Five Star directors jailed
Former Five Star Finance managing director Nicholas Kirk and director Marcus MacDonald have been jailed for lying to investors in the failed finance company.
Kirk was sentenced in the Auckland District Court today to two years and eight months imprisonment while MacDonald was jailed for two years and three months.
The case was one of the first finance company prosecutions to proceed to sentencing, and the first jointly prosecuted by the Ministry of Economic Development and the Serious Fraud Office. The offences relate to Five Star Consumer Finance, Five Star Finance and Five Star Debenture Nominee Ltd.
SFO Chief Executive, Adam Feeley, says "the SFO is pleased with the delivery of a custodial sentence. This (first sentencing) continues the clear message from the courts as to the seriousness of white collar crime."
Both men had pleaded guilty to four Securities Act and Financial Reporting Act charges earlier this year, relating to untrue and false or misleading statements contained in FSCF's investment statements.
The pair were also charged with theft by a person in a special relationship under the Crimes Act, relating to the misuse of funds through related party transactions.
The prison sentences set a precedent for similar ongoing prosecutions and investigations of finance company directors.
The pair are also expected to pay reparation of $92,756 - money tied up in loans books and debentures held by them.
One other man integral to the Five Star Finance group of companies - Neill Williams - also pleaded guilty and was due to be sentenced today, but has since asked for a disputed facts hearing which will take place in March.
Judge Roderick Joyce said that significant "grey areas" remained in the facts surrounding the case which would be settled with Williams' hearing, and that Kirk and MacDonald's testimony in that case would be valuable.
Earlier today another Five Star director Anthony Bowden was sentenced to nine months home detention and 300 hours of community service.
Bowden, who has since been suspended for five years from being a chartered accountant, was described by Judge Roderick Joyce as being the ''rainmaker'' for the company because he had lent his profile and reputation to be "front and centre of investment statements" used to attract investors to the finance group.
But in sentencing Bowden's business partners, Joyce declared that home detention was not a fit punishment for Kirk and MacDonald who were more intimately involved with the running of Five Star.
Joyce said he agreed with the Crown prosecutor's statement that denunciation and deterrence played a "crucial role" in the type and length of the sentence.
Joe Tregerthan, an investor who lost over a million dollars in Five Star and a former close friend of two of the directors, said the sentence would not bring comfort to investors.
"For most investors they're not going to get a lot of joy out of this, they would've preferred money.
"It's affected my standard of living somewhat yes, but there are other people who've suffered more. I had more balanced investments.
General manager of the MED's National Enforcement Unit Phil Day said he was satisfied that the courts had acted "very strongly" to denounce the actions of the Five Star directors.
"It sends out a strong message to directors that their obligation to have accurate information in their prospectus and investment documents.
"If it contains false and misleading information, the court has today sent out a strong message that imprisonment will result."
Five Star was placed into receivership on 29 August 2007 owing investors approximately $46 million.