Five Star Consumer Finance Directors Prosecuted

Media Release

12 November 2009

Five Star Consumer Finance Limited Directors Prosecuted

The Companies Office has laid criminal charges in the Auckland District Court against Marcus MacDonald, Anthony Bowden and Nicholas Kirk. De facto director Neill Williams has also been charged.

“The charges relate to false and misleading statements contained in investment statements and the 20 September 2006 registered prospectus” said Registrar of Companies, Neville Harris.

The prosecution is being carried out by the National Enforcement Unit of the Companies Office.

The defendants are due to appear in the Auckland District Court on Monday 30 November 2009.

Mr Harris said the case was now before the Court and it would not be appropriate to comment further.

The charges

The directors of Five Star Consumer Finance Limited (in receivership) are charged under Section 58 of the Securities Act and Section 41 of the Financial Reporting Act for making misstatements in an advertisement or registered prospectus and for making false statements (including in the company’s financial accounts). These charges relate to Five Star’s commercial practices, their engagement in commercial loans, and their disclosure of related party transactions.

De facto director, Neil Williams also faces similar charges under the Securities Act and Financial Reporting Act for being a party to the offending and for his role as a principal officer.

Penalties

If convicted on the Securities Act charges, the directors and Williams are liable to a term of imprisonment not exceeding five years, or to a fine not exceeding $300,000.

If convicted on the Financial Reporting Act charges, the directors and Williams are liable to a term of imprisonment not exceeding five years, or to a fine not exceeding $200,000.

Five Star

Five Star Consumer Finance Limited went into receivership on 29 August 2007. Secured debenture investors have to date received 22.5 cents in the dollar on their original investments.

The receivers estimate the total value of the Five Star Consumer Finance Limited loan book to be approximately $66 million, of which $41 million comprises loans made for commercial purposes. The receivers at their last reporting date have recovered $17.5 million of the total loan book.

Other Agencies

The case was referred to the Companies Office by the Securities Commission.

The Serious Fraud Office is also conducting a separate investigation into possible breaches of the Crimes Act and is focussing on a number of matters, some of which involve related party transactions. Its investigations are substantially advanced although any decision as to charges is unlikely until the first quarter of 2010.

These agencies have all been liaising closely, as appropriate.

ends

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