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SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

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NZ White Collar Crime: Two guilty in million-dollar fraud cases

December 8, 2010 by SPCS Leave a Comment

The SPCS contends that some of the more spectacular symptoms that reveal how New Zealand society has lost its moral bearings, include the steady growth in its million dollar white collar crime ‘industry’, involving fraud, bribery, theft, and dishonesty etc. Hitting the headlines with growing regularity it seems, are middle-aged grey-haired balding, or completely bald company directors, who, having been banned by the Registrar of Companies under section 385 of the Companies Act 1993 from directing, managing or promoting a company for up to five years; are subsequenly convicted and sentenced for committing multiple breaches of such banning orders, at the same time having committed serial criminal offences involving fraud etc.

Some having been banned because they pose a serious financial risk to the public because of their mismanagement of company financial matters and/or financial incompetence, despite having a degree or two such as an MBA, deliberately give the ‘the two-fingered salute’ to the Registrar of Companies who imposed the ban on them; caring little about any moral standards, the rule of law or the vulnerability of the public to their financial risk-taking and gross incompetence. Others banned from being directors after being declared bankrupts in the Courts, give the same insulting salute and box on as trumped up ‘directors’, in the self-declared role of “promoter” and/or highly paid “consultant”.

Such flagrant deception when exposed by the Serious Fraud Office (SFO) makes a complete mockery of the sanctions (prohibitions) imposed on such former directors by the Companies Office via the Courts, unless such crimes are severely punished by Judges at sentencing. The SPCS contends that banned company directors who deliberately and knowlingly breach banning orders should be jailed long-term and made to make full reparation. It believes that the vast majority of New Zealanders would probably support this view.

It is reassuring to the public to read in he Dominion Post report of 3 December 2010 that… On 3 December “in Wellington District Court, bankrupt Alan Edwards Wycherley, 52, who had been using the name of clients of a debt management company to get money from an Auckland finance firm, was jailed for three years. He had pleaded guilty to conspiring to defraud, nine charges of running a company while prohibited and two of illegally signing shareholder forms.”

He was one of “two Waikanae men who appeared before the courts the same morning, in unrelated million-dollar fraud cases, in which one falsely claimed a client was terminally ill and the other submitted dodgy loan applications.” Both were sentenced by Judge Behrens.

See full report: 3 December 2010 http://www.stuff.co.nz/dominion-post/news/wellington/4418021/Two-guilty-of-million-dollar-fraud

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Filed Under: Crime, Moral Values Tagged With: banned company directors, Banned Director, bribery, Companies Act 1993, Fraud, fraud cases, million-dollar fraud, s. 385, section 385, section 385 ban, Serious Fraud Office, SFO, theft, White-collar crime

Penalties for breaches of S. 385 Banning order by banned NZ Company Director

November 27, 2010 by SPCS Leave a Comment

In view of the growing numbers of New Zealand company directors, MPs and business leaders who have been convicted in the Courts for fraud, financial mismanagement, reckless trading and bribery; it is important that the penalties imposed by Judges on those convicted of such offences, be regularly reviewed, particularly in view of the financial suffering and social upheaval caused to shareholders, creditors and investors etc. by those responsible for such crimes.

Under s. 385 (1) of the Companies Act 1993, “the Registrar [of Companies] may, by notice in writing given to a person, prohibit that person from being a director or promoter of a company, or being concerned in, or taking part, whether directly or indirectly, in the management of, a company during such period not exceeding 5 years after the date of the notice as is specified in the notice. Every notice shall be published in the Gazette.”

Under S 373(4) of the Act, a person convicted of acting in contravention of a banning order notice issued under s. 385, is liable to imprisonment for a term not exceeding 5 years or to a fine not exceeding $200,000. Furthermore s. 386 sets out “Liability for contravening section 385 or section 385AA”

A person who acts in contravention of a notice under s. 385 or 385AA is personally liable to –

(a) a liquidator of the company for every unpaid debt incurred by the company; and

(b) a creditor of the company for a debt to that creditor incurred by the company—

while that person was so acting [against the banning order].

[Read more…]

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Filed Under: Crime Tagged With: bribery, Companies Act 1993, Fraud, mismanagement, reckless trading, S 374(3), s. 385, section 385

Warning to company directors responsible for reckless trading during insolvency

July 27, 2010 by SPCS Leave a Comment

For a company director to allow a company to continue to trade while it is insolvent is a breach of duty under section 135 or 136 of the Companies Act.  It is the duty of a Liquidator to report on any such reckless trading that is uncovered in the course of his or her efforts on behalf of creditors to recover any debts owed once the company is put into liquidation. The identification of reckless trading does give rise to possible civil action from creditors against the directors: creditors who may choose to seek reimbursement from the company for any shortfall in debts owed them. Consider a company that purchases a property for $1.9 million dollars, borrowing all the money to pay the purchase price. A director who finds that the company is unable to meet interest repayments on a first and second mortgage, should realise that a mortgagee sale is inevitable unless he can refinance the loan, source capital from elsewhere or gain assistance from a kindly tooth fairy. If however, the director allows debts to mount up for months due to unpaid interest and persists in carrying out trading operations throughout the period of insolvency, that would constitute reckless trading by the company, for which he is directly responsible. All income gained by the company over the period of insolvency would be subject to a rightful compensation claim be creditors via a civil action in the Court. If the company director failed to produce a credible record of company income deposited in a company bank account over this period, he would have committed an offence under the Companies Act 1993. Directors who fail to file an annual return after an extended period of such reckless trading, should be banned from being company directors. A director who through mismanagement allows two of more of his companies to be put into liquidation is more than likely to be banned as a director by the Ministry of Economic Development under s. 385 of the Companies Act 1993.

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Filed Under: Other Tagged With: Banned Director, civil action, Companies Act, liquidation, Ministry of Economic Development, reckless trading, s. 135, s. 136, s. 385, section 135, section 136, section 385

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