Convicted financier John Hotchin, former director of Nathans Finance, which collapsed in 2007 owing debenture investors $174.5m, pleaded guilty in the High Court last week to three charges brought by the Securities Commission: making untrue statements in Nathan’s investment documents. He was sentenced to 11 months home detention and BusinessDay (The Dominion Post 9 March) reports that it understood from what was stated in court at sentencing, that it was to be served at a rented property.
Documentation readily accessible on-line to the New Zealand public has often been used by investigative business reporters to probe and raise serious questions concerning suspected and actual white collar criminal activity. They often appear to see their roles to be that of “public watch dogs”, effectively promoting and raising awareness of the need for better community standards in the area of public accountability in business, reparation and sentencing etc. They most certainly do serve the “public good” and thec best of them receive journalism awards. The public needs to recognise the vital role they play in a free and democtatic society like ours in New Zealand.Companies Office records relating to John Hotchin’s wife, Sally, have been used by Business Day (BD) writer Tim Hunter to determine where Mr Hotchin is most likely to be serving his ‘arduous’ “home detention”. A colour 12.5 cm by 21 cm photo of the ‘prison cell’ is prominently featured in his article, complete with street number (186A), revealing “a luxury $4 million mansion in the upmarket leafy suburb of Kohimarama”.
Property records have been accessed by BD so former Nathans Finance investors who suffered huge losses, can now reflect deeply on the finer descriptors Hotchin’s luxury ‘cell’ and compare it perhaps, with their own non-cellular humble abode:
“The [Kohimarama] property, down a long drive barred by security gates and an entry phone, is listed in property records as having a tennis court and swimming pool, and is valued at $4.69m. It’s owners appear to be a wealthy Remuera couple.”
But has not John Hotchin the right to seek privacy from snooping business reporters and private investigators carrying out surveilance? Has he actually committed a crime by seeking shelter behind a high security gate in a leafy upmarket luxury property? Why shouldn’t he have the right to chill-out in a luxury swimming pool and keep fit playing tennis close by his ‘cell-block’. Has he not got genuine grounds now for laying a serious complaint to the Press Council over this BusinessDay ‘probe’into his very private pecuniary affairs?
Business Day must have caused further ‘pain’ and ‘sufferng’ when it visited the Kohimarama address to achieve its in-depth expose. Hunter, notes “a late model Range Rover was parked in the drive. A man man answered the entry phone and, when told of the visitor’s identity, said: “There’s no comment thanks.”
Undeterred by this business-like ‘rebuff’, BusinessDay has accessed Hotchin’s US property records to dig deeper. It notes Justice Lang’s comments in Court at sentencing that Hotchin owned no assets, other than a house in America, which secured loans exceeding its value. He added: “It is virtually inevitable …. that at 51 years of age you will be declared bankrupt.”
BusinessDay reports: “US property records show the Hotchins bought this six-bedroom, six-bathroom house in the Boston area in October 2005 for US$2.855m. It is now for sale.”
BusinessDay’s article could be seen by some readers as containing innuendo, suggesting that justice has not been served on John Hotchkin – having been given sufficient leeway by a ‘weak’ sentencing judge to avert bankruptcy, despite him stating that bankruptcy [for Hotchin] is “inevitable”.
Most of the money raised by Nathans Finance from its debenture investors, was used to finance its parent company VTL Group, a marketer of vending machine franchises. When Nathans collapsed in August 2007, all but $6.3m of its total loans of $176m were to VTL, its subsidiaries, franchises or other related parties. Investors were expected at that time to lose $188m.
After the collapse New Zealand properties owned by John Hotchin and his brother Mark Hotchin, both co-founders of Nathans Finance and VTL Group, “appear to have been sold in early 2008. One, a substantial Remuera residence, was sold to former Auckland mayor John Banks for $3.4m. A beachfront house at Pauanui sold for $2.7m – a healthy gain on the $1.9m the Hotchins paid in 2004.”
The point is that Property Records have been used legitimately by BusinessDay to lay bare the facts so the public can judge for themselves whether or not community standards are being ‘upheld’ by the courts and other enforcement agencies.
But will out-of-pocket investors, many of whom lost their life savings, be convinced that justice has been served and community standards upheld when they read the closing comments in the BusinessDay article? It reads:
“Justice Lang said a potential sentence of three years in jail was mitigated by his [John Hotchin’s] good character, remorse, a reparation payment of $200,00 and willingness to give evidence”.
It appears that the horse may well have truly bolted, dragging the stable doors, the stable foundation and the nearby luxury mansion with it, well before the painful and arduous sentence has been served.
Reference: Hotchin’s sentence believed to be served in $4m mansion
By Tim Hunter BusinessDay, The Dominion Post, Wednesday, March 9, 2011, p. C1.
http://www.stuff.co.nz/business/money/4745742/Hotchins-sentence-believed-to-be-served-in-4m-mansion
Special Note:
It is notworthy that John’s brother Mark Hotchin was recently granted high profile exposure on public television in a Primetime TV3 interview to share with the public how much he is suffering in terms of material deprivation etc. following the collapse of Hanover Finance, that also left $13,000 investors out of pocket. Mark Hotchin was director at the time of its collapse and Eric Watson its owner.
SEE UPDATE ON MARK HOTCHIN:
http://www.stuff.co.nz/business/industries/8610994/Hotchin-relieved-at-SFO-closing-case ]
AND ON ERIC WATSON
http://www.stuff.co.nz/business/industries/8610994/Eric-Watson-not-surprised-SFO-closing-case
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