Lombard Finance sentencing part of efforts to protect investors, Crown says
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Tougher sentences handed out to former directors of Lombard Finance & Investments were part of a regime to protect investors, and a major factor in underlying the seriousness of the case, according to the Crown.
Former Justice Ministers Doug Graham and Bill Jeffries, former PR man for the Queen Lawrie Bryant and Lombard's ex-boss Michael Reeves were appealing to the Supreme Court over the tougher sentences imposed by the Court of Appeal, though they weren't granted leave to appeal the actual convictions.
Counsel for the Crown, Colin Carruthers QC, told the Supreme Court in Wellington today that the Court of Appeal was right to impose stricter sentences on the former directors.
"Harm in the context of a strict liability regime is designed to protect investors as the primary consideration - that's a major factor which makes this a serious case," Carruthers said.
He refuted an argument put forward by opposing counsel, Jim Farmer QC, that the introduction of the Financial Markets Conduct Act last year, reserving criminal sanctions for only the most egregious offending, effectively nullified the need for custodial sentences for their milder offending.
"It is an entirely different concept, disclosure concept, from the previous regime," Carruthers said. "If you want to compare the Securities Act and strict liability penalty regime with the Financial Markets Conduct Act, you need to look at the whole of the section, not just a piece of one."
Farmer had earlier said the new law undermined the impact of the Lombard directors' sentences deterring similar behaviour, because what they were convicted of wouldn't attract criminal sanctions under the new act.
"The question of deterrence and denunciation in relation to this offence simply can't be something that can properly be said to have any great weight because the law has changed," Farmer said. "Nobody is going to be deterred by thought of going to prison if they honestly made a mistake."
All Lombard directors four avoided jail time when sentenced in 2012, when Justice Robert Dobson said the offending was much less serious than that involving other failed finance companies, such as Bridgecorp. They had been found guilty of making untrue statements in investment documents and advertisements in late 2007 and early 2008 and the Crown had initially sought jail terms.
The Appeal Court imposed custodial sentences after determining the original penalty didn't reflect the gravity of offending and didn't give sufficient weight to accountability, denunciation and general deterrence.
Jeffries was sentenced to eight months' home detention and 250 hours community work and Reeves was sentenced to nine months' home detention and 250 hours community work, having both initially been sentenced to 400 hours community work.
Graham and Bryant were each sentenced to six months' home detention and fines of $100,000 apiece. Graham had his sentence of community work reduced to 200 hours from 300 hours.
The 4,400 Lombard Finance investors owed $127 million at the time of the receivership have been repaid 13 cents in the dollar, and are looking at an estimated recovery of between 15 percent and 20 percent.
Chief Justice Sian Elias, and Justices Terence Arnold, William Young, Susan Glazebrook and Peter Blanchard reserved their decision.