National Party President Peter Goodfellow raised the alarm when a friend approached him for a third time seeking large sums of cash to invest in allegedly fictitious enterprises, Auckland District Court has heard.

Stephen Lyttelton told the court today how his relationship with Goodfellow became strained after he sought to involve the Sanford fishing heir in schemes the Crown alleges were fictitious.

The Crown alleges Loizos Michaels, facing 31 charges of fraud, spun a "web of deceit" in claiming to be a "corporate raider" for the billionaire Macau-based Ho family and induced dozens of investors to lose more than $3 million.

The court had earlier heard testimony from Lyttelton, who said he quit his job as acting chief executive of the Christchurch Casino after being offered a position by Michaels to help with a supposed takeover of Sky City Entertainment Group. Michaels was known at the casino as a VIP patron who played slot machines day and night,

Lyttelton told the court his relationship with Goodfellow was close. For a time in 2007, when Michaels' alleged offending is said to have occurred, Lyttelton stayed in Goodfellow's Auckland home.

He said Michaels convinced him to approach Goodfellow to invest in his schemes, and in August 2007 Lyttelton received a total of $114,000 from Goodfellow in two instalments.

Lyttelton said the money was a loan which he intended to repay. He earlier told the court he had been promised a job working with Michaels paying an annual salary of $12m.

Lyttelton said Michaels loitered around Goodfellow's Auckland office while he went to get the money.

"When I had got the money from Peter I gave Michaels a call and he came by and picked me up in his gold BMW," he said.

Lyttelton said Michaels told him: "Uncle will be very pleased with what you've done."

The court earlier heard Michaels had told Lyttelton he could communicate with his mysterious backer "Uncle" using an implant in his ear.

Lyttelton said Michaels claimed Uncle urged him to approach Goodfellow for more cash.

"He said he'd had a message from Macau that I needed to try Peter Goodfellow for a third time for more money. I was horrified, felt absolutely sick to my stomach," Lyttelton said.

This third meeting between two friends was not as congenial as before, the court heard.

"He said he wasn't going to give me any more money and moved to suggest I was the victim of a scam," Lyttelton told the court of Goodfellow's reaction.

The meeting ended acrimoniously and Michaels organised for Lyttelton to move out of Goodfellow's home into a motel.

The court heard from prosecutor Christine Gordon that Goodfellow went on to recruit private detectives to investigate Michaels, and their findings triggered Lyttelton to lay a complaint with the Serious Fraud Office which laid charges in 2010.

Goodfellow is scheduled to appear as a witness for the Crown in the eight-week trial.

- © Fairfax NZ News