Medical company director imprisoned following fraud

Media release
15 November 2011

Medical company director imprisoned following fraud conviction

Former Koru Medical Radiology director Alan John McMillan (51) was sentenced to two years and ten months in prison at the North Shore District Court today, after pleading guilty to 21 charges of forgery and dishonestly using a document.

The charges were brought under the Crimes Act in April 2011 following an investigation by the Serious Fraud Office (SFO).

Mr McMillan established Koru Medical Radiology Limited, a company involved in the provision of x-ray equipment, in 2006. He admitted that between 2007 and 2010 he created false documentation, including financial statements and sale and purchase agreements, that overstated the strength of his financial position. Mr McMillan then used these documents to support applications for finance and extensions to overdraft facilities from the Bank of New Zealand, Westpac Bank and Marac Finance Limited.
Through this fraud Mr McMillan obtained loans totalling $6.5 million and overdraft facilities totalling $1.8 million, some of which were extended by the use of false documentation.
SFO Chief Executive Adam Feeley said “While it is concerning that fraud against banks and other lending institutions continues to represent a significant portion of SFO cases, we are pleased to bring this case to a conclusion.

“As well as an increased importance on concluding investigations in a timely way, the Office has also continued to maintain a high conviction rate which compares favourably with similar law enforcement agencies overseas.”

The SFO opened its investigation into Mr McMillan in August 2010.

ENDS

Notes to editors

1. Background to investigation

In 2006 Alan John McMillan started up a company involved in the provision of equipment used in Radiology.

Between 2007 and 2010 Mr McMillan obtained a number of loans and finance facilities from BNZ, Westpac and Marac Finance Limited for a mixture of purposes, including two home loans, finance for vehicle purchases, and facilities for the provision of equipment used in the running of his businesses.

Mr McMillan submitted a number of documents that are false in order to improve the perception of his financial strength and encourage lenders to provide finance.

The SFO began this investigation in August 2010 following the receipt of complaints from BNZ and Westpac Bank.

2. 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 256: Forgery
(1) Every one is liable to imprisonment for a term not exceeding 10 years who makes a false document with the intention of using it to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration.
(2) Every one is liable to imprisonment for a term not exceeding 3 years who makes a false document, knowing it to be false, with the intent that it in any way be used or acted upon, whether in New Zealand or elsewhere, as genuine.
(3) Forgery is complete as soon as the document is made with the intent described in subsection (1) or with the knowledge and intent described in subsection (2).
(4) Forgery is complete even though the false document may be incomplete, or may not purport to be such a document as would be binding or sufficient in law, if it is so made and is such as to indicate that it was intended to be acted upon as genuine.

3. Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act in response to the collapse of financial markets in New Zealand at that time.

The SFO operates three investigative teams:
• Fraud Detection & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.

The SFO operates under two sets of investigative powers.

Part 1 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 2 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 2011 sets out its achievements for the past year, while the Statement of Intent 2011-2014 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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