Ex-mayor guilty of theft
Authorities have welcomed the conviction of a finance company legal adviser for enabling his client to breach its trust deed and take out related-party loans.
Former mayor and lawyer Hugh Hamilton, 62, was found guilty in the High Court in Auckland this morning of obfuscating links between his client and Belgrave Finance, allowing prohibited related-party loans that cost investors millions.
Hamilton, 62, Belgrave's former legal adviser and partner at DAC Legal, was convicted on 14 charges of theft by a person in a special relationship.
Justice John Faire found Hamilton not guilty on a further 27 charges of theft and making false statements following the joint prosecution brought by the Financial Markets Authority (FMA) and the Serious Fraud Office (SFO).
Justice Faire said Hamilton knew the transactions were in breach of the trust deed and "intended to assist in the offending".
Following the verdict, Belinda Moffat, the FMA's head of enforcement, said: "Professional advisers play a critical role in ensuring compliance in financial markets.
"This case shows that advisers who fail in this basic obligation and who are instrumental in enabling their clients to commit financial crimes will be held accountable for their actions".
Hamilton was mayor of Central Hawke's Bay between 1989 and 1995. Last May he was struck off as a lawyer by the Law Society for misconduct after he was found to have misused $62,000 advanced by a client.
In his High Court trial, Hamilton was accused of structuring a series of related-party transactions to disguise client Raymond Schofield's controlling interest in Belgrave.
The court had heard Hamilton helped Schofield get $12.6 million in loans from Belgrave for entities he controlled, despite Belgrave having an express policy prohibiting related-party loans.
By March 2008, just before receivers were appointed, 45 per cent of Belgrave's assets were loans to Schofield entities.
The prosecutor had described the breaches of the trust deed as "enormous", even compared to other finance company prosecutions.
Belgrave collapsed in May 2008 owing 1268 investors about $20m.
Receivers hadrecovered only $3.5m and believed that was all that could be retrieved, the court heard.
Hamilton was one of four people charged in connection to the Belgrave collapse, and his was the last case to be resolved.
Stephen Smith, the former finance director at Belgrave, pleaded guilty to 25 charges brought by the SFO and FMA and was sentenced in June last year to four years in prison.
Former director Shane Buckley pleaded guilty in April 2012 and was sentenced to three years in prison.
Schofield's prosecution was stayed in December 2012 after he told the court he was terminally ill.
Hamilton has been granted bail until sentencing on July 4.