Clients advised to borrow against homes
Former financial advisor Jacqui Bradley, now facing fraud charges, suggested to some investors they take loans against their homes to invest in the company run by her and her late husband.
B'On Financial Services was run by Bradley and her late husband, Mike until it collapsed in December 2009, owing 28 investors $15.5 million. She has denied all 75 theft and dishonesty charges.
Crown witness Jocelyn Calderwood told the Auckland District Court today she was able to claw back $400,000 of around $600,000 she was owed by B'On before the company failed. She only succeeded after she and eventually a lawyer persisted in pushing the Bradleys to release her funds after 19 months.
Calderwood said she was contacted by Bradley and was advised she had sufficient income and assets to borrow against her properties in the upmarket Auckland suburb of Herne Bay. Bradley told her it would ensure she could continue to receive her agreed monthly income disbursement of $5000.
"She suggested I borrow $300,000 to invest that would top up my income," Calderwood said. "I wasn't very happy about it but she convinced me it would be alright."
The funds, as with others, were supposedly invested in a B'On managed fund through Australia's Macquarie Bank, with the capital guaranteed. That, the Crown claims, was a ruse as no funds were ever invested.
Instead, the couple's Ponzi-type scheme saw them use investors' money to repay other investors - and the Bradleys' lifestyle, the Crown alleges.
Investor Noeline Creighton of Auckland's Ponsonby, had been paying in $300 a month to B'On since 1998. She retired in 2002 and two years later, after a meeting with Bradley, invested another $35,000. She was hoping to eventually draw regular disbursements for income.
Although she did receive nine separate $1000 income payments, she retrieved only $12,000 in total of the $51,500 her investment had grown to before B'On folded.
Creighton said she had sought out Bradley after seeing her at a financial seminar shortly after Bradley published the investment book The Winning Woman in 1988.
Creighton gave evidence that after several years as a B'On client, she was contacted by Bradley who asked her if she owned her own home. She rejected a Bradley suggestion that she take a loan against the house to then invest in B'On.
"I laughed. At the seminar I did a (investment) risk assessment and I had low risk," Creighton told the court. "I wouldn't have slept at night."
The jury trial is set to run for five weeks.
- © Fairfax NZ News
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