The Serious Fraud Office has announced it has laid 87 fraud charges against Mike and Jackie Bradley, the Remuera based financial advisors who ran B'On Financial Services. They are charged with accepting NZ$15 million from investors and using it to repay earlier investors, which is a Ponzi scheme. They also used it to fund an extravagant lifestyle of luxury homes, cars and holidays.
Here the full details below.
The Serious Fraud Office (SFO) today laid 87 charges under the Crimes Act against Michael John Bradley and Jacqueline Lyndsay Bradley, the co-directors of B’On Financial Services Ltd (B’On), for what is alleged to be the defrauding of approximately 85 investors of over $15M.
Chief Executive, Adam Feeley, said the case is alleged that B’On took investors’ money to repay earlier investors, and also to fund the lifestyle of the defendants.
“Anyone contemplating investing their hard-earned money should understand the risks that are attached to any form of investment. However, it is also reasonable that New Zealanders can expect that any investment scheme is run honestly, and that their money is used in the manner promised.”
Mr Feeley added that where these expectations are not met, it was important that Government agencies responded. “Speed and professionalism should be the hallmarks of any major fraud investigation, and we believe this case has met those standards.”
The SFO says that its investigation identified over 85 investors, but charges relate to 24 investors in the period 2003 to 2009 and comprise:
· theft by a person required to account and theft by a person in a special relationship – Sections 222 and 220 Crimes Act 1961 (59 charges)
· dishonestly using a document – Section 228(b) Crimes Act 1961 (28 charges)
The defendants were remanded on bail to appear on 13 January 2011.
Case summary
Michael and Jacqueline Bradley established B’On Financial Services Ltd on 20 April 1998 as joint directors and equal shareholders. They acted as financial advisors and investment managers.
Prior to this they operated under a number of different entities. Mr and Mrs Bradley put the company into voluntary liquidation on 22 December 2009.
As a result of an extensive investigation the SFO now alleges that 24 investors invested a total of $14,423,702.18 plus AUD$841,303.00 between 28 April 2003 and 30 November 2009.
The SFO says that clients who invested with the Bradleys did not have their funds invested in any meaningful way.
Instead, the money was primarily used to repay previous investors but was also dispersed on business running costs and personal spending.
8 Comments
A suggestion. The demise of so many Finance Companies will make it difficult for this type of business to ever regain the confidence of the general investing public. Yet there is a very simple solution. Every non-bank deposit taking organisation should have their loan book subjected to a quarterly audit in the same way Lawyers and Solicitors and Real Estate Agents trust accounts are subjected to quarterly audit by independent auditors.
Every Finance company should be required to publish each quarter the following information in the public domain - six simple figures :-
(a) Total performing loans
(b) Total non-performing loans
(c) Revenue derived from (a) and (b).
(d) Total Related Party Loans
(e) Capitalised Interest
And the Board of directors should be held responsible for the accuracy of that information. Yes, it might be onerous, but they are now swimming in a contaminated barrel of apples and it is in their interests to re-establish some credibility. About 2 days work for an auditor. The results of which should then be published in the public domain. For the number of finance organisations in businesses it shouldn't be too much of a task for (even) the Auditor General. Another solution would to outsource the quarterly task to a bunch of overseas auditors who could fly in, do the job, report to SecCom and fly out.
Wow... you are so out of date it isn't funny....
non-bank deposit takers have been providing this information on a MONTHLY basis to the Reserve Bank for nearly two years, and the penalties for mis-reporting are pretty severe. The RB collects a whole bunch more statistics on the structure of loan books and deposit books as well.
Non-bank deposit takers are already subject to full audits every six months (all other businesses that are issuers it is annually). Not sure that quarterly audits will add a lot of value other than to take up a lot of time - a full financial audit generally takes 3 months anyway, so under your proposal the auditors would never leave the premises!
So yesterday Feeley said (from Stuff.co.nz)
"Mr Feeley told Parliament's law and order select committee the investigation into the suspected Ponzi scheme began after a call to the SFO from the Companies Registrar, who had received a complaint. The two organisations began the investigation together. "
Today he says that the receivers BDO contacted the SFO in January.
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