Archive | Fraud

Ross & Wehipeihana jailed for Celestion development loan fraud

Property developer Leonard John Ross (52) & Michael James Wehipeihana (46), a small shareholder in Mr Ross’s company that built the Waldorf Celestion apartments hotel in downtown Auckland, were both jailed for over 4 years today for fraudulently obtaining a $41-million development loan for the project.

In the Auckland High Court, Justice Rebecca Edwards sentenced Mr Ross to 4 years & 4 months’ jail, and Mr Wehipeihana to 4 years & 3 months’ jail on charges brought by the Serious Fraud Office.

Mr Ross & Mr Wehipeihana lied to the ANZ Bank NZ Ltd about the number of genuine presales they had made to obtain the development loan for Emily Projects Ltd.

They used forged documents, including sale & purchase agreements, to support the loan application. Later, they used additional forged documents when the apartments were onsold to genuine buyers.

After an 8-week trial, a jury found them guilty in July on all charges they faced – 3 of obtaining by deception & 2 representative charges of using forged documents.

The other 2 men involved in the fraudulent scheme were sentenced to 10 months’ home detention. Vaughn Stephen Foster (56), a self-employed consultant, pleaded guilty to one representative charge of obtaining by deception just before the trial began and was sentenced in June. Timothy Upton Slack (56), a lawyer, pleaded guilty to one representative charge of obtaining by deception on 1 September last year and was sentenced later that month.

The Waldorf Celestion has 2 towers on adjacent sites between Emily Place & Anzac Avenue, containing a total 127 apartments.

Mr Ross, who headed the Paxton Pacific development group, incorporated Emily Projects in July 2008 to develop & sell the Celestion apartments on a site bought from the receivers of Blue Chip Financial Solutions Ltd.

Mr Ross was the director and majority shareholder of Emily Projects.

The Serious Fraud Office said Mr Wehipeihana (46) was Mr Ross’s ‘right-hand man’ at the time of the offending and had a small shareholding in Emily Projects Ltd.

Earlier story:
1 August 2018: Trial ends with 2 more guilty of $41 million Celestion development fraud

Attribution: SFO release.

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Stephen Gubb’s wife sentenced to home detention for joint fraud

Shirley Anne Johnston (66), of Wanaka – wife of twice-jailed fraudster Stephen Gubb – was sentenced yesterday to 7 months’ home detention & 200 hours of community work on charges brought by the Serious Fraud Office.

Ms Johnston, a real estate agent, obtained commissions from the Selwyn District Council that she wasn’t entitled to. The council made the payments for 13 property sales she purportedly organised in relation to Izone, a Selwyn District Council business hub developed in Rolleston, Christchurch.

As an employee of Hughes Developments Ltd, Mr Gubb sold land, leases & design-build packages for Izone. Ms Johnston & Mr Gubb fraudulently obtained over $300,000 in commission payments from the council. Almost half of the money was eventually transferred to a bank account controlled by her & Mr Gubb.

Mr Gubb, in his capacity as a property consultant for Hughes, which was supervising the council development, instructed a law firm to pay commissions to a real estate agency that Ms Johnston worked for. The agency then paid Ms Johnston $149,094 for her purported work as its agent.

She was sentenced at the Christchurch District Court on a single representative charge of “obtaining by deception”.

Mr Gubb, who was her co-defendant, admitted the charges in March and was sentenced in May to 2 years 9 months in jail.

Mr Gubb was sentenced to 4 years’ jail in Auckland in 2003, on Serious Fraud Office charges involving about $1.18 million. Victims then included the property consultancy where he was a director & shareholder, Grafton Group Ltd, and another company where he & his second wife, Helen, were shareholders, Beauford Properties Ltd.

Earlier stories:
12 July 2018: Stephen Gubb’s wife admits role in joint Christchurch fraud
24 May 2018: Gubb jailed for fraud again

Attribution: SFO release.

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Trial ends with 2 more guilty of $41 million Celestion development fraud

An Auckland High Court jury yesterday found the owner of Waldorf Celestion apartment hotel developer Emily Projects Ltd, Leonard John Ross (51), and a small shareholder & representative of it, Michael James Wehipeihana (46), guilty of fraudulently obtaining a large bank loan to build the downtown Auckland block.

Mr Ross & Mr Wehipeihana were convicted on 3 charges of obtaining by deception & 2 representative charges of using forged documents, brought by the Serious Fraud Office.

