For immediate release

Media Statement:
10 August 2010

SFO welcomes sentence in technology fraud

The Serious Fraud Office (SFO) today said it welcomed the sentence of 5 years 3 months imprisonment against Philip Whitley convicted last month of two counts of making a false statement as a promoter.

SFO Chief Executive, Adam Feeley, said “Mr Whitely and his company Near Zero Ltd caused over $5M of losses to almost 500 investors and it is heartening to see the gravity with which the Court views such offending.”

Mr Feeley said that the Whitley case was consistent with the type of cases which the SFO needed to be focusing on.

“The SFO has targeted large-scale investment frauds as one of its top priorities and, as a consequence, we expect to see more and more of our prosecutions securing significant custodial sentences.”

He added that while it had been over three years since the investigation into Near Zero had first begun, the SFO was setting more demanding standards for initiating and completing investigations.

“Our strategy is to focus on fewer cases, but which have greater public impact, and to devote sufficient resources to the investigation of them so that they can be brought to a speedier conclusion.”

--

Note to editors
Details of Near Zero Ltd

Mr Whitley has worked in the computer industry for most of his life. During the late 1990’s the accused worked for Astute Software Limited in Nelson assisting to develop their point of sale software. In about 2000 Mr Whitley allegedly discovered a new form of data compression technology. He was then tasked with the development of this new technology.

Between 1999 and 2006 a core group of businessmen were involved in supporting Mr Whitley financially in the work he was doing.

In 2006 Mr Whitley incorporated a company called NearZero Inc. in Nevada, United States. NearZero was controlled by Mr Whitley and claims to control Mr Whitley’s alleged data compression technology.

Also in 2006, Mr Whitley incorporated another company called Syntiro Limited. Syntiro Limited was a contractor to NearZero Inc. and provides all services necessary to enable NearZero to conduct its operations in New Zealand.

After the formation of NearZero Inc. and Syntiro Limited Mr Whitley organised a number of share sale roadshows and presentations. The presentations were run by him via PowerPoint in seminar rooms of large hotels in Auckland, Wellington and Christchurch.

The roadshows and presentations took place between September 2006 and April 2007. During those presentations Mr Whitley made false statements that he had technology that was “… a breakthrough invention, offering dramatically more efficient electronic data transmission and storage capability …” and that this technology had patent protection.

During the period July 2006 and May 2007, Mr Whitley also published false statements about the technology and its patent status in information packs distributed to potential investors. The material stated that the technology had faster data transmission and greater storage capacity than any other technology available at the time, and once again that the technology had patent protection, including what is sometimes called patent pending status.

All the false statements were made by Mr Whitley with the intention to induce persons to subscribe to a security, namely to buy shares in NearZero Inc.

Role of SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act in response to the collapse of financial markets in New Zealand at that time.

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…”

The SFO’s Statement of Intent 2010-2012 sets out the SFO’s three year strategy and goals for contributing towards the Government’s Justice and Economic Development goals. It is available online at:
http://wwwsfo.govt.nz/Serious_Fraud_Office_files/SFO%20SOI%202010.pdf

ENDS

© Scoop Media