity of our financial markets, and the consequences for breaching the law."