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Sentenced for benefiting from community funds

Media release                       
13 July 2017

Sentenced for benefiting from community funds

Two out of three of the defendants found guilty in June this year of ‘Obtaining by deception’ in a Serious Fraud Office (SFO) prosecution of a multi-million dollar gaming machine fraud have been sentenced in the Wellington High Court today.

Michael O’Brien, guilty of five charges, received a sentence of imprisonment for four years, six months.

Kevin Coffey, guilty of one charge, was sentenced to home detention for 12 months.

Paul Max, guilty of three charges, will be sentenced in the Wellington High Court on 27 July.

The case involved the manipulation of gambling licenses and grants and the offending was detected during Operation Chestnut, a joint investigation involving the Department of Internal Affairs, the Organised and Financial Crime Agency of New Zealand and the SFO. It was a significant case in New Zealand for the ‘Class 4’ gambling sector, which is made up of high-turnover gambling including gaming machines in pubs and clubs.

SFO Director, Julie Read said, “The sentences imposed today reflect the very serious nature of the misconduct in this case. The proceeds from pokie machines, intended to provide community funding for sport, health, education and other activities, were directed to entities nominated by Michael O’Brien so that he could obtain a personal benefit amounting to $6.86 million.”

ENDS


Background information
A Pokies 101 guide is available at this link: http://www.dia.govt.nz/ it describes how the Class 4 gambling sector in New Zealand operates.

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—
(i) knows that it is false in a material particular; or
(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.

About the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act.

The SFO is the lead law enforcement agency for investigating and prosecuting serious or complex financial crime, including bribery and corruption.

The presence of an agency dedicated to white collar crime is integral to New Zealand’s reputation for transparency, integrity, fair-mindedness and low levels of corruption.
This work contributes to a productive and prosperous New Zealand and the SFO’s collaborative efforts with international partners also reduce the serious harm that corrupt business practices do to the global economy.

The SFO has three operational teams; the Evaluation and Intelligence team along with two investigative teams.

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…”

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:
the suspected nature and consequences of the fraud and/or;
the suspected scale of the fraud and/or;
the legal, factual and evidential complexity of the matter and/or;
any relevant public interest considerations.

The SFO’s Annual Report 2016 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO’s strategic goals and performance standards. Both are available online at www.sfo.govt.nz

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