By Pattrick Smellie and Paul McBeth
All four directors of Lombard Finance and Investments has escaped prison sentences, although former chief executive Michael Reeves only escaped prison or home detention because of ill health and family obligations.
Judge Robert Dobson said expressions of remorse by former chairman Doug Graham and fellow director Lawrie Bryant are mitigating factors in final sentencing. The other director, Bill Jeffries, declined to express remorse.
Graham and Bryant were sentenced to 300 hours community work and fines of $100,000 apiece. Jeffries and Reeves were sentenced to 400 hours community service.
Lombard Finance went into receivership in April 2008, owing approximately $127 million to about 4,400 investors.
Last month they were found guilty of making untrue statements in investment documents and advertisements in late 2007 and early 2008. The judge ruled in favour of the Financial Market Authority’s case on two of the five points over untrue statements.
Crown prosecutor Colin Carruthers QC had urged the High Court in Wellington to impose custodial sentences of 2 years to 2 ½ years for non-executive directors Douglas Graham, Lawrence Bryant and Bill Jeffries. He argued for two years, nine months for chief executive Michael Reeves.
But defence counsel argued their clients had already suffered injury to the reputations and no more than a community sentence or fine would be appropriate.
Following the sentencing, the Financial Markets Authority, which brought the actions against the Lombard directors, issued the following statement:
Lombard verdicts highlight directors’ duties, says FMA
The Financial Markets Authority (FMA) today acknowledged the High Court’s sentencing of four directors of Lombard Finance & Investments.
“The guilty verdicts in this case, and the sentences imposed, illustrate the obligation on directors to ensure that investors are properly informed, and are kept informed,” FMA CEO Sean Hughes said.
“These verdicts, like those in the earlier Nathans Finance case, are a reminder to directors and their advisers that timely, accurate and meaningful disclosure to investors is an obligation which cannot be delayed or delegated to others. These responsibilities are hallmarks of New Zealand’s disclosure regime.
“FMA is keen to help directors get these obligations right. We have a process underway to provide the market with further guidance.”
In his 24 February judgment Justice Dobson said the primary issue was the adequacy and accuracy of disclosure.
New Zealand’s disclosure regime “intended that investors be in a position to make decisions for themselves by being adequately informed on material matters, rather than making an investment decision in reliance on an assessment of the quality of judgment of those who would become custodians of their investments,” the judgment said.
Lombard Finance & Investments was placed in receivership in April 2008 owing $111 million to around 3,600 investors.
Sir Douglas Graham, Michael Reeves, Lawrence Bryant, and William Jeffries were found guilty on 24 February 2012 of four charges under section 58 of the Securities Act on the basis Lombard’s December 2007 prospectus and three investment statements contained false statements.
The value of investments and reinvestments made during the currency of the December 2007 offer documents was approximately $10.45 million.
28 Comments
The interesting thing I have picked up through experience is that criminals generally don't have a good life expectancy. I am picking it is the tension from looking over your shoulder all the time wondering if you are going to get caught.
It is interesting to read the herald article on the sentencing of the four:
Justice Dobson said that in the case of Reeves, his serious ill-health was the overwhelming mitigating factor.
....and his ongoing outlook was mixed.
Contempt ...it would appear ...Sore Loser , is an emotion truly understood by the Graham's the Ritchwhite's..the Faye's ,and so on of this world.
When the effect upon those who would support you is of no consequence to you other than your own financial gain....you begin the relationship with contempt.
Any improvement from that vantage point is always unlikely.
p.S. An appeal would demonstrate extreme contempt........
What I would like to know is why it has taken so long just to get to this outcome. Isn't it 4 years. That's nearly half a decade! Such as huge waste of money too. The only winners are the lawyers. Feel so sorry for the investors who have had to wait all this time for an outcome.
Why is it that we act with all haste , and a zillion coppers , to lock up Kim Dotcom ( who inconvenienced not one single soul here in Godzone ) ...
....the long arm of the law landed upon that guy in a manner that would've made Osama Bin Laden feel proud that he'd made a successful terrorist's impact ........
...... and yet the Grahams , Watsons , Hotchins , Petrovic's of the country swank around free as a lark , larger than life , even though they've cumulatively destroyed billions of dollars of Kiwi investors' retirement savings ........
Why is it that we act with all haste , and a zillion coppers , to lock up Kim Dotcom ( who inconvenienced not one single soul here in Godzone ) ...
I think the answer to that, Gummy, partly lies in New Zealand's desire to sign a Free Trade Agreement with the United States. If the govt. had failed to act in the manner it did over dotcom (and let's face it, why should we give a sh#t about him, he's not a nz citizen) then I think the chances of a FTA with the US would have been toast.
I think it's important for New Zealanders to understand that there remain sections within the US government that don’t hold New Zealand in very high regard. A failure to act over dotcom would have just added to the negative perception that some have of our country in Washington.
..youve got to realise there are all those top coppers who go on FBI courses learing how to do these raids, plus the STG and AOS teams who are always training but have little to do (hence the need to dress up in black terror gear at the slightest oppurtunity).
This rambo raid gave them the occasion to play out their real fantasy (which is to be in the SAS). Boys with toys i am afraid.
