Judge rebuffs Capital + Merchant questioning

CATHERINE HARRIS
Last updated 13:11 14/12/2012

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A High Court judge has rebuffed a Crown attempt to question his acquittal of two Capital + Merchant Finance directors over alleged hidden related-party loans.

CMF collapsed in 2007 owing $167 million to more than 7000 investors who are facing total losses.

Neal Nicholls and Wayne Douglas were jailed in August for seven-and-a-half years after being found guilty of fraud charges at the company.

But in a concurrent trial, they were acquitted of criminal charges related to $14.4 million in loans for a property development called the Hub in Palmerston North.

The Serious Fraud Office claimed the loans to four companies involved in the project should have been disclosed as related party transactions.

It sought three points of law retrospectively from the judge, Justice Edwin Wylie, on the case's complex ownership issues.

In a judgment just released, the Crown pointed to evidence from a Bruce Stokes that he was a front man for Nicholls and Douglas when he acted as sole director for three of the borrowing companies.

Shares in those companies were incorporated into a company called Eton Capital.

But Justice Wylie said the evidence before him showed Eton Capital was owned by a trust which had the Child Cancer Foundation as sole beneficiary.

He also noted Stokes owned no shares in the borrowing companies himself.

Other Crown questions revolved around another trust which Nichols and Douglas were connected to.

Justice Wylie said that he never concluded that the Hub loans were not related party transactions, but that he had not been satisfied the case had been proven beyond reasonable doubt.

"I did not reach the legal conclusion attributed to me by the Crown and with respect to the Crown, it is not now open to it to go back and revisit the way in which the case was argued and put at trial.

"To do so would be unfair to the accused."

Nicholls and Douglas' lawyer B D Gray said the judge's findings had been factual and that the Crown was essentially seeking a retrial.

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- BusinessDay.co.nz

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