Westpac bank advances $10m, not $10,000. Oddly, NZ now short 2 BP franchisees

May 21, 2009

BPNZYou have to have some sympathy for the banker.

But not much when you know their full involvement in financing franchises in New Zealand in the last couple of years.

The New Zealand Herald reports today on a service station franchisee couple taking it on the lamb, Runaway millionaires named – may have fled to Asia:

Interpol is leading a worldwide hunt for the Rotorua couple who have fled with millions of dollars worth of Westpac’s money.

The couple, who ran Rotorua’s BP Barnetts service station on Old Taupo Road, are Leo Gao and Australian girlfriend Cara Young.

They are understood to have applied to Westpac Bank for a $10,000 overdraft and mistakenly had $10 million paid into their account.

All legality and morality aside, you have to stop and think “What Would I Do” in this situation? Pretty easy to be sanctimonious when you’ve never been tempted to am-scray.

As usual the most interesting bits are from experienced police officers:

Detective Senior Sergeant David Harvey held a media conference in Rotorua this afternoon, but would not confirm any speculation. When asked where police believed the money had gone, he simply replied “overseas”, before refusing to answer any further questions.

$6-million: That’s simply amateur hour when compared to professional thievery such as Blue Chip. The Austrialia-based bank stands to lose big-time if the investors’ lawyer can convince New Zealand courts that the contracts are either unenforceable or void.

Westpac is frequently mentioned as the money behind the Blue Chip fiasco. the latest article is Westpac embroiled in New Zealand property fall-out.

Auckland barrister Paul Dale is launching a High Court challenge on behalf of more than 250 investors. Dale says his clients’ contracts are illegal for a number of reasons including that they breached the country’s Securities Act and Fair Trading Act.

If Dale is successful and the contracts are thrown out the developers will be left with a glut of apartments unsold and unrented, with price tags well below what they originally sold for. Standing behind the developers is Westpac. The Australian bank has been a major player in the New Zealand property market and has financed a number of developers that did business with Blue Chip.

Thank God for Paul Dale because from what I have seen the New Zealand government has done nothing to help the victims of Mark Bryers’ +80 million franchise fraud.


Franchisor faces 100 criminal charges

February 23, 2009

bryers2Blue Chip was set up as a franchise by Mark Bryers.

Business format franchising is very useful in insulating owners from liability. One type of liability is when people, downstream, sue the corporation because of its alleged fraudulent dealings. Bryers set up +160 companies.

  • Not many kiwi real estate investors are smiling as much as  Bryers, a disbarred lawyer left, appears to be these days while biding his time in sunny Australia.

The New Zealand Herald and Jared Savage report on the latest attempts to bring Bryers to justice (Blue Chip founder faces 100 charges).

Criminal charges have been laid against Blue Chip co-founder Mark Bryers for his part in the property company’s $80 million collapse.

More than 100 charges have been laid against Bryers for alleged breaches of the Companies Act.

They follow a six-month inquiry ordered by the Registrar of Companies.

Bryers is living in Sydney, Australia running a similar type of real estate company. The Serious Fraud Office and Commerce Commission are also investigating.

To Recap:

More than 2,000 investors are out of pocket after 22 Blue Chip-related companies owing more than $80 million were put into liquidation last year.

Many investors are retired and face losing their homes.

About the only person working to try to recover any investor money is…

Paul Dale, an Auckland lawyer acting for many of the investors, said he was not surprised charges had been laid.

He welcomed the prosecution, but called on the Government to bail out those who stood to lose everything because of the Blue Chip collapse.

In a related story called Mark Bryers still gets rent cash, Rebecca Milne quotes a  67 year-old who as saying it’s too late for her and her 72 year-old husband:

“We’ve been to the doctor more in the last 12 months than we’ve ever been in our lives. We’re just so stressed about it all.

“We’ve already sold our home. We’re in a one-bedroom council flat. That’s all we’ve got.”

The New Zealand government has yet to explain how such a large-scale fraud could occur, let alone take steps to prevent it in the future.


Where’s Mark Bryers? With Waldo in AUS, of course.

September 4, 2008

The children’s game, “Where’s Waldo?” was a big hit with my kids a few years back. Here is a link to Waldo Wiki for some fun.

Otherwise, it appears from New Zealand’s One NEWS that the Blue Chip founder is somewhere in Australia (Blue Chip hope sparked by frozen funds).

Hundreds of Blue Chip investors across New Zealand have been given fresh hope that they might be able to recover millions of dollars worth of deposits for apartments they never wanted to buy.

The High Court has frozen funds in solicitors trust accounts until a full hearing takes place later this year…

We’ll wait and see if any cash actually surfaces from freezing the lawyer’s escrow accounts for the 2,000 seniors (mostly) who have lost over $84-million.

