Trail of fraud began with a small loan

MATT NIPPERT
Last updated 15:44 03/05/2012
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FAIRFAX

BANGED UP: Former Datasouth Finance director Gavin Bennett has been convicted on SFO fraud charges.

Mariesa May
MARIESA MAE: Bennett invested in this lingerie label founded by Mariesa Crowder .

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Gavin Bennett's trail of fraud that led to today's eight-year prison sentence began in 2005, with a relatively small loan from Southland Finance he could not repay.

Instead of defaulting on the debt, the Serious Fraud Office found he manufactured a false loan application and repaid the finance company with its own money.

This trick would be repeated over the next six years, with a total of $65 million being eventually advanced and recycled by Southland Finance, and later its parent South Canterbury Finance. The proceeds were used to prop up his DataSouth business and fund a lifestyle that grew exponentially more lavish.

The Christchurch District Court heard Bennett fudged his company's accounts to the tune of $38m to keep the funds flowing in. It was a Ponzi scheme with only one victim - a finance company that was later bailed out by the taxpayer.

Former colleagues of Bennett at DataSouth, the Christchurch-based IT firm he founded, said that in 2003 their boss would bring beer to after-work drinks.

Over the years Bennett's choice of tipple moved from Lindauer, to Moet, to Veuve and by the end he was a firm favourite of $400 bottles of Dom Pérignon. ''He'd drink the stuff like it was tap water,'' the source said.

''His tastes went up along with his fraud.''

Bennett, 54, grew up in Southland before moving to Christchurch where he started DataSouth, but began spending more and more time in Australia as the fraud developed.

It was in Sydney where he led a lifestyle of wine, women, fancy cars and accommodation that saw him make the city's social pages attending exclusive parties populated by attractive women.

Bennett used $A464,000 of fraudulently obtained funds to rent two apartments in a high-rise with views of the Sydney Opera House. One, his primary residence, was valued at $A2.5m and is listed in Companies Office records as the Australian office of DataSouth.

These accommodation bills paled next to other living expenses - $A429,000 for food and drinks at expensive Sydney nightspots, $A163,000 on designer clothing, and $A161,000 in international travel - plus generous payments to what the Serious Fraud Office describe as ''various female companions''.

BusinessDay investigations found two of the ''female companions'' were listed as co-directors of businesses Bennett registered in Australia.

Marlena Davis, a make-up artist and former model, was a co-director of DataSouth Australia. She did not return calls today.

Another, burlesque dancer Mariesa Crowder, said Bennett signed up as a co-investor in her lingerie start-up in late 2010.

The end came for Bennett did not come from the collapse of South Canterbury Finance - receivers managing the company that would later see taxpayers foot a $1 billion bill continued to advance DataSouth loans - but rather the Christchurch earthquake.

Receivers BDO were appointed in March 2011 and immediately discovered discrepencies in the accounts.

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Bennett flew out of Christchurch to Sydney just ahead of a High Court order freezing his accounts, and the SFO began investigating.

The collapse of DataSouth has left 33 employees without jobs and South Canterbury Finance with a $22m hole in their accounts.

Fairfax talked to Bennett last June where he complained about being evicted from his apartment and sought to defend his involvement with Davis and Crowder.

''She's a long-standing friend,'' he said of Davis. He claimed the investment in Crowder's lingerie business was ''minimal - there's nothing to it at all''.

All up, the SFO found $A900,000 was paid by Bennett to a coitre of attractive women known informally by DataSouth employees as ''Gav's girls''.

Bennett claimed then he was co-operating fully with the SFO, and the fraud watchdog confirmed he returned to New Zealand voluntarily in November last year to plead guilty to eight charges of dishonestly using a document and false accounting.

- Fairfax Media

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