Two ex-directors of Five Star Consumer Finance have been jailed for more than two years each after pleading guilty to stealing NZ$50.1 million.
The two, Nicholas Kirk and and Marcus Macdonald, were sentenced to two years and eight months and two years and three months, respectively. The sentences related to charges brought under the Crimes Act by the Serious Fraud Office (SFO) and the Ministry of Economic Development relating to the theft of NZ$50.1 million by a person in a special relationship. The charges stemmed from related party lending.
"The SFO is pleased with the delivery of a custodial sentence," SFO CEO Adam Feeley said. "This is the first sentencing in relation to a major finance company collapse, and continues the clear message from the Courts as to the seriousness of white collar crime.”
Anthony Bowden, another ex-Five Star director, was also sentenced on Securities Act charges today. He got nine months home detention and 300 hours of community service. A fourth man, Neill Williams a former Five Star manager - who also pleaded guilty and was due to be sentenced today, has now requested a disputed facts hearing which has been set down for March.
Kirk pleaded guilty to all the following Securities Act and Financial Reporting Act charges;
- Three charges of misstatements in an advertisement or registered prospectus (pursuant to s58 of the Securities Act 1978)
- One charge of false or misleading statements (pursuant to s41 of the Financial Reporting Act 1993)
- 36 charges of offering, distributing or allotting in contravention of the Securities Act (pursuant to s59 of the Securities Act 1978).
Williams and Macdonald both also pleaded guilty to all of the charges. Bowden, however, pleaded guilty to the same charges, except for the charge of false or misleading statements.
Meanwhile, Bowden and Williams also face charges brought by the SFO under the Crimes Act in relation to Five Star Consumer Finance. A trial date has yet to be set for them.
Five Star Consumer Finance accepted deposits from the public and invested those deposits in consumer and commercial lending. Five Star was placed into receivership on 29 August 2007 owing investors' about NZ$46 million. Five Star Finance Limited, Five Star Debenture Nominees Limited and Antares Finance Holdings Limited were related companies, forming the wider Five Star group.
The collapse of Five Star Finance, Five Star Consumer Finance and Antares, between August 2007 and June 2008, left just over NZ$100 million owed to about 2,400 depositors. See our Deep Freeze List here.
Five Star Consumer Finance receivers Richard Agnew and Colin McCloy of PricewaterhouseCoopers say secured debenture holders have so far got back 22.5 cents in the dollar and should receive another 2.5c, excluding any recoveries from the legal action.
Aside from the MED's and the SFO's criminal proceedings, there are also civil proceedings outstanding with a trial set for March 2012.
"At this stage, and while the subject matter is before the courts, it is not appropriate to comment further on the merits and likely outcome of the various proceedings," the receivers say.
"It is difficult to quantify both the quantum and timing of any further distributions to investors as they are dependent on the outcome of the litigation proceedings."
And Agnew and McCloy are investigating the possibility of yet more action, this time against "other parties," in respect to their conduct prior to receivership.
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