Guilty verdicts in $41 million lending fraud case
A jury has found two men guilty of fraudulently obtaining a large bank loan to build an Auckland inner-city apartment block.
Property developer Leonard John Ross (51) and company director Michael James Wehipeihana (46) were convicted today at the High Court in Auckland on three charges of ‘Obtaining by deception’ and two representative charges of ‘Using forged documents’ brought by the Serious Fraud Office.
Mr Ross and Mr Wehipeihana made false statements and used forged documents in order to obtain a $41-million development loan from the ANZ Bank to allow their company, Emily Projects Limited, to construct the Waldorf Celestion Apartment Hotel.
SFO Director, Julie Read said, “Mr Ross and Mr Wehipeihana misled the bank to ensure that Emily Projects Limited obtained the loan facility. The SFO is committed to investigating and prosecuting this kind of offending to maintain the integrity of the mortgage market for the benefit of honest borrowers.”
Mr Ross and Mr Wehipeihana have been remanded on bail to reappear at the High Court in Auckland for sentencing on 28 September.
The two other men involved in the fraudulent scheme were sentenced to 10-months’ home detention. Vaughn Stephen Foster (56), a self-employed consultant, pleaded guilty to one representative charge of ‘Obtaining by deception’ just before the eight-week trial commenced and was sentenced in June. Timothy Upton Slack (56), a lawyer, pleaded guilty to one representative charge of ‘Obtaining by deception’ on 1 September last year and was sentenced later that month.
Serious Fraud Office
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Note to editors
Crimes Act offences
Section 240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.
(1A) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any document or thing capable of being used to derive a pecuniary advantage knowing that, by deception and without claim of right, the document or thing was, or was caused to be, delivered, executed, made, accepted, endorsed, or altered.
(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
(i) knows that it is false in a material particular; or
(ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.
257 Using forged documents
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, knowing a document to be forged,—
(a) uses the document to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or
(b) uses, deals with, or acts upon the document as if it were genuine; or
(c) causes any other person to use, deal with, or act upon it as if it were genuine.
(2) For the purposes of this section, a document made or altered outside New Zealand in a manner that would have amounted to forgery if the making or alteration had been done in New Zealand is to be regarded as a forged document.
About the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act.
The SFO is the lead law enforcement agency for investigating and prosecuting serious or complex financial crime, including bribery and corruption.
The presence of an agency dedicated to white collar crime is integral to New Zealand’s reputation for transparency, integrity, fair-mindedness and low levels of corruption.
This work contributes to a productive and prosperous New Zealand and the SFO’s collaborative efforts with international partners also reduce the serious harm that corrupt business practices do to the global economy.
The SFO has two operational teams: the Evaluation and Intelligence team and the Investigations team.
The SFO operates under two sets of investigative powers.
Part 1 of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
Part 2 of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”
In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:
- the suspected nature and consequences of the fraud and/or;
- the suspected scale of the fraud and/or;
- the legal, factual and evidential complexity of the matter and/or;
- any relevant public interest considerations.
The SFO’s Annual Report 2017 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO’s strategic goals and performance standards. Both are available online at www.sfo.govt.nz
The SFO Twitter feed is @SFO_NZ