Eight years' jail for $103m Sth Canterbury Finance fraudster

Left-to-right: Marlena Davis, Gavin Bennett and Emily Deyris.

UPDATE 4pm: Convicted fraudster Gavin Clifford Bennett has been sentenced to eight years in jail. Bennett, 54, was sentenced in Christchurch District Court this afternoon.

Earlier this year he pleaded guilty to defrauding South Canterbury Finance of $103 million - one of the country's largest fraud cases.

Judge Jane Farish has just delivered the sentence.

She says there needs to be an element of deterence and denunciation, which is why she increased the non-parole period from two and a half years to three and half years.

The average man in the street would think it was insufficient for Bennett to serve only two and a half years, she said.

Judge Farish repeatedly called the fraud "unprecedented" because it took place over six years and involved 894 documents. 

The short of stature and bespectacled Bennett appeared in court wearing a black suit and fancy white shirt, with no tie.

Judge Farish told him to be seated until the end of the hearing and for most of the time he peered out above a glass barrier at the proceedings until he was invited to stand to for the sentencing.

Although defence lawyers asked the judge to consider a starting point of eight years before applying discounts, she accepted the Serious Fraud Office request that the starting point should be 12 years.

Judge Farish gave Bennett a 3% discount for good character and the fact he had not appeared before the court on fraud charges before, a 13% discount for cooperating and saving money on the prosecution, and a 25% discount for pleading guilty – reaching a final sentence of eight years.

Under normal circumstances, Bennett would be eligible to apply for parole after two and a half years.

But due to the scale of the fraud, the judge imposed a non-parole period of three-and-a-half-years imprisonment.

Bennett had a few family members supporting him in court for his sentencing, but the room was mostly filled with media.

This underlines the arguments that the ultimate victim in the Bennet-fraud saga is the taxpayer – who has footed the bill for the government’s bailout of South Canterbury Finance.


On March 1, Bennett pleaded guilty in the Christchurch District Court to frauds totalling $103 million.

The charges, brought by the Serious Fraud Office, concerned Bennett's use of his company DataSouth to run a Ponzi-style network of loans from South Canterbury Finance between 2005 and 2011 in order to sustain a lavish lifestyle.

Datasouth's sister company Datasouth finance (also owned and run by Bennett) borrowed millions from South Canterbury Finance to fund a series of deals to lease IT gear. Most of the leases were fraudulent.

The offending caused losses to the collapsed finance company of $23m.

Mr Bennett channelled $7.8m to personal New Zealand and Australian bank accounts or credit cards used for personal expenses during the period of offending.

These proceeds, according to the SFO, were spent in part on:

  • $A900,000 in regular payments to “various female companions”.
  • $A463,000 in rental payments for luxury apartments with views of the Sydney Opera House.
  • $A429,000 on food and beverages, with a significant proportion at the upmarket gentleman’s club Hemmespheres.
  • $A161,000 on international air travel for himself and companions to New York, Las Vegas, Paris and London.
  • $A163,000 on designer clothes from Louis Vuitton, Cartier, Chanel, Georgia Armani, Gucci, Harrods in London and Bloomingdales in New York.
  • $A53,000 in corporate taxi expenses, understood to include the regular hiring of limousines.

SFO chief executive Adam Feeley said: “The collapse of DataSouth was a significant event in the Christchurch business community and caused widespread losses.

"Mr Bennett’s guilty plea brings to a satisfactory end one of the SFO’s largest investigations in recent times.”

A Datasouth insider told NBR ONLINE that, in the end, Bennett wanted to get caught.

His spiraling behaviour reminded her of Stephen Versalko, the ASB investment advisor convicted of stealing $17.8m.

The men shared a taste for expensive company. Versalko spent $3.4m on prostitutes.

Bennett was no slouch, managing to burn through $A900,000 ($1.1m) on what the Serious Fraud Office euphemistically described as “various female companions.”

The company was obviously in a tight financial spot in late 2010 and early 2011, but Bennett was leading an increasingly lavish lifestyle, taking clients to strip clubs and “drinking Dom Perignon like it was Speights.”

But it was revealed Bennett’s hijinks on the other side of the Tasman left his Christchurch spending in the shade.

Travelling to Sydney, the former manager was astounded by the luxury of  Bennett’s apartment, overlooking the Sydney Opera House, and big-spending habits such as hiring limousines to take him to high-priced restaurants.

