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Lombard directors guilty

Four people facing trial over the collapse of Lombard Finance have been found guilty of Securities Act charges in the High Court in Wellington.

Those former Lombard directors charged included two former justice ministers Sir Douglas Graham and Bill Jeffries, along with former press officer to the Queen Lawrie Bryant. Former Lombard chief executive Michael Reeves was also charged.

All four had pleaded not guilty to five Securities Act charges.

Lombard collapsed in 2008 owing 4400 investors about $127 million, an average of about $28,000 each.

Justice Robert Dobson heard the case alone and presided over a trial that began in October and only wrapped up earlier this month.

Justice Dobson indicated that he will consider community-based sentences and financial penalties.

He said the charges proven were a material step away from the seriousness requires for a custodial sentence.

Sentencing has been set down for March 29.

More by Matt Nippert and Colin Williscroft

Comments and questions
53

So what. The fine will be $100 and 2 hours of community service.

I think it might be tea and biscuits courtesy of Her Majesty's Prison Service' for a few years.

Ray Smith of Goldcorp didnt find it that bad as he certainly honed his golf handicap on the Turangi golf course. His name is still on the honours board today.

Were all of these finance company owners/managers/directors in some sort of competition, to see who could be the best at loosing money and going broke the fastest unbelievable!!
Bridgecorp the latest in the courts, what an absolute joke that outfit turned out to be, and all of that money just flushed away.

They all should be locked up!! they really look like hardship has hit them, fine them to the max and take it out of their family trust accounts.

Kim Dotcom is accused of movie piracy (not proved) has all his cash and property seized, and is forced to prepare his defense with one hand tied behind his back [he has no cash].
Men who caused investors to lose $127m will likely get a slap on the back of the hand for getting caught.

Totally agree the punishment needs to fit the crime

Hi HH ( aka Kim )

Don't forget BIG brother said no access to the internet ok

You fail to mention the racketeering and money laundering charges - a tad more serious than copyright breaches.

They only apply if he is in breach of copyright otherwise it's legit money

All allegations. No shred of proof has been presented.

Agree entirely. As far as we know Kim has not caused any kiwis to lose a cent yet our authorities really went after him. Often difficult to get them to do anything about our own miscreants.

"Justice Dobson indicated that he will consider community-based sentences and financial penalties."

One LAW for 'White' Collar criminals (No Jail Time) and One LAW for 'Brown' Collar criminals (Correctional Facilities in NZ house a majority of them, according to the NZ Correctionals Dept's stats).

No JUSTICE for those who are the 'Victims' of their Stealth' and all that hard work put in by the SFO, the FMA and the Crown with their investigations - to be slapped in the face with 'community-based sentences with $1 going to charities of their (crooks) choosing by an inept, gutless Judge.

The 'victims' of this serious crime, should lodge a complaint with the Judicial Conduct Commissioner.

Does Douglas Graham lose his knighthood as a result of this?

The Five star Directors went to the clink, the Nathans Finance guys are doing porridge, Justice Dobson doesn't really have an option here does he?

What happens to the developers and builders that borrowed the money or is this like the leaky homes.

The boys club will take care of this one.

$127m = about a $10k fine, suspended sentence and stern 'don't do it again'

Rob a bank = 3 years, (out in 18 months)

Society needs to see that justice has been seen to be done here To have any credibility the Judge, at the very least, has to give a strong message to the financial services industry that the law will deal severely with convicted offenders. These offenders need to get a term of home detention as a deterrent/signal to others that the penalty bar has been raised.

Siena Denton | Friday, February 24, 2012 - 11:01am.
Re NO JUSTICE. Some accountants, FA's, lawyers etc who convinced elderly to put their money into these "safe companies" are the one's that should also be on the scrapheap. Some passed on & families left to tidy up the mess.

Do a deal with Bali and contract out the sentences. let them experience real jail time in Indonesia , they've ruined peoples lives and remain fat cats with all their wealth tied up in trusts. they should have their wealth taken the same as drug dealers.

Such a shame, that sentencing for Douglas Graham isn't be at the Auckland High Court. Where, on the day, he could pause at the Entrance, to puff-and-buff the bronze plaque that bears his name as Minister of Justice, dedicating the opening of the building.

Can't help, but think, that there's no justice for our Dougie ,when such a primo op. goes begging.

Why do family trust not have to justify how the money was earned..if they cant oull it to help pay creditors

I too wonder that. The only reason I can think of is that many of our m pees have trusts for the specific reason to dodge tax, and protect the money, (as in this case) should someone sue them.
So as they are the lawmakers the evilness of trusts will continue and there is not a lot the victims can do about it.

Having a close relative who was royally screwed over by Lombard,specifically Reeves this verdict is excellent but won't hold my breath over the sentence.My relative lost all his money, his credibility, his health and occasionally his mental well being.No point incarcerating reeves, he will just slither out on his belly!

Breslin | Friday, February 24, 2012 - 11:32am - how's the canapes & cocktails?

I wonder if the judge will remember to leave the bus tickets out on his lawn, the night before sentencing.

*** Strip him of his Knighthood ***

Sir Douglas shamelessly lent his name (and no doubt, Sir title) to Lombard Finance (again, name shamelessly taken from a major offshore banking entity) to entice old investors to deposit money with the company.

