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Former iwi social services CEO sentenced

Former iwi social services CEO sentenced following fraud conviction

Arapeta Victor Hamilton (53), a former Director and Chief Executive of Ngapuhi Iwi Social Services Limited (NISS), has been sentenced to eight months home detention and ordered to pay $20,000 in reparations at the Auckland District Court today, following charges brought by the Serious Fraud Office (SFO).

Mr Hamilton was found guilty in June of five counts of fraud under section 229A of the Crimes Act.

NISS was a Northland company set up to deliver services to Maori children through government and community funded contracts, from 1997 to 2006. Hamilton was appointed a Director to the company in October 2000.

During that time, Mr Hamilton was found to have fraudulently diverted NISS funds totalling approximately $147,500 to cover personal expenses, including mortgage repayments and investments in a nightclub.

SFO Acting Director Simon McArley said that today's sentencing will hopefully provide some justice for those affected by Mr Hamilton's actions.

"Mr Hamilton took advantage of his trusted position, to the detriment of both NISS and the wider community. This sentence should act as a deterrent as well as highlight the need for organisations to have clear fraud prevention policies in place," he says.

Note to editors

1. Background to investigation

From 1997 to 2006, Arapeta Hamilton was employed as CEO of Ngapuhi Iwi Social Services Ltd ("NISS"), located in Kaikohe. NISS was a subsidiary company of the Te Runanga A Iwi O Ngapuhi Charitable Trust and was set up to provide and deliver services to Maori children. NISS was governed by a board of six persons located throughout the Northland region.

As CEO, Mr Hamilton had overall responsibility for the finances and business management of NISS from his appointment in 1997. Hamilton was given complete autonomy to run the business of NISS, including managing of their finances, and was responsible for reporting to the Board at their monthly meetings.

Mr Hamilton had sole signing authority for two bank accounts operated by NISS (the "03" and "04" accounts). He was also a co-signatory, with other NISS Board members, for two other bank accounts the company held (the "00" and "25" accounts).

From about January 2000 to November 2002, Mr Hamilton took money from the NISS "03" and "04" accounts with the intention of defrauding NISS of approximately $147,500. The money was taken from the accounts via cheques that Mr Hamilton wrote to either himself, to cash, or to entities not related to NISS.

Details of the payments are as follows:

a. Mortgage payments: Approximately $86,588.69 by 40 cheques paid towards mortgages held over a property at Pakaru Road, Kawakawa, in which Hamilton and his family had an interest.

b. Advance Salary payments: Approximately $9,000 by two cheques for advance salary payments to Hamilton, which were not authorised by the Board of NISS.

c. Overlapping Salary payments: Approximately $11,000 by four cheques for salary payments to Hamilton that overlap with salary payments authorised by the Board of NISS.

d. Southside Ltd payments: Approximately $12,885 by nine cheques written to Southside Ltd, a company running a nightclub in South Auckland owned by Hamilton.

e. Other payments: Approximately $28,045 by 80 cheques written to cash or a company owned and controlled by Mr Hamilton which was not entitled to payments from NISS bank accounts.

Concerns about the company finances were eventually raised at Board level and Mr Hamilton was relieved of his financial authority in June 2004.

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 229A (pre-2003 Amendments): Taking or dealing with certain documents with intent to defraud

Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to defraud,---

(a) Takes or obtains any document that is capable of being used to

obtain any privilege, benefit, pecuniary advantage, or valuable

consideration; or

(b) Uses or attempts to use any such document for the purpose of

obtaining, for himself or for any other person, any privilege,

benefit, pecuniary advantage, or valuable consideration.

3. 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:

* 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 Statement of Intent 2011-2014 sets out the SFO's three year strategic goals and performance standards. It is available online at: www.sfo.govt.nz

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