It does seem that Mr. Mark Bryers is keeping a pretty low profile these days. It appears that lawyers are having a hard time tracking him down in Australia to serve him with bankruptcy papers.

And what does one of the 2,000 investors [$1-million lost as a condition of re-locating to Britain] have to say about Bryers’s moving to Australia?.

“And now he’s off to Australia to do the same to people over there, I just – unbelievable,” says Blue Chip investor Michelle Hickman.

Altered loan documents, fraud and an agency relationship you say? Mrs. Hickman’s intrepid barrister Paul Dale:

“Certainly on the affidavit evidence we have filed to date, there has been fraud. We have produced examples of altered loan documents,” says Paul Dale the investors’ Barrister…

Dale says he has got powerful evidence of a profit sharing agreement between Greenstone and Blue Chip which would have seen money flow to Mark Bryers when apartment projects like this were completed.

Like I said before [Oz Alert: Shrewd businessmen immigrating], if you bump into Mr. Bryers or Bob Bangerter, let me know.


Sue Big Franchising: franchisor, lawyers, lenders, sales agents, developers

September 2, 2008

Neil Hickman, with wife Michelle and their children Lewis (6) Lauren (11) and Holly (10), moved here from the UK for a better life but have lost their life savings after investment company failures. Photo / Martin Sykes

Good job: Naturally, raise enough doubt to have the contracts set aside as unenforceable because they were based in fraud.

More body parts are washing up on New Zealand’s shoreline in the continuing Blue Chip scandal.

See my post on the family on the left, Kiwi scams touch all classes of immigrants and the New Zealand Herald’s original article, Immigrant banker put $1.7m in Blue Chip).

The Herald says this week:

The investors claim the agreements are unenforceable.

They say Greenstone and the Blue Chip group had an agency relationship, including a profit-share arrangement. They are also taking action against three Blue Chip-recommended lawyers over the advice they gave – Jonathan Mathias, Zeljan Unkovich, and Hamilton firm Foster, Milroy & Turketo.

Okay but Jenni McManus and BusinessDay.co.nz really gets into the details in Blue Chip investors sue their lawyers:

Eight out-of-pocket investors in bankrupt property company Blue Chip are suing their Blue Chip-recommended lawyers for breach of duty for their handling of millions of dollars worth of apartment purchases due to settle within weeks.

They say lawyers Jonathan Mathias, Zeljan Unkovich and the law firm Foster Milroy & Turketo who habitually did Blue Chip work, were recommended to investors for legal advice when buying apartments in the Barclay development in downtown Auckland about two years ago.

The investors claim they were dissuaded from using their own lawyers by Blue Chip, who they say told them its property schemes were complex and their own lawyers might not understand how they worked.

But Mathias, Unkovich and Foster Milroy & Turketo regularly did Blue Chip-related work and knew how the schemes operated, the investors say they were told. Some say Blue Chip threatened not to pay their legal fees unless they used lawyers Blue Chip recommended. Specifically, the plaintiffs allege the lawyers failed to advise them of the implications of the transactions they were signing or to give them any advice about the documentation.

So its the lawyers and franchisor only? No: Here are the lenders, sales agents…

The claim is part of the first significant lawsuit against Blue Chip. Other defendants have been named as Greenstone Barclay Trustees, GE Custodians (a lender), Tasman Mortgages and Executive Mortgages (mortgage brokers) and Blue Chip associate Bribanc (now know as Vault Realty).

Fraud claims have been brought against Tasman and Executive, where it’s alleged one or both fraudulently altered the loan documentation for one investor whose income was misstated, and mortgages were obtained from GE Custodians on the basis of fraudulent conduct.

…but last if not least, the property appraisers.

Described by Dale [Paul Dale, the Hickman’s lawyer] as naive and unsophisticated investors, the Hickmans also relied on a valuation from Blue Chip associate Bribanc Real Estate that they did not even see. Dale is arguing that, as with several plaintiffs’ properties, their apartment was over-valued.

They are seeking an injunction and although I am not a lawyer they appear to have to satisfy a pretty low legal standard:

…all the plaintiffs need prove is that they can mount a credible argument against the developers and Blue Chip.

Whatever happens, there were no aligned interests or a conspiracy to commit fraud. Only a nut-job would ever think such a thing.


Blue Chip finger puppetry?

August 8, 2008

Team A: This is a picture of Jeff Meltzer of Meltzer Mason Heath, New Zealand.

A Mr. Aaron Heath says that after six months investigation, it is still too early to know what to write in their promised reports. Hmmm.

This is not a trivial little financial bubble involving a tiny franchise system tanking.

