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Four years for accessing client funds for personal benefit

30 January 2014

Four years for accessing client funds for personal benefit

Rene Alan Chalmers (43) has been sentenced in the Auckland District Court to four years and three months’ imprisonment following Serious Fraud Office (SFO) charges of theft by person in special relationship, dishonestly taking or using a document and false statement by promoter.

In August last year, Mr Chalmers pleaded guilty to 14 Crimes Act charges relating to his activities in connection with foreign exchange (forex) trading, and three property purchases which occurred in 2011 and 2012.

Many of Mr Chalmers’ initial investors were family members and friends and later included other colleagues and acquaintances. He carried out his trading activities through his company Chalmers Cameron Investments Limited (CCIL).

Investors believed they were giving Mr Chalmers their money for the purpose of forex trading. Investor funds of approximately $740,000 were used contrary to the purpose for which they were accepted and Mr Chalmers reported false gains to investors.

In May 2012, CCIL was placed into voluntary liquidation. The agreed capital loss to investors for the relevant period (the period for which Mr Chalmers has been charged) was $1.5 million.

SFO Director Julie Read said, “The prosecution of serious financial crime is important to maintaining a confident economy. People must be confident about investing to create economic growth which is why the SFO places such importance on the success of prosecutions such as that of Mr Chalmers. The SFO hopes that today’s outcome will go some way towards maintaining the confidence required.”

Background information
Rene Alan Chalmers is a former teacher. In 2007, Mr Chalmers and his wife, moved to the United Arab Emirates (UAE) for Mr Chalmers to take up a teaching position. Mr Chalmers and his family moved back to New Zealand from the UAE in July 2011.

Mr Chalmers was a shareholder and director in the following entities:
• Chalmers Cameron Investments Limited (CCIL)
• Chalmers Cameron Management Limited (CCML)

CCIL was incorporated in January 2007 and was placed in voluntary liquidation on 28 May 2012. CCML was incorporated in April 2007 and struck off the Companies Office register on 25 August 2009.

After considering the complaints from investors, an investigation under Part I of the Serious Fraud Act 1990 was commenced on 15 May 2012. It was upgraded to a Part II investigation on 30 May 2012.

Crimes Act Offences

Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

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 242 False statement by promoter, etc
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent—
(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978; or
(b) to deceive or cause loss to any person, whether ascertained or not; or
(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.

(2) In this section, false statement means any statement in respect of which the person making or publishing the statement—
(a) knows the statement is false in a material particular; or
(b) is reckless as to the whether the statement is false in a material particular.

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.

The SFO 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 committed…”
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

ENDS

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