Published 17 July 2009
The Companies Office has laid criminal charges in the Auckland District Court against Clegg & Co Finance Ltd directors Brian Clegg & Pamela Nicholson-Clegg, relating to 2 prospectuses & statements to the company’s trustee. They’re due to appear in court on Thursday 30 July.
Mr Clegg faces 8 charges and Ms Nicholson-Clegg 7. Ms Nicholson-Clegg resigned as a director on 25 September 2007 and the company’s trustee, Covenant Trustee Co Ltd, called in receivers on 4 October 2007.
Registrar of Companies Neville Harris said yesterday: “Both directors face charges relating to statements in the company’s 2005 & 2006 prospectuses and statements made to the company’s trustee. Brian Clegg faces a separate charge in relation to misleading or deceiving the Securities Commission.”
The Companies Office’s National Enforcement Unit began its investigation after the Securities Commission referred the matter to it.
The receivers, Brian Mayo-Smith & Shaun Adams (BDO Spicers Ltd), said in their report on 5 May they’d made 4 payments to investors, worth a total 42.5c:$1 or $6.4 million, and were about to make another 4.5c payment, taking the total payout to $7.1 million.
Those payments have been funded primarily from the finance & leasing receivables ledgers, but also from collateral security over the directors’ Algies Bay property. The Cleggs moved there from Parnell in early 2007.
The receivers said they’d continued to downgrade anticipated returns – from a total of 56-69c:$1 expected last August to a range of 50-60:$1 in their latest report. Clegg & Co had 496 investors at the time of receivership, with deposits of $15.1 million.
The Clegg & Co Finance receivers had the group’s parent company, Clegg & Co Ltd, wound up in April 2008, with an expected shortfall of $4.3 million.
Mr Clegg & Ms Nicholson-Clegg face 2 charges each under section 58 of the Securities Act for providing false statements in the company’s 2005 & 2006 prospectuses, and a further 5 charges each under section 377 of the Companies Act for providing false information in relation to the extent of related-party lending in reports provided to the trustee. Mr Clegg faces one charge under section 59A of the Securities Act for misleading the Securities Commission.
Maximum penalties are 5 years’ jail or a fine up to $300,000 under section 58; a fine up to $300,000 under section 59 and, if the offence is a continuing one, a further fine up to $10,000 for every day the offence is continued; and 5 years’ jail or a fine up to $200,000 under section 377.
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Attribution: National Enforcement Unit release, receivers’ & liquidators’ reports, story written by Bob Dey for the Bob Dey Property Report.