When it comes to shallow RiF ,wer'e your garden variety bird bath,with a dirty bottom.
That said, the focus is not so much on what we are directed to do by America or anybody else for that matter (as in Noodle Muppetry) , it has to do with elitism and contempt.When the perversions created within the laws structured to "protect from" become "allow to."
Those who have been involved at the highest levels of influence in "re-structuring" the law by amendment become part of the framework to service the elite.
We have two former Ministers of Justice here in one sitting, how's that for an indictment of the lawmakers.
Christoff .. correct .. It's "divide and conquer" ... there are two laws .. criminal and civil .. the criminality test is set very high. The cases that are slowly grinding their way through molasses glue-pot of the court system are "criminal" and are not likely to succeed. Civil cases are dependent on each individual sueing seperately .. and that wont happen .. until the law-makers enable class-actions where many small victims can join together and act as a collective .. and so you need to ask the question .. why are class actions forbidden under the nz system .. by prohibiting class-actions the elite law-making parliamentarians are dividing the proletariat and keeping them quiet. And thus they will remain forever conquered.
To me the failure here, yet again, is not with the Government - The Crown - which after all did ask for custodial sentences to be given to Graham et al., but with the Judiciary. Once again it has failed to live up to the standards of the community it is supposed to serve, and do what should in fact be among its first duty, the protection of New Zealanders. As I’ve commented in here before, when does judicial independence in fact become judicial arrogance?
see http://www.stuff.co.nz/business/money/6663532/Lombard-fallout-Graham-urged-to-give-up-Sir
Note the statement -
The court was told Graham's reparation payment would "pretty well clean him out". But his home in the upmarket Auckland suburb of Remuera was held in a trust of which he was not a beneficiary.
It would be interesting ot go through this trust deed and minutes. If Sir Graham is not a beneficiary, then it follows he should be paying a market rent. Sure as heck he won't be..so is he a beneficairy or not? I imagine the civil case will take a close look at this...
If he set a Trust up under the old rules that applied many years ago, and given his age he may very well have, he would not be a beneficiary of the Trust, as back then a settlor was specifically excluded from being a beneficiary of his/her own trust.
If his wife was a beneficiary (which is highly likely) then by virtue of his marriage to one of the Trust’s beneficiaries there is no particular reason why he would/should be paying rent to live in the family home.
Intriguing comment. Can you expand on that?
You won't get these stories on here as it's a touchy subject with Bernard, because he was one of many that added fuel to the fire back in 2007 on stuff.co, when finance companies came under attack from the media.
are you implying the media was warned off?
What has been noticeable for some time now is there are topics which Interest.co.nz will touch, and when you think about it there are also some important financial topics that Interest.co.nz avoids and never touches. Perhaps Bernards obsession with single-handedly bringing down the Chinese economy (90% of recent Top-Tens) and bashing-baby-boomers is smoke-and-mirrors.
Don't let that worry you Ivan ,....it makes you now part of an elite group of individuals who no longer qualify for a cheery "Cheers" from the head honcho....probably due to being a tad too contraversial......going off topic......being critical.....not bashing a boomer......not loving the latest quaff....etc.etc.
Your in mate !!!!, your furniture.......now you don't go round talking to the furniture do you..?
in case no one else will
Cheers Ivan
The answer to that Snippy is.........an awful lot longer than it takes a fresh faced altruistic young Minister to become a corrupt self serving puppet to the elite.
As I pointed out above the perversions created within laws by the lawmakers are not laid bare for us to scrutinize and find new intent.
The intent of law by enlarge is to Protect from...
The perversion of that intent is Allow to
why has the press remained silent on just where the hundreds of millions has disappeared? the Lombard board clearly hasn't received it. If you can take comments at face value they are penniless? therefore were they a series of bad loans? was there fraud on behalf of developers, or bad valuations. Were properties flogged off too quickly and at fire sale by the Receivers? Were they acting outside their fiduciary duties? What about insurance? Was the business subject to systematic and complex fraud? Where were the auditors, the forensics accountants, the restructuring experts, Trustee and myriad of other expert consultants in this sorry state of affairs? I read nothing of substance, just see four elderly gentleman that look utterely spent and frankly destitute, with the Press and Investors that have lost heaps baying for blood. Remember you can't lose on bricks and mortar so where has all the cash gone?
The four bandits should do 40 hours educational work for free and to their own expenses - telling the NZ illiterate audients their story - so NZpeople learn how to invest their money properly. 20 hours tree planting and 30 hours cleaning up their community of litter
Furthermore they should work for the Police department for free to chase similar bandits throughout the country. They should only be released of their duty, by delivering at least 10 other criminals (cheating other people) to the courts.
Cheers Alex ...it was indeed Tuesday....the video montage led me to believe English was in the house... but ...alas no ....still makes you think when numbers two and three are not particularly media freindly....although not for the same reasons I suspect..
Billy always looks uncomfortable as if thinking "don't ask me anything difficult...semi difficult...or even off topic.." It stops my neck muscles working.
Gerry always looks ambushed and stiffens to think "Ask me whatever you like...I'll tell you whatever I want...and not give a rats patoot ,ya lying fleas..!" I've gotta get to my next sandwich.
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