AK property developer guilty of $47 million mortgage fraud
20 December 2013
Auckland property developer guilty of $47 million mortgage fraud
Following a six week trial in the Auckland District Court, former Auckland property developer, Malcolm Duncan Mayer (57), was today found guilty of orchestrating a $47 million mortgage fraud.
Mr Mayer was convicted of 26 charges under the Crimes Act laid by the Serious Fraud Office (SFO), comprising 16 counts of dishonestly using a document and 10 counts of using forged documents.
The charges related to false loan applications Mr Mayer submitted to fund management company Trustees Executors Limited (TEL) for 26 properties, between December 2003 and August 2007.
Mr Mayer was found to have used a variety of means to mislead TEL into lending the money, including dishonestly using relatives’ and associates’ names to secure the loan funds, using false sale and purchase agreements and false leases to support valuations, and making false statements about the supposed applicant's deposit or contribution to the purchase.
SFO Director, Julie Read said, “Commercial lenders are entitled to expect that borrowers will provide them with true and complete information. While there will also be a need for cross-checks and confirmation of details, if lenders do not have the ability to rely upon the information provided to them, they cannot conduct business effectively and efficiently. Individuals like Mr Mayer are an example of those whose actions add costs to innocent participants in the mortgage lending sector.”
Mr Mayer has been remanded on bail and is scheduled to appear for sentencing on 18 February 2014.
Background to investigation
Malcolm Duncan Mayer was involved in the purchase and development of commercial properties in and around the Auckland region.
In order to fund these transactions, Mr Mayer applied for loans from mortgage lenders, including fund management company Trustees Executors Limited (TEL). TEL owned and administered $242 million of Tower Mortgage-Plus funds. Although he was seeking money for his own purposes, Mr Mayer applied for loans in the names of other persons, usually friends or associates, often based overseas. This enabled him to circumvent TEL's internal lending limits to any one borrower. In addition, he omitted important information from those loan applications, giving the impression that the loan applicant was actually contributing significant funds to the purchase, when in reality they were contributing nothing. He also supported the loan applications with false documents, including false sale and purchase agreements and deeds of lease.
The trial for Mr Mayer was originally scheduled in July 2011, but Judge Wade aborted the trial due to illness of the defendant at the time.
Crimes Act offences
Section 228 Dishonestly taking or using document
Every one is liable to
imprisonment for a term not exceeding 7 years who, with
intent to obtain any property, service, pecuniary advantage,
or valuable consideration,—
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.
Section 257 Using forged documents
(1) Every one is liable to imprisonment
for a term not exceeding 10 years who, knowing a document to
(a) uses the document to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or
(b) uses, deals with, or acts upon the document as if it were genuine; or
(c) causes any other person to use, deal with, or act upon it as if it were genuine.
(2) For the purposes of this section, a document made or altered outside New Zealand in a manner that would have amounted to forgery if the making or alteration had been done in New Zealand is to be regarded as a forged document.
About the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO’s role is the detection, investigation and prosecution of serious or complex financial crime. The SFO’s focus is on investigating and prosecuting criminal cases that will have a real effect on:
• business and investor confidence in
our financial markets and economy
• public confidence in our justice system and public service
• New Zealand’s international business reputation.
operates three investigative teams:
• Evaluation and Intelligence;
• Financial Markets and Corporate Fraud; and
• Fraud and Corruption.
The SFO operates under two sets of investigative powers.
Part I of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
Part II of the
SFO Act provides the SFO with more extensive powers where:
“…the Director has reasonable grounds to believe that an
offence involving serious or complex fraud may have been
The SFO’s Annual Report 2013 sets out its achievements for the past year, while the Statement of Intent 2013-2016 sets out the SFO’s three year strategic goals and performance standards. Both are available online at:www.sfo.govt.nz