They made false statements and used forged documents relating to apartment unit purchases to obtain a $41 million development loan from ANZ Bank NZ Ltd to allow Emily Projects to construct the building between Emily Place & Anzac Avenue, on the eastern fringe of Auckland’s central business district.

They’ve been remanded on bail until sentencing on 26 September.

2 other men associated with the project were both sentenced to 10 months’ home detention after each pleaded guilty to one representative charge of obtaining by deception.

The lawyer who acted for Emily Projects, Timothy Upton Slack (56), was sentenced last September. He was adjudicated bankrupt in 2013 and automatically discharged in April 2016.

Vaughn Stephen Foster (56), a self-employed consultant to Emily Projects, pleaded guilty just before the 8-week trial began and was sentenced in June.

Site bought from Blue Chip mortgagee

The site was already controversial, because Mr Ross, who’d developed property for Mark Bryers’ Blue Chip NZ Ltd, acquired the Celestion site at mortgagee sale from a lender to Blue Chip.

A Blue Chip company bought the 1081m² site for $4 million in 2004 and it was transferred in 2006 for $10.9 million to another of Mr Bryers’ companies.

Under Blue Chip, the development was known as the Emily and it was to have had 149 units. 85 were sold and investors paid an estimated $11.2 million in deposits.

Emily Projects bought the property after it was put up for mortgagee sale in 2008 by The NZ Guardian Trust Co Ltd, owed $4.475 million. The purchase price covered the Guardian Trust debt and Guardian Trust stayed in behind ANZ Bank as second mortgagee on the new project.

The Celestion was developed as an apartments hotel, containing 119 non-permanent-stay apartments and run by NZ Waldorf Apartments Ltd. It has 16 levels fronting Anzac Avenue and 18 levels in a second tower on Emily Place.

Emily Projects, 88% owned by Mr Ross, 3% by Mr Wehipeihana, went into voluntary liquidation on 22 December 2011. Liquidators Tim Downes & Greg Sherriff (Grant Thornton) said in their final report in 2015 they’d recovered $610,244 of assets. 2 unsecured creditors claimed $671,000 and 53 investor claims totalled $2,890,951.

The one distribution to unsecured creditors was 11.8c in the dollar for a total $420,310.

Earlier stories:
26 September 2017: Lawyer gets home detention for Celestion project finance deception
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: SFO release, Companies Register.

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Stephen Gubb’s wife admits role in joint Christchurch fraud

Shirley Anne Johnston, 66, a Christchurch real estate agent & wife of jailed fraudster Stephen Rolf Gubb, has pleaded guilty to fraudulently obtaining commissions from the Selwyn District Council in Canterbury.

In the Christchurch District Court on Monday, Judge David Saunders remanded Ms Johnston on bail until sentencing on 20 September.

Mr Gubb, 62, a former Auckland property consultant, was jailed for fraud for a second time in May, this time for defrauding the Selwyn District Council over commission payments at its Izone business hub.

Mr Gubb was sentenced to 2 years 9 months in jail after admitting the charges, brought by the Serious Fraud Office. For his first fraud conviction, in Auckland in 2003 on fraud charges involving about $1.18 million, he was sentenced to 4 years’ jail.

The Serious Fraud Office evidence against Ms Johnston was that she obtained 13 commission payments from the Selwyn District Council between March 2007 & July 2015 for work she didn’t do. Nearly $150,000 of these payments was transferred into a bank account controlled by her & Mr Gubb, her husband & business partner.

Ms Johnston received the commissions on 13 land sales as a Phoenix Harcourts agent in Christchurch. However, she wasn’t the real estate agent for these property sales at Izone.

Mr Gubb, who was a property consultant at the business park, instructed Buddle Findlay to pay $300,829 in commissions to Phoenix Harcourts, which then paid Ms Johnston $149,094 for her purported work.

Mr Gubb was jailed for his part in the fraudulent scheme as well as a separate offence of submitting a false invoice to the Selwyn District Council.

Mr Gubb was employed by Hughes Developments Ltd as a property consultant. His primary role was to sell Izone land, leases and design-&-build packages.

Earlier story:
24 May 2018: Gubb jailed for fraud again

Attribution: SFO release.

