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Guilty verdicts for loan fraudsters

Media Release
22 March 2013
Guilty verdicts for loan fraudsters

Three men charged with Crimes Act offences have been found guilty by jury in the Auckland District Court today in relation to a Serious Fraud Office (SFO) investigation.

In a trial in front of Judge Wilson which began on 7 March, Jonathon Earl Chiswell (37), Brett Royce Donaldson (51) and Richard Michael Barnett (42), each faced charges for their roles in a scheme conducted with their associate Mark James Whelan to defraud Dunedin-based vehicle finance company, Motor Trade Finances Limited (MTF).

Mr Chiswell faced six charges of obtaining by deception and was found guilty on all charges. Mr Donaldson faced seven charges of obtaining by deception and was also found guilty on all charges. Mr Barnett faced 16 charges of obtaining by deception and was found guilty on five of those charges. Mr Whelan had previously plead guilty to 66 charges of obtaining by deception.

Mr Chiswell, Mr Donaldson and Mr Barnett have been found guilty of obtaining loans from MTF via Mr Whelan between July 2005 and February 2009. In his position as a Retail Dealer and franchisee of the company, Mr Whelan, along with his associates would sign contracts that falsely represented that the loans from MTF were secured against specific assets.

Mr Chiswell obtained loans for approximately $671,000, Mr Donaldson obtained loans for approximately $576,000 and Mr Barnett obtained loans for approximately $234,000.

Acting Chief Executive for the SFO, Simon McArley said, “The guilty verdicts bring this long-running investigation to an end. Unfortunately the actions of this group of individuals caused significant loss to MTF to its detriment. The SFO will continue to focus on conducting quality investigations that lead to successful prosecutions.”

The defendants have been remanded on bail and will be sentenced on 16 May.

Three other individuals, faced joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan’s scheme. All those defendants pleaded guilty prior to the trial.

ENDS


Note to editors

Background to investigation
Richard Michael Barnett was born on 3 August 1968, and is currently unemployed. During the relevant period of the SFO investigation he was a magazine publisher using the company Worldsport Ltd, and also the sole director of Go Advance Ltd. He has known Mark James Whelan for about 10 years and they were good friends.

Jonathon Earl Chiswell was born on 12 February 1976. During the relevant period he was the sole director of the company Hono Tana Holdings Ltd. He was a good friend with Mr Whelan and with him, used MTF funds to speculate on the property market.

Brett Royce Donaldson was born on 1 October 1961. He previously had his own car dealership under the company name Drive Cars Ltd. He was also the sole director and shareholder of Senroa Ltd. He has known Mr Whelan since around 1999 through obtaining financing for his customers from Auckland Finance.

From March 2005 Mr Whelan was a Retail Dealer for Motor Trade Finances Ltd (MTF), and became a franchisee of the company in January 2008. While Mr Whelan was in those positions he wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. In early 2009 these loans went into default and MTF was unable to locate those assets for repossession.

In total, seven individuals including Mr Whelan were facing joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan’s scheme.

Crimes Act Offences
Section 240: Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.
(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
o (i) knows that it is false in a material particular; or
o (ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.

Role of 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 operates three investigative teams:
• Evaluation & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & 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 committed…”
The SFO’s Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO’s three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz

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