Last Belgrave Finance trial kicks off
A lawyer stands accused of obfuscating links between his client and Belgrave Finance, allowing more than $12.5 million in illegal related-party loans.
Hugh Hamilton, Belgrave's former legal adviser and partner at DAC Legal, faces 41 charges of theft and making statements in a joint prosecution brought by the Financial Markets Authority (FMA) and the Serious Fraud Office (SFO).
Hamilton pleaded not guilty to all charges in the High Court in Auckland this morning.
Nick Williams, acting for the Crown, said Hamilton had worked with Raymond Schofield to allow his client to buy Belgrave for $3.1m in June 2005.
This transaction was structured to hide Schofield's identity, Williams said.
"The purpose of hiding his client's identity and his control of Belgrave was to allow him to borrow from it either deftly or via various borrowing companies that his client also controlled.
"Because of Hamilton's help, Schofield was able to borrow large amounts of money using public debenture investors' funds in what were in truth forbidden related-party loans," Williams said.
The Crown alleges Hamilton helped Schofield to get $12.6m in loans from Belgrave for entities he controlled.
Williams said Belgrave's offer documents and advertisements expressly stated it had a policy of no related-party loans.
The loans to Schofield entities, assisted by Hamilton, breached both related-party and credit-concentration limits in the Belgrave trust deed, Williams said.
"Related-party loans were 30 times the permitted level," he said.
By March 2008, just before receivers were appointed, 45 per cent of Belgrave's total assets were loans to Schofield entities.
Williams said the trust deed breaches, even compared to other finance company prosecutions, were "enormous".
In earlier hearings the FMA and SFO succeeded in overturning Hamilton's legal privilege over documents connected to the case on the basis that the documents were made for the purpose of committing an illegal or wrongful act.
Belgrave collapsed in May 2008 owing 1268 investors about $20 million.
Receivers have only made $3.5m in realisations to date and believed this represented all possible recoveries, the court heard.
The trial, starting today before Justice John Faire alone, is set down to last eight weeks.
Hamilton is one of four people charged in connection to the Belgrave collapse.
Stephen Smith, the former finance director at Belgrave, pleaded guilty to 25 charges brought by the SFO and FMA and was sentenced in June last year to four years in prison.
Former director Shane Buckley pleaded guilty in April 2012 and was sentenced to three years in prison.
Schofield had his prosecution stayed in December 2012 after disclosing to the court he was terminally ill.
The trial is ongoing.
- Fairfax Media