Acquitted on appeal of issuing a false finance company prospectus, property developer Paul Bublitz was released from prison but must serve eleven months home detention for misleading Treasury over the extent of his prohibited related party lending.
Paul Bublitz was charged with fraud offences after exploiting government guarantees for finance company deposits; guarantees intended to avert liquidity concerns following the 2008 global financial crisis. Bublitz had direct or indirect control over Viaduct Capital and Mutual Finance. He used depositors’ funds to rescue his personal investment in Hunter Capital and to get loans for further property development. He was sentenced to three years two months imprisonment.
The Court of Appeal overturned his conviction for issuing in 2010 a false prospectus for Mutual Finance. This prospectus referred to the then government guarantee of depositors’ funds. The trial judge said this was misleading; the government guarantee was at risk of being withdrawn should Treasury become aware of the extent of prohibited related party lending by Mutual to entities associated with Bublitz. The Court of Appeal said the prospectus was not misleading; depositors’ funds were guaranteed, regardless of any related party lending. Unless and until the guarantee was withdrawn, all deposits made during the currency of the prospectus were guaranteed.
Bublitz had been in jail for some two and half months following conviction. The Court of Appeal ordered his release, but ordered he serve eleven months home detention on his remaining convictions; charges of misleading Treasury over undisclosed related party lending. Bublitz became eligible for home detention, in part, because he gained no personal benefit from the fraud. He lost well over two million dollars of his own money attempting to ‘rescue’ his finance company investments and spent over one million dollars on legal fees at an initial nine month criminal trial, aborted because of government’s failure to disclose documents. Bublitz’ legal fees for a second trial were covered by legal aid.
Bublitz v. R. – Court of Appeal (16.08.19)
19.150