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Source: ONE News -
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The Securities Commission has laid criminal charges and issued civil proceedings against Capital + Merchant Finance directors Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland.
Criminal charges have also been laid against Wayne Douglas, who resigned as a director in February 2007.
On Thursday the Serious Fraud Office said it had started an investigation into Capital + Merchant Finance following a referral from Grant Thornton, the receivers of companies within the Capital + Merchant Group.
The Securities Commission said its proceedings followed extensive investigations by the commission since Capital + Merchant Finance went into receivership on November 23, 2007 owing approximately $167 million to some 7000 investors.
According to the receivers it was likely that none of this would be recovered, the commission says.
"The commission alleges that Capital + Merchant Finance's offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to related party lending, insurance cover and liquidity," says commission chairwoman Jane Diplock says.
The commission alleges that the directors made untrue statements in the registered prospectus and investment statement dated August 15, 2006, mainly in respect of related party lending and loan management.
It also alleges that the current four directors made untrue statements in the registered prospectus and investment statement dated September 10, 2007, as well as untrue statements about liquidity and cashflow and in the prospectus incorrectly stated that no loans were impaired and the company's financial position had not materially and adversely changed since its last balance
Five advertisements distributed during 2007 contained untrue statements about insurance cover for capital secured debenture stock and some of the matters referred to above, it is alleged.
These claims do not apply to Douglas who had resigned his directorship by then.
The commission further alleges that Nicholls and Ryan knowingly misled the commission.
Most of the criminal charges carry a maximum penalty of five years imprisonment or fines of up to $300,000.
The charges were filed in the Auckland District Court on 18 December last year and the first court appearance is scheduled for April 8.
The commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the current four directors.
A declaration of civil liability is conclusive evidence that can be relied upon by either the commission or investors themselves in any subsequent claims against the directors for compensation.
The commission will consider pursuing compensation claims in due
course and investors can take their own civil compensation
proceedings.
The
Serious Fraud Office also said on Friday that they expect to
know in about a month what action it will take on various
finance companies under investigation including Bridgecorp, Five
Star, Nathans Finance, Western Bay Finance and Club Finance.