Blue Chip and its founder and Oz resident Mark Bryers have caused 2,000 Mom and Pop Kiwis to lose over $80 million as 20 related companies went buns up kneeling.

It appears the liquidator’s actions and sense of urgency have the full support of Commerce Minister Lianne Dalziel and the Clark government.

Team B: Anne Gibson from The New Zealand Herald reports this week in Blue Chip process frustrates lawyers that:

Two lawyers acting for more than 300 Blue Chip investors say they are aghast at the scale of the task and are angry about what they say is a distinct lack of Government aid for investors.

Specifically, how helpful have the liquidators been in assisting the the two lawyers (Paul Dale and Daniel Grove) in trying to defend the 2,000 citizens?

Grove says his firm has been greeted only with hostility from the liquidators so far. “We requested a document and were told we needed a court order.”

Illustratively, it is these two barristers that are:

Issuing proceedings against two Auckland lawyers – whom the barristers refused to identify – for professional negligence over advice to clients who became Blue Chip investors.

The two lawyers are doing this: not the liquidators or the Government.

  • You Decide: Is it Team A or Team B that appears to be putting on a cheesy puppet play?

Legal Aid used to fund franchise lawsuits

July 23, 2008

Now here are a couple of novel ideas from New Zealand.

Maria Slade at the ever-vigilant New Zealand Herald reports today that the 2,000 investors who have lost over $84-million in the Blue Chip franchise collapse are being encouraged to apply for legal aid to finance their attempts at getting thier money back.

Commerce Minister Lianne Dalziel says she is:

interested in helping Blue Chip investors find ways and means to access legal advice, particularly in this case where lack of funding is a barrier to legal recourse.

This is a first: I have never seen a publicly funded legal aid program used to fund a franchise legal action.

Not that surprising that the New Zealand government doesn’t want to touch the Blue Chip mess with a 10 foot pole. It’d raise too many questions about lax commercial regulation, I’d imagine.

  • Something about creating a very friendly feeding ground for massive consumer fraud, targeting Kiwi senior citizens.
  • International financial market laughingstock? Or some other alarmist conclusions.

The second is that the the lawyers and valuation firms are being scrutinized for their professional competence.

Law firm Ellis Law, together with barristers Paul Dale and Daniel Grove, are acting on behalf of several hundred of them. Activity includes taking legal action against solicitors over allegedly negligent advice they gave on the investments.

Valuers who provided allegedly inflated valuations on properties sold through the Blue Chip scheme are also in the lawyers’ sights.

But we’re missing a key ingredient to the Blue Chip fraud sausage: The lenders. Where are they in this fiasco? The last time I checked, there should be some type of regulation or lapdog self-regulation to cover these lenders.

  • Could it be the government is handing over the heads of the small fries [no-name lawyers and valuators] to avoid looking responsible for not regulating lenders sufficiently?
  • The Kiwi government knew or would have been reasonably been expected to know that lax or no lending regulations causes loss.
  • When the chickens come home to roost, the government blames everyone except themselves.

This fraud would have been impossible without a source of funds. I suspect the government was asleep at the switch as $ millions fed this humongous scam.

  1. Remember: Sue the SOBs with insurance, when you don’t have the cojones to sue the government and Her Majesty’s ministers.

Sue the enablers: lawyers, appraisers

July 9, 2008

Good news for the thousands of Kiwi real estate investors who have lost +$80 million from a tanked franchise system.

I like it. I like it a lot.

Sue the practicing attorneys with the greatest legal duty and insurance rather than the smarter, former one who is in Oz now.

  • Want to pretend fulfilling your fiduciary duty to a client?

Okay.

  • Let’s e-publish a list of the defending solictors and their law firms.

Auckland law firm Ellis Law is trying to take legal action against the lawyers and appraisers who helped convince senior citizens to sign up for some very high risk, fuzzy logic investments.

Ellis Law principal Brian Ellis said there were a number of concerns surrounding the solicitors’ actions, including:

  • The size of the deposits investors were required to make.
  • The immediate release of investors’ deposits.
  • The lack of explanation in the documentation about who actually owned the property and who was developing it.

But some things stay the Same: And what is the government doing when asked by Ellis and Paul Dale to help centralize and co-ordinate claims?

Other than acknowledging the lawyers’ request the Government has not yet responded.

There is still lots of work to do.

Ellis said many affected Blue Chip investors could not afford the $2000 retainer the lawyers were charging. “We think there’s a large number who have done nothing.”

He knew of people in their 70s and 80s who had no idea what to do, and who were struggling to even write a straightforward narrative of their situation.

Anyone that waits for any western government to help out when the inevitable and predictable fraud sausage blows up, is a damn fool.


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