First
exposed on TV3’s Campbell Live, four
fraudsters have been convicted of intention to deceive following a false
invoicing scam gulling customers into paying for advertisements in fake
publications.
Anthony Hendon and James Burns from Picton
pleaded guilty before trial. Johannes
Hendrik Middledorp and Noelene Kay Banton from Port Waikato were convicted
after a lengthy criminal trial in the High Court. All four of them previously worked together
in advertising in Auckland.
Details of the false invoicing scam perpetrated
by Middledorp and Banton were spelt out in evidence from the Serious Fraud
Office: businesses were cold called with either a plausible story about
finalising advertisements in a named (but fictitious) publication when no such
advertisement had been agreed previously or the customer was talked into
placing an advertisement with a publication previously unknown to them; when
the business indicated it would go ahead a copy of the proposed advertisement
was emailed for checking and final approval; then an invoice would be sent but
the named publication did not appear as promised. When cold-calling, an alias was used to hide
the fraudsters tracks. Contact details
were changed for each publication to avoid suspicion from “bunnies”, the term
used to describe those businesses targetted more than once. Their most profitable bunny was an elderly
man later diagnosed with dementia who spent $19,982 over three years to
advertise in 22 of their publications. Publication titles chosen were designed
to create the impression of links with altruistic or community-based causes
with titles such as Children in the Community,
The Local Business Guide and Roadcare
NZ. Appeals to altruism were used to
help sell advertising. Privately,
Middledorp called them “bleat” magazines.
When the potential advertising market for one title looked to be
exhausted, a new title was dreamed up.
For the period covered by the prosecution, there
was evidence that Middledorp and Banton billed out invoices for approximately
$480,000. They got back payment of about
$116,000. It may not have been a
particularly lucrative scam. Intercepted
phone conversations between Middledorp and Hendon had Middledorp complaining
that he had only $20 worth of gas in the car, $3.96 in the bank and was
struggling to get food for the cat.
There was a degree of conflict between the
Picton and Port Waikato operations, with evidence given of Banton’s suspicions
that Hendon was getting access to and using their lists of target businesses
for cold calling.
Justice Mallon ruled there was no intention to
publish the promised magazines at the time businesses were billed for
advertisements. The Serious Fraud Office
investigation found financial records indicating that a maximum of $8557 had
been spent on what was described as printing, but only little over $1000 could
be traced to print shops. They had done
small print runs for a handful of copies of a particular title. At best, a couple of hundred magazines of all
titles were printed. This despite
promises to advertisers that print runs would be in the thousands. Justice Mallon said where printing was done
this was usually to secure payment of an invoice where the advertiser required
proof the advertising was legitimate.
R. v.
Middledorp & Banton – High Court (7.05.15)
15.042