Lawyer Timothy Upton Slack (55) was sentenced to 10 months’ home detention today for his role in getting finance for the Celestion apartments hotel project in 2008.
The development by Emily Projects Ltd (Leonard Ross) was close to not proceeding in the early days after the global financial crisis had started to impact, for lack of sales.
ANZ Bank NZ Ltd agreed to advance $41 million under an agreement signed in December 2008, provided Emily Projects had qualified presales on 80 of the proposed 127 apartments, all buyers unrelated to the developer & with cash deposits.
In the Auckland High Court today, Justice Kit Toogood said Mr Slack gave the bank several undertakings & personal assurances “that you knew were blatant lies”.
The judge said: “Although you said there was minimum risk to the bank, it was for the bank to decide that…. Deliberate & planned deception increases your culpability.” He said the bank was likely to reconsider its lending procedures.
Mr Slack made false representations that the preconditions had been satisfied. In fact, Justice Toogood said, “Emily Projects had in fact achieved few if any of those presales. The letters of acknowledgment were entirely false. In fact no deposits had been paid and no cash deposits were held.”
The judge said Mr Slack “had no idea the deposits & letters of acknowledgment were false”, but he went on to provide several false undertakings that his law firm held deposit funds in its account. The firm charged Emily Projects $488,000 in fees for its work.
The bank also didn’t lose out. The project, between Emily Place & the foot of Anzac Avenue in the Auckland cbd, was completed, the bank collected interest on its loan and the development finance was paid back.
Mr Slack pleaded guilty on 1 September to one representative Crimes Act charge of obtaining by deception. Justice Toogood said the maximum jail term was 7 years, but the agreed starting point in setting penalty was 4 years’ jail.
He told Mr Slack: “You were disciplined by the Law Society in 2005 for another misdemeanour. That disqualifies you from any discount for good character.”
However, the judge discounted the prospective jail term by 16% for remorse & future consequences and took the discount to 25% for an early guilty plea, plus 20% for the “moderate” degree of support he gave the Serious Fraud Office, which prosecuted.
Justice Toogood told Mr Slack: “Your complicity was essential to the deception [but] you did not devise the fraud scheme yourself.”
The judge also said Mr Slack’s humiliation & loss of income – and there is doubt that he will retain his certificate to practise as a lawyer – added to the discount, reducing the potential jail term to 22 months: “That means you are eligible for home detention.”
Justice Toogood did not explain how a longer jail term translated into a shorter period of home detention, but commented: “I regard your reactions to your disgrace that you have real insight into your offending & its causes and pose no risk of reoffending…. Imprisoning you would serve no useful purpose.”
Mr Slack was adjudicated bankrupt in 2013 and automatically discharged in April 2016.
The other 3 defendants in this case – property developer Leonard John Ross and 2 men who worked for him, company director Michael James Wehipeihana and self-employed consultant Vaughn Stephen Foster – will face trial on 5 June 2018.
Justice Toogood told Mr Slack: “I have made no findings at all about the guilt or innocence of your codefendants.”
3 September 2017: Celestion finance deal lawyer pleads guilty
12 April 2017: Remand on Celestion development fraud allegations
17 February 2017: SFO alleges fraud in Celestion development loan deal
8 May 2009: Ross’ Emily Projects starts work on ex-Blue Chip site
Attribution: Court sentencing.