Three
directors of finance company Capital + Merchant have been sentenced after
pleading guilty to Securities Act offences.
Over two years, investors put $23.4 million into the company on the
strength of untrue statements which misrepresented the quality and risks of
their investment. Capital + Merchant
went into receivership in 2007 with about 7,000 investors out of pocket.
Colin Gregory Ryan was
sentenced to seven months home detention and 300 hours community work. He agreed to pay $100,000 to the receivers by
way of reparations for the loss and damage caused investors. The court was told Ryan is a 66 year old
Australian citizen from Brisbane. He is
a very experienced businessman with law and accountancy qualifications. He had served on boards of Brisbane’s port
company and airport company. His home
detention is to be served at an Auckland address.
Robert Gordon
Sutherland was sentenced to six months home detention together with 300 hours
community work. He agreed to pay
reparations of $60,000.
Owen Francis
Tallentire was sentenced to twelve months imprisonment to be served in addition
to a prison term currently being served after his earlier conviction for theft
by a person in a special relationship arising out of his dealings as a Capital
+ Merchant director.
The untrue statements
which mislead investors were in prospectuses issued to the public in 2006 and
2007. That court said both Ryan and
Sutherland had an honest belief that the information in the 2006 and 2007
prospectuses was correct, but this belief was not reasonable. Tallentire was described as being more deeply
involved such that he must have been aware critical information was false.
In particular, the
prospectuses misrepresented the extent and manner of dealings with related
parties; misrepresented the cash flows and future liquidity of Capital +
Merchant and did not identify the extent of disputed loans or the fact of
unpaid loans being rolled over rather than enforced. It was incorrect to state that no loans were
impaired and that no provision was required for past-due loans when in fact a
number of large loans were clearly impaired.
R.
v. Ryan, Sutherland & Tallentire – High Court (15.03.13)
13.010