“And then there were the young woman. Mr Bennett was constantly surrounded by them in Sydney."

And this when Bennett was no Richard Branson, or even Larry Ellison.

“He was balding,paunchy, and always smelling of alcohol from the night before, but he’d be surrounded by drop-dead gorgeous girls. People stop and stare as they walked down the street.”  

The National Business Review first reported Mr Bennett's escalating taste in luxuries and association with lingere makers and models known by DataSouth employees as "Gav's girls" in July.

IT services company Datasouth - a Microsoft Partner Awards 2010 winner - was founded in 1993 in Christchurch (where at the time of the quake there were 50 staff), and grew to open offices in Auckland, Wellington, Melbourne and Sydney.

It was liquidated in April last year on the eve of an SFO raid.

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43 Comments & Questions

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Lets see what sentence the judge gives for a Ponzi scheme in NZ

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Well done SFO.

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This is chicken shh ( ppop ) compared with Hanover Finance and Strategic Finance - related party loans and personal gain.

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I 100% agree. Look at Hanover and the Kinloch gold course. This property deal with $30m of margin was "handed back to investors" with the $50m of debt as a full and final settlement. What a wrort ! Translation / interpretation: we made a related party loan from Hanover to our mates and ourselves. We were going to make $30m, except the sky fell in/GFC and the assets turned toxic. So we used our position on the fiannce entitiy's board to hand back the toxic asset that was now facing a massive loss due to interest on $50m being unfinded with no possible sales, and we pretended we were "handing the margin back like good guys standing by our investors". I( I think it was hanover right ? Ill stand corrected if it was another finance company.)

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If you're concerned about Kinloch then have a look at how Allied Farmers and Rob Alloway destroyed the asset's value to such an extent that they literally gave away a neighboring property for a pittance just to exit stage left.

If Allied had actually spent some time and effort looking a gaining some value out of the assets they might be in a far better position (as would the the 16,000 mum and dads that agreed to the debt for equity swap with Allied).

But blaming everything on Hanover is just trying to pass the buck on the behaviour of Allied's board, and that of Rob Alloway.

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What about Strategic and the $20M hole in Ponsonby that grew to $100M after fees etc??

What about all the loan swaps between Hanover and Strategic and others that shored up their balance sheets and banking covenants because most of their loans were developments that were being capitalised.

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Yes we will get to Strategic and Hanover in due course.
And then the court will sentence their directors to home detention in palacial surroundings,where they can order drop off pizzas.

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Throw away the key, sounds like a reasonable plan A to me.
something on this scale must have had many 'hangers on' in the know and therefore guilty by association.

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Yes indeed, many whom have found themselves in positions of trust with reputable companies perhaps. Maybe its not just the money that’s the crime.

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I wonder, if the judge ever gets a sprained wrist, from applying the wet-bus-ticket slap on the convicted fraudster's wrist?

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Sorry golf course not gold course. ( Re Kinloch)

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OK. but it's "rort", not "wrot" etc. But some valid points, you make.

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name sharing sux

[Indeed. It's worth pointing out that there is a second NZ IT industry figure, Gavin Bennett of Citrix Systems, who is no relation - CK]

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SDon't care if you think this is small fry. Look at the lives ruined by this prat.Again you will say it is even smaller fry but what about the actions of NZ Rugby in allowing Otago Rugby to trade whilst insolvent and rip off honest Otago suppliers and then recomend that "Otago Rugby start again with a clean sheet" which means that goods and servicess supplied in good faith will never be paid for. If thats legal the laws wrong. The morals of NZRU are sour.

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I also prefer blondes.
A man with good taste.
As for the Otago Rugby Union,if i was a creditor I would be giving careful consideration to taking action against Directors for trading whilst insolvent.

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Trading while insolvent is not per se an offence, unlike Australia. Here it is trading recklessly that is an offence, even if the organisation was solvent.

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While that part of the Companies Act addresses Reckless Trading,it is aimed at directors who allow a company to carry on in business in a manner likely to create a substantial risk of serious loss to the company's creditors.
The court cases under this section of the act quite clearly address the proper monitoring of the financial position of the company.
If I was a creditor who had a grievance,I most certainly would be examing this aspect.
In my view,it is not used as often as it should be,allowing many to escape under the company veil.

