The liquidator for the Blue Chip group of companies has filed a $40 million claim against the failed property investment group, which banked investors’ funds straight into its own bank accounts instead of into trust accounts.
The statement of claim, lodged in the High Court in Auckland, is against Blue Chip’s former directors and auditor BDO Spicers, and on behalf of about 800 investors, liquidator Jeff Meltzer of Meltzer Mason Heath said.
The suit focuses on the post-2006 period, when Blue Chip sold apartments off development plans in Auckland’s central business district, and alleges there were “inherent flaws” in the business model which led to its collapse.
“These inherent flaws were compounded by the way the business model was operated,” Meltzer said. “Rather than purchasers’ deposits being held in a solicitor’s trust account, they were instead paid to Blue Chip.”
Former Blue Chip boss Mark Bryers faces indefinite bankruptcy in New Zealand after the Official Assignee lodged an objection against discharging him. He was bankrupted in 2009 after his Blue Chip scheme started falling over.
The liquidators said they have been working on recoveries for investors through civil action, and today’s step was the first in what may be a lengthy process.
Bryers escaped a prison sentence in 2010 when he pleaded guilty to 34 charges relating to the company’s mismanagement and improper accounting, angering more than 2,000 investors owed some $84 million who saw his punishment of a $33,750 fine and 75 hours' community work as inadequate.
The group was probed by the Serious Fraud Office, though the white-collar crime investigator decided there was insufficient evidence to pursue a prosecution, even if it operated in a “moral vacuum”.
Bryers has been earning a living in Australia, advising on apparently similar schemes to Blue Chip.
(Story updated to add name of Blue Chip's auditor named in the statement of claim).