Stopping fraud souring New Zealand's export reputation
The Judge in the trial of Trevor James Lock, has handed down his verdict in the Auckland District Court today following a Serious Fraud Office (SFO) prosecution.
The former dairy industry scientist and then owner of Nubiotics Limited (Nubiotics) and Nu-Brands Limited (Nu-Brands) has been found guilty of 18 Crimes Act charges and two SFO Act charges.
Mr Lock was arrested in Morrinsville on 22 December 2015 following an SFO investigation into his activities with Nubiotics and Nu-brands. Through these entities, Mr Lock entered into a number of contracts to supply dairy and honey products. He used customer deposits to fund personal or other business expenses and then failed to deliver on the contracts.
SFO Director, Julie Read said, “The SFO’s prosecution in this matter will help preserve the reputation of New Zealand companies as reliable exporters of quality milk and honey products. New Zealanders have a reputation for being honest in their business dealings and for this reason, Mr Lock’s customers trusted the representations he made to them. In reality Mr Lock deceived his customers, using false statements, forged documents and other means to disguise his failure to fulfil his obligations. He also supplied false information to the SFO while under investigation.”
Mr Lock will be sentenced on 18 October 2017.
Serious Fraud Office
027 705 4550
Note to editors
Background to investigation
Prior to 2001, Mr Lock has a history working in the dairy industry as a scientist in the field of milk powder product development.
From 2001, Mr Lock set up various companies as providers of milk powder and honey products, targeting the Chinese export market. In October 2001 Mr Lock began operating Nubiotics Limited, and in February 2014 after Nubiotics was put into receivership, Mr Lock incorporated Nu-Brands Limited.
Crimes Act offences
Section 228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,—
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.
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.
Section 256 Forgery
(1) Every one is liable to imprisonment for a term not exceeding 10 years who makes a false document with the intention of using it to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration.
(2) Every one is liable to imprisonment for a term not exceeding 3 years who makes a false document, knowing it to be false, with the intent that it in any way be used or acted upon, whether in New Zealand or elsewhere, as genuine.
(3) Forgery is complete as soon as the document is made with the intent described in subsection (1) or with the knowledge and intent described in subsection (2).
(4) Forgery is complete even though the false document may be incomplete, or may not purport to be such a document as would be binding or sufficient in law, if it is so made and is such as to indicate that it was intended to be acted upon as genuine.
(5) Every person is liable to imprisonment for a term not exceeding 3 years who, without reasonable excuse, sells, transfers, or otherwise makes available any false document knowing it to be false and to have been made with the intention that it be used or acted on (in New Zealand or elsewhere) as genuine.
SFO Act offences
Section 45 Offence to obstruct investigation, etc
Every person commits an offence, and is liable on conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $15,000:
(b) in the case of a corporation, to a fine not exceeding $40,000,—
(c) without lawful justification or excuse, resists, obstructs, or delays any member of the Serious Fraud Office in the exercise of any power conferred by section 9; or
(d) without lawful justification or excuse, refuses or fails to—
(i) attend before the Director; or
(ii) answer any question; or
(iii) supply any information; or
(iv) produce any document; or
(v) provide any explanation; or
(vi) comply with any other requirement,—
as required pursuant to the exercise of any power conferred by section 9; or
(e) in the course of complying with any requirement imposed pursuant to section 5 or section 9, gives an answer to any question, or supplies any information, or produces any document, or provides any explanation, knowing that it is false or misleading in a material particular or being reckless as to whether it is so false or misleading.
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 three operational teams; the Evaluation and Intelligence team along with two investigative teams.
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 2016 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 @FraudSeriousNZ