Former Capital + directors jailed
Three former Capital + Merchant Finance directors have been jailed for a variety of fraud charges.
Neal Nicholls, 56, Wayne Douglas, 59, and Owen Tallentire, 65, were sentenced in the High Court at Auckland today. Nicholls and Douglas were each jailed for 7 years and six months and Tallentire for 5 years.
The Crown had called for a starting point for sentencing the three of nine years imprisonment. The maximum penalty is 10 years.
But Bruce Gray QC, representing Nicholls and Douglas, argued against that starting point as it was much more severe than that used in the sentencing against Rod Petricevic, a former director of another failed finance company Bridgecorp.
Petricevic represented "the high water mark" in terms of seriousness when considered against other finance company cases which have been before the courts, Gray said.
Petricevic's starting point was 7.5 years.
He was jailed for six-and-a-half years in April, once other factors were taken into consideration
The Capital + Merchant directors were found guilty of fraud charges last month. The charges related to fraudulent transactions involving around $28 million that occurred between 2004 and 2006. The Crown maintained the transactions breached the company's trust deed and resulted in trusts controlled by the accused receiving benefits of almost $16m.
The Serious Fraud Office is appealing a separate not guilty verdict against Nicholls and Douglas over $14.4 million in lending to a Palmerston North student accommodation complex.
The SFO had alleged the loan should have been disclosed as a related party.
The not guilty verdict marked the sole courtroom defeat for the SFO in its finance company prosecutions and outgoing SFO ceo Adam Feeley said there were important points of law, that have significance not only to this case, but also other on-going finance company prosecutions.
Capital + Merchant Finance went into receivership in November 2007 owing 7000 debenture holders $167m and none of that money has been recovered.
The trustee for several failed finance companies, Perpetual Trust, is being lined up for extraordinary legal action by the receivers it appointed to Capital +Merchant.
BusinessDay understands receivers Grant Graham and Brendon Gibson of Korda Mentha are considering making a claim against the trust, which had a legal obligation to supervise the finance company on investors behalf.
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