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Propbd on Q T14Oct14 – South Canterbury verdicts, Turners takeover

2 acquitted & one guilty on 5 charges after South Canterbury trial
Dorchester at 72.4% of Turners

11.30am:
2 acquitted & one guilty on 5 charges after South Canterbury trial

Justice Paul Heath has acquitted South Canterbury Finance Ltd’s former chief executive, Lachie McLeod, and one director, Robert White, on all charges in their fraud trial.

The judge has found another director, Edward Sullivan, guilty on 5 charges, not guilty on 4. He’s been remanded on bail and will be sentenced on 12 December.

All defendants were acquitted on the charge relating to the Crown retail deposit guarantee scheme.

The Serious Fraud Office laid the charges in December 2011 after a 14-month investigation and the trial ran for 5 months in the Timaru High Court, ending in August.

Most of the charges related to specific transactions entered into by South Canterbury Finance involving allegedly undisclosed, related-party lending.

The Serious Fraud Office also alleged that persons associated with South Canterbury unlawfully obtained the benefit of the guarantee scheme for South Canterbury Finance by failing to disclose to the Government that the company had entered into related-party lending.

The Serious Fraud Office estimated the total value of the allegedly fraudulent transactions at $1.7 billion, which included an estimated $1.58 billion from entering the guarantee scheme.

Link: Judgment, R v Sullivan & Ors

Dorchester at 72.4% of Turners

Dorchester Pacific Ltd’s hold on Turners NZ Ltd rose to 72.4% yesterday, from 68.5% on Friday. Dorchester Pacific lodged a full takeover offer for Turners on 18 September.

Attribution: Company & SFO releases.

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Fagan jailed for forgery & false statements

John Grant Fagan (54) has been sentenced in the Palmerston North District Court to 3 years & one month in jail following a Serious Fraud Office prosecution.

Mr Fagan pleaded guilty last September to 15 offences under the Crimes Act of false statement by promoter, forgery & using forged documents.

Serious Fraud Office director Julie Read said today: “The charges arose out of Mr Fagan’s attempts to promote a number of technology & property companies between 2009-11. He used false & forged documents which overstated the value or success of the businesses in an attempt to encourage people to invest with him. He also made false statements overstating the position of the companies.  Mr Fagan’s actions relate to investments of $1.285 million and attempts to gain a further $4.564 million from various individuals & entities.

Mr Fagan was a director of Isthmus Builders Ltd in Auckland in the mid-1990s and, in Palmerston North, companies including Fagan Group Ltd, Manukau Super Developments Ltd & Pacific Properties One Ltd.

Attribution: SFO release.

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Belgrave Finance lawyer jailed

Former Waipukurau lawyer Hugh Hamilton (63) was sentenced to 4 years & 9 months’ jail today on 14 fraud charges arising out of the collapse of Belgrave Finance Ltd.

Justice John Faire found Mr Hamilton guilty in May after a trial in the Auckland High Court on charges brought in a joint prosecution by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA).

Belgrave’s 2 Auckland-based directors both pleaded guilty earlier and were jailed for their roles, Shane Buckley for 3 years and Stephen Smith for 4 years. The alleged controller of the company, Ray Schofield, originally from Waipukerau but more recently from Whitford, was granted a stay of prosecution on the grounds of terminal illness, conditional upon review.

The charges related to more than $12 million of loans Belgrave made to various entities related to Mr Schofield & the company between 2005-08.

Mr Hamilton, a legal advisor to Mr Schofield & the 2 directors, was found not guilty on 25 charges – 11 of false statement by a promoter, 11 Companies Act charges of making a false statement to a trustee & 3 theft charges.

Earlier stories:
18 May 2014: Lawyer guilty on 14 Belgrave charges
16 September 2011: SFO & new authority both lay charges over Belgrave Finance collapse
28 May 2008: Belgrave Finance into receivership

Attribution: FMA release.

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Lawyer guilty on 14 Belgrave charges

Former Waipukurau lawyer Hugh Hamilton (62), who was Central Hawke’s Bay mayor for 6 years, was found guilty at the Auckland High Court on Friday on 14 charges arising out of the collapse of Belgrave Finance Ltd.

Justice John Faire remanded Mr Hamilton on bail until sentencing on 4 July.

Belgrave’s 2 Auckland-based directors both pleaded guilty earlier and were jailed for their roles, Shane Buckley for 3 years and Stephen Smith for 4 years. The alleged controller of the company, Ray Schofield, originally from Waipukerau but more recently from Whitford, was granted a stay of prosecution on the grounds of terminal illness, conditional upon review.

