Family weep at Hamilton fraud sentencing
Two "broken" Hamilton men who "phantom" financed the importation of heavy machinery to keep their business afloat have been jailed.
Friends and family of Brett Ralph Dutton, 49, and James Peter Moore, 51, wept in the public gallery of the Hamilton District Court yesterday after hearing they would be jailed for three years for offending described by Judge Robert Spear as "cynical" and "deliberate".
The offending, between March 2007 and October 2008, left the pair stripped of their possessions.
Moore was able to keep his home only because it was owned by a family trust.
Dutton's lawyer, Sharon Green, described her client as a "broken man" who'd lost his home and was living with his ill mother.
Dutton and Moore originally faced 104 fraud charges totalling $3 million.
But nine charges were withdrawn by Crown prosecutor Tini Clark at their March trial.
Judge Spear, in a reserved decision released in June, found them guilty of 32 charges relating to three different finance companies - FMG, GE and Blackbird Finance - worth a total $837,691.71.
Clark said their offending had been deliberate, especially that which involved the forging of invoices to FMG Finance.
"There was no suggestion that these entries were mere things that happened by mistake or by bad management ... the level of culpability of both is high," Clark said.
Dutton and Moore's goal was to establish a nationwide franchise of their company, HPL New Zealand Ltd, after taking over Henry Peiris Ltd, which had been a client of their consultancy business.
The business was made viable due to funding from a variety of finance companies, including UDC Finance, Lock Finance and Waikato Finance.
However, each case for finance required items being pledged for security - namely the imported machinery.
Judge Spear found that not only did the pair pledge machinery once as security, but also twice, which he referred to as "double financing" or "phantom financing".
He found their actions "incredible" and "inconceivable".
Moore acted as "the public face, the frontsman", while Dutton was "more the background boy or man attending to the detail of the transactions".
However, the global financial crisis crept in and hit them in 2008 with the judge accepting that it put a squeeze on the pair's operation.
"Indeed, Moore's evidence described almost a classic tale of an undercapitalised startup business operating on a shoestring with rapid expansion and inadequate management."
The judge found the pair also manipulated the Personal Property Securities Register (PPSR) - which is used to register security interests - by registering the machinery in different ways.
The pair both had a background in the banking industry, which Judge Spear said influenced their ability to secure financing.
"You also quite cynically took advantage of the confidence that was held in you and in your integrity by various members of the finance companies with whom you dealt," the judge said.
"Many of them knew you from personal dealings when you were in the banking industry and then the finance industry."
The offending against Blackbird Finance, totalling $432,141.71, nearly brought the company to its knees.
Much of the finance was taken out near the end of the company's operations when it was "desperately trying to stay afloat".
"Hoping no doubt, for an uplift in the market to generate extra revenue ... but in my view this was deliberate, cynical and dishonest business conduct that caused significant loss. Blackbird in particular, almost collapsed."
The judge said the $837,691.71 did not represent the "huge disruption that you caused to those finance companies" and the actual loss was far greater than $800,000.
"You operated as a tight team of two. It is inconceivable to me that this offending could have occurred without both of you being fully aware of what the other was doing."
In jailing the pair, Judge Spear said while he could accept their previous good character and remorse, there were no other mitigating features.
Reparation was also unlikely to ever be paid in full.
- Waikato Times