Two of four former Five Star Finance directors, Nicholas Kirk, 65, an accountant and Marcus MacDonald, 89, a lawyer, were sentenced to prison terms at Auckland District Court today. All had been banned by the Registrar of Companies from acting in any management role in tany company, for five years, in April 2009.
Five Star Finance was put into receivership on 29 August 2007 owing 2,000 investors more than 46 million New Zealand dollars. Serious Fraud Office (SFO) chief executive Adam Feeley said:
“SFO is pleased with the delivery of a custodial sentence. This is the first sentencing in relation to a major finance company collapse [there have been 30 in the last few years], and continues the clear message from the Courts as to the seriousness of white collar crime.” Both Kirk and MacDonald had pleaded guilty to Securities Act and Financial Reporting Act charges earlier this year involving the issuing of misleading statements and advertisements that distorted the company’s financial position.
MacDonald was sentenced today in the Auckland District Court to two years and three months on charges brought under the Crimes, Securities and Financial Reporting Acts.
Kirk was jailed for two years and eight months.
Judge Roderick Joyce said many prudent investors had trusted the pair with their life and retirement savings and would not have invested in the company had they been aware of its high-risk lending to related parties.
Another director, accountant Anthony Bowden, was sentenced to nine months’ home detention and 300 hours of community service on three charges relating to untrue statements in investment prospectuses put out by Five Star Consumer Finance, Five Star Finance and Five Star Debenture Nominee Ltd.
The remaing director, Neill Williams, also pleaded guilty but was not sentenced today after requesting a disputed facts hearing which will take place in March next year.
Former chartered accountant Bowden has been suspended for five years for working as a chartered accountant.
In August the Serious Fraud Office announced it had laid more than 100 charges against the directors, and former manager Williams, concerning related party lending that took place between 2003 and 2007.
“For investors to have confidence in the financial markets they need to know there will be quick and effective intervention by a law enforcement agency with the powers and resources to deal with serious and complex fraud,” Serious Fraud Office chief executive Adam Feeley said in a statement at the time.
“Investigations of the scale and complexity of Five Star Finance require detailed forensic accounting analysis which inevitably takes time,” he said.