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Farmer-boy Robbie was stitched up like a pipper, by a couple of slick city hustlers. Our boy 'Allo-'Allo Alloway, fell for the old con of agreeing to pay extra -- $5m -- to Hanover, because he was getting such a "good deal".

Can just imagine old Hotch wringing his hands in mock despair at the time of signing:

"I'm sliiting my wrists over this deal, Stevie; I truly am." Sniff.

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No, KKR. Robbie never did any due diligence and at meetings and in his PR release told the Hanover investors he was their best shot at getting 100c in the dollar. Hotchin had got them 7c, by then. On today's prices Alloway got them sub 1c. That is a bigger loss than any finance company. That is a bigger loss than Gav.

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Waste of Legal fees
There is no money left to be recovered

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Not the point whether there is or isn't any money to be recovered. There has to be a deterrant to others who might be thinking of having a try-on. Good work SFO.

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Could commenters please refrain from making defamatory statements. The NBR is all for rugged debate, but some have been crossing the line and have required moderation.

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In relation to Mark Hotchin, I'm afraid the major thing he is becoming symbolic of, is that there is a break-down of the rule of law in New Zealand as we head more and more into <a href="http://www.solopassion.com/node/8802"> arbitrary government and the police state</a>. His 'now' horrific asset freeze of fourteen months - akin to fourteen months detention without trial by an out of control Big Brother State - should have all of us with a vested interest in living in a free country very worried.

And no, for all posters who did NZ State School comprehension, I'm not defending anything Mark Hotchin may or may not have done: which given no trial, or even charge, yet, is impossible for any of us to comment on. Read my link above.

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As per usual,Tribeless seeks to draw us into his underpopulated and narcistic website.
No thank you..

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Why is it fraud totalling $103m when they only lost $23m???????

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$103m sounds a lot better than $23m when you read the headlines

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Mr Bennett ran Ponzi scheme for seven years obtaining an increasing cycle of loans from SCF to meet prior loan commitments. The total amount of loans obtained through this scheme were $65 million, and Mr Bennett falsified his companies' accounts to the tune of $38 million to obtain said loans.
At the end of the day, given the earlier scam loans had been repaid with more scam loans, the shortfall to SCF is $23m.
Hope that helps.

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Where were SCF's auditors - it only took the receivers at data South - BDO about 5 minutes to work out that this was a massive fraud.

The CA firm auditing SCF should be sued for negligenece to get some of the Government Guarantee cash back - and for $103M not $23M

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I think you will find that the SCF auditor has already been taken to task by NZICA.
Apart from that,the level of CA cover the firm would hold,would not be material compared to the SCF losses.
And when i looked at the website of his former firm in recent times,someone had spammed the website so that all the writing on it appeared to be russian.

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He's got you there Anonymous...quick thinking from the hungry young reporter...

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our paper are full of rort after rort after rort but who's in jail???

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But it was ok at the time as he is a good ole Southern boy not like the "Viaduct brigade".

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So who at SCF was signing these loans off? Loan amounts of this size must have been run past old man Hubbard?

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Mr Bennett will feel the full force of the law. Unlike others he doesnt know where the bodies are buried so wont be getting the same lienent treatment

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There are too many comments here and I am adding to the problem with an especially meaningless one.

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say wat ya' like - this bloke had real taste!

We're gonna really miss good ol' gav at Hemmespheres

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I'd expect he'll get a 4-year sentence and serve 14 months.

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So how can this be!!

Sandy Maier -
21/4/2010: “has not found anything in the big finance firm's accounts that would require reporting to authorities”.

Yogesh Mody, Trustee Executors –
31/8/2010: "As trustee we have had SCF under heightened surveillance since 2008".

What do you believe?

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As an SCF investor,I found the Government Guarantee fantastic.
My confidence in the statutory trustee companies is zero.
Their responsibilities as trustee for the debenture holders were on another planet from where a normal trustees responsibilities would be.

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If Trustees Executors had SCF under "heightened surveillance", how is it that they didn't notice $1,000,000,000 in value disappearing before their very eyes?

What a great job they did protecting the investors.

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Appears questions could be answered by Tweedle Dum & Tweedle Dee, late of SCF!

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I'm sure the NBR's decision to remove my comment criticising the use of these women's name is justifiable on grounds other than hurt feelings?

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