Fraud
convictions against Michael O’Brien, Kevin Coffey and Paul Max for concealing
the true ownership and operation of gaming licences disclosed backdoor
connections between the racing industry and distribution of profits from
pokies.
The High Court was told
of loans from trotting clubs in the upper South Island and lower North Island channelled
through O’Brien who used the funds to finance bars having slot machine licences. O’Brien kept hidden his ownership of these
liquor outlets. O’Brien then controlled
disbursement of gambling profits back to racing clubs, taking a cut himself. Over an eight-year period ending July 2013,
O’Brien and associated entities were paid some $11.57 million for services to
the racing industry, according to the Serious Fraud Office. O’Brien would typically charge fees at one
third of each racing club pokie grant he procured, the court was told.
O’Brien and Coffey were
convicted of making false representations in a 2009 application for a gaming
licence by Bluegrass Trust. Blenheim-based
O’Brien has considerable experience in managing bars and hotels and is heavily
involved in the harness industry.
Wellington-based Coffey worked as an adviser to local gaming
trusts. He was previously employed by
Internal Affairs as a gambling inspector.
Both denied O’Brien was in any way involved in Bluegrass. Any application involving O’Brien would have
been turned down flat by Internal Affairs.
It had refused to renew a gaming licence in 2005 for Nelson’s Metro
Charitable Trust citing concerns about O’Brien’s involvement with that Trust.
Justice Dobson ruled
O’Brien and Coffey were part of a criminal enterprise to conceal from Internal
Affairs O’Brien’s involvement in the management of Bluegrass. While both O’Brien and Coffey had repeatedly
told gambling inspectors O’Brien was not behind Bluegrass’ licence application,
there was evidence O’Brien had hatched plans for Bluegrass to get a gaming licence,
arranged finance, leased business premises in Blenheim, forged the signatures
of others to Bluegrass correspondence and liaised with Coffey over the
narrative to be given Internal Affairs.
Bank of New Zealand was approached for finance with O’Brien using his
father’s email address to disguise his own involvement. Funds totalling $300,000 were borrowed
personally by O’Brien from Kaikoura, Blenheim and Nelson racing clubs to
provide working capital for Bluegrass.
Racing club loans were not made direct to Bluegrass; that would
compromise their entitlement to pokie grants.
Justice Dobson also
ruled O’Brien exercised effective control over venue licences where pokies were
installed. Nelson-based Max was the
supposed venue licence owner through his shareholding in Maximum Holdings
Ltd. Evidence was given that Max held
these shares as trustee for O’Brien. While
Max was the nominal owner, O’Brien trusted Max to operate licensed gambling
venues consistently with O’Brien’s interests, Justice Dobson said. Again, racing club funding assisted. August 2006 purchases of two bars by Maximum
Holdings was part-financed with $150,000 borrowed by O’Brien from the Oamaru
Harness Racing Club, Kurow Trotting Club and Westport Trotting Club. In September 2007, O’Brien had Maximum
Holdings borrow $150,000 from the Manawatu Racing Club with these funds used in
part to purchase other gambling sites.
Charges were also laid
against Patrick O’Brien, Michael O’Brien’s father. Justice Dobson ruled these charges are to be
heard separately.
R.
v. O’Brien, Coffey & Max – High
Court (15.06.17)
17.069