The Serious Fraud Office and the Financial Markets Authority brought the charges in a joint prosecution. They related to more than $12 million of loans Belgrave made to various entities related to Mr Schofield & the company between 2005-08.

Mr Hamilton, a legal advisor to Mr Schofield & the 2 directors, was found not guilty on 25 charges – 11 of false statement by a promoter, 11 Companies Act charges of making a false statement to a trustee & 3 theft charges.

Justice Faire said he was satisfied Mr Hamilton “had knowledge that Mr Schofield, Mr Smith or Mr Buckley, through their borrowing, were causing Belgrave to be in breach of the debenture trust deed.”  Justice Faire also found beyond reasonable doubt that Mr Hamilton “intended to assist in the offending”.

Belgrave, incorporated in 2000, was placed in receivership in May 2008, owing 1000 investors about $22 million. It was wound up in April 2010, making it the 20th finance company collapse in 2 years.

Belgrave lent heavily on second mortgages for commercial & residential property developments, sourcing its funds primarily from the public in the form of debentures & convertible notes.

Receivers entered 3 of Mr Schofield’s companies in December 2008 – Kiwi Freeholds Queen Street Ltd, Kiwi International Hotel Queen Street Ltd & Schofield Kiwi Freeholds Ltd. He also owned the Kooralbyn Resort in south-eastern Queensland & the Airport Gateway Hotel at Mangere.

Earlier stories:
16 September 2011: SFO & new authority both lay charges over Belgrave Finance collapse
28 May 2008: Belgrave Finance into receivership

Attribution: Judgment, FMA release.

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Propbd on Q T18Feb14 – Mayer jailed for 6 years, Precinct profit soars & waterfront deal looms

Mayer gets 6 years’ jail for $47 million mortgage fraud
Swaps gains lift strong Precinct profit, company in talks on exclusive waterfront deal

1.34pm:
Mayer gets 6 years’ jail for $47 million mortgage fraud

Former Auckland property developer & investor Malcolm Duncan Mayer (57) was sentenced today to 6 years’ jail for orchestrating a $47 million mortgage fraud.

He was found guilty in December of 16 charges of dishonestly using a document & 10 charges of using forged documents, in a prosecution brought by the Serious Fraud Office.

Mr Mayer had used false loan applications and submitted them to fund management company Trustees Executors Ltd (TEL) for 26 properties in & around the Auckland region, between December 2003 & August 2007.

Swaps gains lift strong Precinct profit, company in talks on exclusive waterfront deal

Precinct Properties NZ Ltd increased net profit after tax by 67% to $39.5 million in the December half on net operating income up 22% to $32 million – up from 2.63c to 3.1c/share. The company has lifted its first-half dividend by 5.5%, from 2.56c to 2.7c/share.

Precinct also announced today that it is in exclusive negotiations with Waterfront Auckland to become its development partner for commercial office within the Innovation Precinct at the Wynyard Quarter, on the Auckland waterfront.

A big factor in the increase was the $10.6 million fair-value gain in interest rate swaps ($1.7 million a year earlier), which chief executive Scott Pritchard said reflected the increase in market interest rates since 30 June 2013 and the unwinding of interest rate positions.

Rental revenue for the 6 months was up 20% to $82.6 million ($68.9 million), primarily due to new rental income from recent acquisitions. Excluding that, rent was up 3%.

Attribution: SFO, company release.

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Forex trader jailed for putting client funds to own use

Currency trader Rene Alan Chalmers (43) was sentenced in the Auckland District Court yesterday to 4 years 3 months’ jail for accessing client funds for his own benefit.

Serious Fraud Office director Julie Read said the agreed capital loss to investors for the period relating to the charges was $1.5 million. Mr Chalmers, formerly of Christchurch and more recently of Tauranga, pleaded guilty last August to 14 charges of theft by a person in a special relationship, dishonestly taking or using a document and false statement by a promoter, relating to foreign exchange trading & 3 property purchases in 2011 & 2012.

Ms Read said many of Mr Chalmers’ initial investors were family members & friends, and later included other colleagues & acquaintances. He carried out his trading activities through his company, Chalmers Cameron Investments Ltd, which went into voluntary liquidation in May 2012.

Investors believed they were giving Mr Chalmers their money for the purpose of forex trading. Ms Read said $740,000 of investor funds was used contrary to that purpose and Mr Chalmers reported false gains to investors.

Attribution: SFO release.

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