Appeal over 'soft' ruling
A businessman convicted of breaching his bankruptcy - but allowed by a judge to walk free and set up a controversial foreign exchange software firm in Ireland - faces an appeal against his sentence.
Mark Brewer, the self-described "sales legend" behind Phoenix Forex's troubled foreign exchange software OakFX, pleaded guilty last year to running an unrelated business while bankrupt.
Buyers of the OakFX software, costing up to $25,000 for a licence, have complained of large losses, And the Financial Markets Authority issued a formal warning urging investor caution and stating claims of 60 per cent returns were unrealistic.
At Brewer's sentencing for bankruptcy breaches, at the Auckland District Court in October, lawyer Brent O'Callaghan convinced Judge Stephen O'Driscoll to overturn a pre-sentence indication of home detention by promising $190,000 in reparations would be paid.
Brewer's business associate, financial adviser David McEwen, gave undertakings to the court he would bankroll the reparation
payments if Brewer was able to immediately travel overseas to pursue business interests.
Judge O'Driscoll, after passing sentence of only reparations and a $5000 fine, said: "Mr Brewer, don't do anything silly again in the future."
McEwen, Brewer and Kendall Twigden - Brewer's girlfriend and Phoenix Forex director - immediately left New Zealand for Dublin to start Paymark Autotrader, another company selling foreign exchange software.
The Financial Markets Authority confirmed an investigation into Phoenix Forex was begun in October.
"We also alerted Irish authorities to our Phoenix Forex warning," a spokesman for the regulator said.
The sentence allowing the formation of Paymark Autotrader - the firm is subject to warnings from international bloggers over its connection to Phoenix Forex - has been challenged by the Ministry of Business, Innovation and Employment.
"MBIE has appealed the sentence on the grounds that the sentence of a fine and reparation was inadequate or inappropriate," a spokeswoman for the ministry said.
The appeal is set down for a hearing in the High Court at Auckland in April.
The Sunday Star-Times understands $130,000 of the promised reparations have been paid, with the remainder on hold pending the appeal.
Brewer told the Sunday Star-Times the appeal would be opposed and his conviction was purely technical as his bankruptcy had been annulled by the time of sentencing and, because of reparations, his offending was a "victimless crime".
"The prosecution was a technical one to make a point," he said. "I was technically bankrupt at the time."
Brewer said he was unaware of any FMA investigation into Phoenix Forex and defended its software.
"I maintain the fact that OakFX was a great product and there remain many happy customers," he said.
"There have been no fines or convictions for anything related to the product despite months of beat-up and innuendo to the contrary."
Brewer said the software offered by Paymark was "completely different" to OakFX.
McEwen, recently returned from Ireland, told the Sunday Star-Times he was distancing himself from Brewer and his foreign exchange trading schemes.
"I have decided to refocus on my core sharemarket services in New Zealand. I am therefore no longer involved in the day-to-day activities of any company in the Phoenix Group or with Paymark in Ireland," he said.
In another development, the Inland Revenue Department has filed a $1.2 million claim over unpaid tax with the liquidators of Phoenix Forex.
- Sunday Star Times