Third Guilty Plea Entered In Motor Trade Finance Fraud
29 February 2012
A further guilty plea was made yesterday in the Auckland District Court by one of the defendants charged for his role in a scheme to defraud Dunedin-based vehicle finance company Motor Trade Finances Ltd (‘MTF’), following an investigation by the Serious Fraud Office (SFO).
Karl Sean Toussaint (40) pled guilty to five charges of obtaining funds by deception under the Crimes Act. The charges carry a maximum penalty of seven years. Late last year, fellow accused Clark Anthony Lewis (35) and Stewart Travis Saunders (43) pled guilty to charges of obtaining funds by deception for their roles in the scheme.
Four other defendants also appeared in Court in relation to similar charges. They have been remanded for trial beginning 4 March 2013.
The SFO laid a combined total of 110 charges against seven individuals in August as a result of allegations made against Mark James Whelan (38), formerly an Auckland-based retail dealer for MTF and later a franchisee of the company.
It is alleged that while in those positions and between July 2005 and February 2009, Mr Whelan wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. He is accused of obtaining loans totaling $4.9 million and using those funds for personal gain, including the purchase of land, servicing of personal debts, and investing in a futures trading scheme.
Mr Toussaint was accused of signing five contracts that falsely represented that a loan from MTF was secured against specified assets. These assets did not exist.
Mr Whelan is facing 25 individual charges and 41 joint charges of obtaining by deception under the Crimes Act.
The other individuals facing joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan’s scheme are: Richard Michael Barnett (43), 16 charges; Jonathan Earle Chiswell (35), three charges; and Brett Royce Donaldson (49), seven charges. Mr Chiswell and Mr Whelan are also facing a further three joint charges.
Mr Toussaint has
been remanded on bail to next appear for sentencing on 11
1. Background to investigation
From March 2005 Mark James 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 is accused of writing 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 were unable to locate those assets for repossession.
A complaint was submitted to the SFO on 17 September 2010.
After considering the complaint the Director determined that there was reason to suspect that an offence involving serious or complex fraud may have been committed. An investigation under Part I of the Serious Fraud Office Act 1990 (“Act”) was commenced in September 2010. This was elevated to a Part II investigation on 15 November 2010. Charges were laid and the defendants first appeared in September 2011.
2. 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
(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,
(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.
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
- 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 2011-14 sets out the SFO’s three year strategic goals and performance standards. It is available online at: www.sfo.govtnz