National Party president among restaurateur's victims

03:11, Oct 03 2012
Loizos Michaels
LOIZOS MICHAELS: On trial for fraud.

The first day of the trial of Loizos Michaels has concluded with prosecution alleging the restaurateur spun a "web of deceit" that induced investors - including National Party President Peter Goodfellow - to lose more than $3 million.

Prosecutor Christine Gordon said Michaels had also convinced two senior Christchurch Casino employees to quit their jobs and work on a fictitious takeover of Sky City Entertainment Group.

Michaels' lawyer, Peter Kaye, said his case would rest on whether it was proved any of the misrepresentations alleged by the Crown were ever made by his client. "That's going to be a test of credibility and reliability of the witnesses," he said.

Gordon said Michaels came to the attention of Christchurch Casino executives Stephen Lyttelton and Peter Arbuckle after losing $130,000 as a VIP gambler in early 2007.

"In a series of highly persuasive lies he convinced these complainants he was closely connected to, and financially backed, by a named family that controlled an international casino empire in Macau and Hong Kong," Gordon told the court.

Michaels purported to be acting as a "corporate raider" doing "due diligence" on Sky City's New Zealand assets in preparation for a hostile takeover of the NZX listed company, she said.


He presented himself falsely as a man of wealth and influence, she alleged, including claims he was related to a Cypriot family controlling an international shipping line.

"These elaborate and yet plausible lies induced each complainant to 'invest' their own money," Gordon said.

By mid 2007 both Lyttleton and Arbuckle had quit their jobs in Christchurch and had relocated to the Edgewater Motel in Orewa, north of Auckland, Here they worked on the takeover plan, including a destabilisation campaign in the media against Sky City.

Michaels also encouraged the pair to raise funds for the casino takeover and other investments from others, and as a result Lyttleton approached Goodfellow in August 2007.

"As of result of this approach Goodfellow, who at this stage had not met Michaels, loaned Lyttleton $114,000," Gordon said.

"Lyttleton gave this money to Michaels in cash in a car outside Goodfellow's office," Gordon said.

"After these loans to his friend, Goodfellow met Michaels and following that meeting he queried his legitimacy. However by that stage Lyttleton had been so drawn into Michaels' web of deceit that he was convinced Michaels was all who he said he was," Gordon said.

Goodfellow is expected to take the stand as a witness for the prosecution.

Michaels is facing 31 charges of obtaining by deception and causing loss by deception. Gordon said the Serious Fraud Office charges relate to payments of more than $3m to Michaels.

He has pleaded not guilty.

The judge-alone trial has adjourned and will continue on Friday.