Company money bought personal goods – witness

Nearly everything in the million-dollar Redwood Valley home Philip Whitley owned was bought with money raised through his company NearZero, a court has been told.

Vivien Fatupaito, an insolvency specialist at Price Waterhouse Cooper, said she met Whitley at his house in 2007.

Several Chrysler cars, two boats, body armour and a high-powered imitation gun were found at the premises, Mrs Fatupaito said.

Just about everything in the house, from the sheets and appliances to the lounge suites, was bought new through funds from NearZero.

Whitley bought the house for $2.4 million, well over the asking price, and it was later sold in a mortgagee sale for about $1m less.

Whitley previously lived in Richmond before buying the larger Redwood Valley home, which he said he needed as he had to have increased security because of the value of the technology he had developed, she said.

Whitley, 48, is on trial in the Nelson District Court facing two charges, laid by the Serious Fraud Office, of making misleading statements as a promoter.

The SFO said $5.3m was invested in Whitley's United States-based company NearZero by 490 investors, on the basis that Whitley had developed a revolutionary technology which could compress data. If the software existed it would have been worth billions.

Mrs Fatupaito said she interviewed Whitley three times as part of her job to help secure the New Zealand assets of Whitley's companies NearZero and Syntiro.

A search of Whitley's office uncovered little documentation relating to the compression technology Whitely claimed to have invented, she said.

The documentation she found related to the investment side of the business.

If the technology existed it would have been an important asset and upon NearZero being liquidated belonged to the investors.

Whitley told her the software behind his technology had not been on the computer server in the office but was on his laptop and he had burnt everything to do with it.

Whitley was given a week to produce the technology but nothing to prove it existed was ever given to the liquidators, she said.

It had not surprised her that Whitley said he had burnt the technology and maintained the "charade" right to the very end.

"I've often witnessed that where you have a large following and want to keep them onside. It's very common."

She established that Whitley had paid US intellectual property manager Sherif Safwat $800,000.

Whitley maintained that most of that money was a loan, but Mr Safwat had documentation to prove the money was paid as part of his work for NearZero.

None of this money has been recovered.

Campbell McKenzie, an expert in computer forensics for Price Waterhouse Coopers, also gave evidence yesterday.

A search of the hard drives seized from Whitley's offices and his laptop turned up no sign of compression technology, Mr McKenzie said. If files had been wiped there were ways of recovering them, but if they were overwritten recovery was tricky.

- © Fairfax NZ News