15 June 2017

Gambling: R. v. O'Brien, Coffey & Max

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