Restaurateur accused of 'grand-scale fraud'
An Auckland restaurateur is accused of committing a ''bold fraud on a grand scale'' that sucked in casino executives and political figures, losing $3 million of investor funds along the way.
Among those he's alleged to have duped is National Party president Peter Goodfellow.
The Auckland District Court yesterday heard allegations Loizos Michaels engaged in elaborate deceptions in 2007 and 2008 that began with claims he represented Macau-based gambling empire Melco that intended to take over the SkyCity Entertainment Group.
Michaels is charged by the Serious Fraud Office with 31 counts of obtaining by deception and causing losses by deception. He pleaded not guilty.
In opening submissions prosecutor Christine Gordon told the court Michaels had convinced senior Christchurch Casino employees Stephen Lyttelton and Peter Arbuckle to quit their jobs and work on the fictitious takeover.
Gordon said the vehicle to be used to acquire the NZX-listed company was New Zealand Casino Services (NZCS).
According to the Companies Office Lyttelton and Arbuckle, as well as Goodfellow and cabinet minister Gerry Brownlee, were directors of NZCS when it was first set up in June 2007.
Both Goodfellow and Brownlee resigned within weeks of being appointed, with the latter saying the company was looking at business opportunities in the casino industry at the time of his resignation.
Brownlee then said he was distancing himself from NZCS as it limited his ability to make public comment on gambling issues: ''I don't want to be doing it from where I might be seen as a participant in the industry after one month of having my name on the company registry which was probably fairly stupid on my part.''
While Goodfellow is listed as one of 50 prosecution witnesses, Brownlee is not. He was unavailable for comment last night. The court heard once Lyttelton and Arbuckle had committed all their own funds to the scheme Michaels pressed them to recruit more investors.
Lyttelton then asked Goodfellow to invest, Gordon said.
"As of result of this approach Goodfellow, who at this stage had not met Michaels, loaned Lyttelton $114,000," she said.
"Lyttelton gave this money to Michaels in cash in a car outside Goodfellow's office," Gordon said.
"After these loans to his friend, Goodfellow met Michaels and following that meeting he queried his legitimacy. However, by that stage Lyttelton had been so drawn into Michaels' web of deceit that he was convinced the restaurateur was all who he said he was," Gordon said.
Michaels' lawyer, Peter Kaye, said his case would rest on whether it was proved any of the misrepresentations alleged by the Crown were ever made by his client.
"That's going to be a test of credibility and reliability of the witnesses," he said.
Gordon said Michaels came to the attention of Lyttelton and Arbuckle after losing $130,000 as a VIP gambler at the Christchurch Casino in early 2007.
Michaels purported to be acting as a "corporate raider" doing "due diligence" on Sky City's New Zealand assets in preparation for the SkyCity takeover, she said.
He presented himself falsely as a man of wealth and influence, she alleged, including claims he was related to a Cypriot family controlling an international shipping line. Gordon described these claims as ''elaborate, and yet plausible, lies.''
''He played a brazen scam at the highest level, manipulating those he came across to gain more profile or cash or both,'' Gordon said.
By mid 2007 both Lyttleton and Arbuckle had quit their jobs in Christchurch and relocated to the Edgewater Motel in Orewa, north of Auckland.
From there they worked on the takeover plan, including a destabilisation campaign in the media against SkyCity.
Gordon said the court would hear from witnesses who would tell of Michaels wearing plenty of gold jewellery and Rolex watches and driving late-model BMWs.
She said Michaels insisted on being paid in cash and none of the money has been recovered.
Gordon said the funds were either withdrawn in cash or used to pay rent on Michaels' Greek restaurant on Auckland's Ponsonby Road.
The judge-alone trial will continue tomorrow.
- © Fairfax NZ News
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