CEO who presided over finance company failure 'as bad as any' potentially faces doubling of 5-year prison term

Owen Francis Tallentire, the ex-CEO of failed property financier Capital + Merchant already serving a five year jail sentence stemming from a Serious Fraud Office prosecution, faces up to another five years in jail after pleading guilty to charges brought by the Financial Markets Authority.

The FMA says Tallentire has pleaded guilty to three charges under the Securities Act. He pleaded guilty to two charges of making an untrue statement in a registered prospectus and one charge of distributing advertisements which included an untrue statement.

The charges he has pleaded guilty to carry a maximum penalty of five years imprisonment or fines of up to NZ$300,000. The FMA and Tallentire will make sentencing submissions ahead of his March 15 sentencing.

Under the Securities Act, Tallentire’s conviction means he is automatically banned from managing companies for five years, FMA head of enforcement, Belinda Moffat said.

Capital + Merchant Finance owed NZ$167.1 million to about 7,500 investors when it was tipped into in receivership in November 2007. Investors have got nothing back. Then SFO boss Adam Feeley last year described Capital + Merchant's failure as being "as bad as anything which occurred in the (finance company) industry."

Tallentire is currently serving a five year prison sentence after he was found guilty on two charges of theft by a person in a special relationship in the prosecution taken by the SFO. Former Capital + Merchant directors Neal Medhurst Nicholls and Wayne Leslie Douglas were sentenced to seven and a half years prison following the SFO case.

Moffat welcomed the guilty plea.

"This case is a further illustration of the importance of holding to account those who are responsible for untrue statements made to investors in offer documents, particularly in cases such as this where the conduct is particularly serious and the market impact is great," Moffat said.

"The prosecution involving similar charges against other directors of Capital + Merchant Finance will begin on February 11."

Capital + Merchant's trustee was Perpetual Trust and its auditor was BDO Spicers.

(Update adds further detail).

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


More guilty pleas. Here's a fresh release from the FMA today:
Two more directors of Capital + Merchant Finance have today entered guilty pleas to three charges laid by the Financial Markets Authority under the Securities Act 1978.
Robert Gordon Sutherland and Colin Gregory Ryan, who reside in Australia, pleaded guilty to two charges of making an untrue statement in a registered prospectus and one charge of distributing advertisements which included an untrue statement. They will be sentenced on 15 March at the High Court in Auckland.
Under the New Zealand Securities Act and the Australian Commonwealth Corporations Act, their convictions mean they are automatically banned from managing companies in New Zealand and Australia for five years.
Last week another Capital + Merchant director, Owen Tallentire, pleaded guilty to the same charges.
"The law requires Directors to ensure that investors receive accurate information in disclosure documents. FMA regards the guilty pleas of Mr Sutherland and Mr Ryan as reflecting their failure in their obligations to investors in this respect,” said FMA Head of Enforcement Belinda Moffat.
The prosecution against Capital + Merchant directors Neal Nicholls and Wayne Douglas is scheduled to begin on 11 February.
Capital + Merchant Finance (in receivership and liquidation) owed $167.1 million to about 7500 investors when it was placed in receivership in November 2007.