kiwi Lenders in jail? There is a Santa Claus.

December 23, 2008

petricevicExecutives from 2 failed New Zealand  finance companies are being charged with criminal offenses.

Maria Slade and The New Zealand Herald report in Criminal charges for 9 finance firm chiefs that the Securities Commission and the Registrar of Companies allege:

…Bridgecorp staff were told to lie to investors who complained about late interest payments by blaming a bank error or computer glitch.

It says the finance company was so short of money that in April 2007, three months before it collapsed, it had only $45,000 available to meet $2 million in payments due to investors.

Also:

The Securities Commission alleges the Nathans Finance directors signed untrue statements saying the company had no bad debts, had adequate liquidity, that its lending was diversified, and that it made loans in accordance with robust policies.

It says they misled investors over Nathans’ lending to its parent company, vending machine operator VTL which is also now in receivership.

Names and Potential Outcomes

Bridgecorp: Former executive director Rod Petricevic and director Rob Roest already face five criminal charges, and now also face civil proceedings. Chairman Bruce Davidson and non-executive directors Gary Urwin and Peter Steigrad are now charged alongside Petricevic and Roest. Bridgecorp owes $459 million to 14,300 investors; they could get back as little as 13c in the dollar. Bridgecorp Investments owes $29 million which is unlikely to be recovered.

Nathans Finance: Directors John Hotchin, Donald Young and Kenneth Moses face criminal and civil proceedings. A fourth Nathans director believed to be living in Australia is also charged. Nathans Finance owes $174 million to 7000 investors; less than 10 per cent is expected to be recovered.

Penalties: Up to five years in jail or fines of up to $300,000 if convicted of criminal charges. $500,000 each in compensation payments.

This is a follow up to my May posting called 90 yr old faces losing house over Blue Chip:

Mrs. Gwendoline Harrison, a New Zealand pensioner was served with legal papers at her bedside this week. It involves the collection of a $300,000 mortgage that the franchise company, Blue Chip, sold her.

Bridgecorp directors Rod Petricevic (left) and Rob Roest are in the photo above, care of Richard Robinson.


So you want to Sue someone, do you?

July 25, 2008

Before you rush to sign up, buy this movie. And then buy the book. A Civil Action is perhaps the most accurate portrayal of civil litigation. Ever.

You’ll have to do what you can do but it has many excellent lessons. Understanding the economics of a lawsuit drives the outcome much more than the facts.

  • Out of the pan and into the fire…

A good article from The New Zealand Herald about the building feeding frenzy to assign Blue Chip legal responsibility. It appears the range and numbers of professionals potentially liable is growing.

Maria Slade reports:

Grimshaw & Co is joining a growing bandwagon of lawyers and burnt investors seeking to make professionals liable over the advice they gave.

A range of professionals are in the lawyers’ sights, from financial advisers and solicitors, to valuers, auditors and corporate trustees.

Further,

North Shore lawyer Andrew Hooker has reviewed the cases of around 160 investors who have lost money in finance companies, and believes at least half of them have grounds for taking action against their financial advisers.

“The scale of advice would go from sound to slightly questionable, to absolutely disgraceful. And there are a significant amount of people in my view at the absolutely disgraceful end.”

Many were put into the same six finance companies – Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston, St Laurence and Property Finance.

Pay careful attention to Robert Duvall and Sidney Pollack roles in the movie.


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