Jail for former Dominion Finance CEO
Former Dominion Finance chief executive Paul Cropp has been sentenced to two years and seven months in jail for trust deed breaches on related party loans.
Cropp was convicted on four Crimes Act charges of theft by a person in a special relationship last month, while Robert Barry Whale and another man with name suppression were cleared.
However, Whale pleaded guilty to separate Securities Act charges this morning, on which Cropp is not charged.
Justice Graham Lang found Cropp guilty of knowingly breaching the trust deed of Dominion Finance and its subsidiary North South Finance, which said the company was not able to make loans to related parties.
Cropp helped push through deals which supported Dominion's financial position at the expense of North South Finance's position and which hid related party transactions.
The group's collapse left 5900 investors out of pocket by $176.9 million, but Cropp's theft charges relate to transactions totalling about $8.7m.
Justice Lang said non-disclosure of such unauthorised related party transactions masked the declining financial position of Dominion Finance until it was put into receivership.
Crown prosecutor Brian Dickey said Cropp was the architect of the transaction that breached the trust deed and the trust of DFG's investors.
Cropp's lawyer, John Billington QC, said Cropp did not act for his own personal gain but rather to allow DFG to continue to do business and it was therefore not an act of dishonesty.
He argued a penalty of imprisonment was not justified.
However, Dickey said Cropp's $450,000 salary was enough of a personal gain to provide motivation for the breaches.
- © Fairfax NZ News