It is not like Michael Reeves dodgy background was not known.

LOMBARD FINANCE & Investments chief executive Michael Reeves "pillaged" a struggling firm to pay for a high-flying lifestyle, and some of his actions fell "well below those acceptable in business".

The comments appear in court judgements from 1995 and 2000 in which Reeves appeared first as a witness and then as a defendant.

Given that he must have known, greater responsibility and accountability must therefore reside with Sir Douglas when he decided to feather his nest from investors' money with director fees, perks etc.

Only jail time (even for a month) will make those into name lending (to aid the fraudulent activities of known misfits in the financial world) take real notice.

The decision has effectively raised the bar for professional directors to a level that few, if any will be able to get over.

In essence New Zealand businesses will now face a struggle to appoint directors as few will be willing to be independent directors as the level of disclosure is fundamentally impossible to meet.

None the less, what is missing in all of this is that in the majority of cases so-called investors failed to read the prospectus' issued, and the bitterness is apparent in the comments above.

Yes investors can take some responsibility (defintely their advisors) but these four were found guilty of misleading statements so what good is reading the prospectus then?

It will be harder to secure directors - but that is no excuse for them not doing their job, when they have been paid.

If lawyers, accountants, FA's can't read & understand a prospectus, why tell elderly to invest where their money would be safe? Was this all to do with them "getting fees"?

Directors must do more than just look at numbers when earning their fees and perks.

Keeping an eye on management is also important, if not more.

Big warning sign : A CEO who drives a Maserati for a company car! That's what Mr Reeves drove.

Bigger warning sign : Failure in previous firms.

Michael Reeves of Lombard Finance and Investments Limited had a troubled history with contributory mortgage schemes and pleaded guilty in 2006 to a breach of the Securities Act 1978
• Roger (Kenneth) Moses of Nathans Finance NZ Limited was also involved in the failed contributory mortgage broking firm Reeves Moses Hudig.

I think the precedent has been set, in our westminister type government and law........... John Key has no option but to ask the governor general to strip the knighthood off douglas graham. the comments of judge dobson with the responsibility of his position for and on behalf the citizens of New Zealand, is not consistent with what punishment we expect.thats cuxtodial. .

They have ruined lots of lives. Let's hope the stupid judge strings them up, it's too good for them

The people of Te Taou believe a custodial sentence is warranted and Graham should be stripped of his knighthood also as besides the investors of Lombard he also sold the people of Te Taou down the drain in the Treaty Settlement Process and it is enlightening to hear that he might/will at least finally be held accountable for something although be warned it is not over until the fat lady sings????

Amazing how people are so ready to comment on something they know nothing about. This article is very abbreviated and quite misleading. People would be well advised to read the actual decision before making fools of themselves in print.

Dear Rewi, now where is the fun in that. I heard they all beat their children too and that they might be gay (not that there is anything wrong with that!). So as you see Rewi the whole point here is freedom to say what we think. Now go away if you dont want to play.

Yup, you got it. Don't let the facts get in the way of a good ol' wallow in the trough of public opinion.

Is this what you are talking about Rewi?

Verdict acknowledges honesty - defence
Outside the court, defence lawyer Paul Davison, QC, said on Friday the verdict acknowledges the men's honesty and integrity in the way they managed Lombard Finance.

Yes - those who have read the decision will have noted these comments by the judge;
“The alleged offences are ones of strict liability so the Crown is not required to prove any form of mental intent to distribute documents that were false or misleading.”
“Nor is it any part of the Crown's case that the conduct by the directors ... was other than honest."
"In the relevant respects, the law has created criminal liability for what may be no more than a material misjudgement about the accuracy and adequacy of the description of the state of financial health of the company, as directors authorise it in offer documents."

"The decision has effectively raised the bar for professional directors " wrote Bankside resident.

Hopefully this is a wakeup call for all Mayors and Councillors that rubber stamp their Chief Executives' recommendations.

Is it too late to mention the different treatment handed out to dr brash and mr banks. They too signed misleading documents at huljich wealth management.

Everything they were paid as directors is money made while committing a crime and should be considered proceeds of crime under the act. wake up.

look, everyone's getting just a bit carried away in calling for their heads!

what are we talking about here - a measly 127mill.or something?

it's not as though any of them is a youing maori fella that pinched a few winegums from a rotorua dairy for goodness sake!! then it is two years in the can....

Is not Reeves the same one from Reeves Moses Higgins that owned Progreesive Nominees that went belly up fullyon lending (ie 100%) too Farrow and Field back in 1987.Higgins is the only of any of these not to have reappeared on the infamous list.
The SFO etc only like corpses!!!

its time we started suing weather forecasters for failing to be predict some changes in weather

Pensioners have lost their life savings, some have had to go back to the most basic of existence, forgo luxuries and gifts for grandchildren and some have committed suicide - because of these highly paid directors did not do their job.

It's not just the prospectuses but also, allowing the finance companies to make dumb loans and related party loans (read - directors and management to themselves) - neglecting their duty of care.

And then, we have an idiot like fr Kev try to make light of the plight of the pensioners.

Shame on you.

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Here's the full decision: http://www.courtsofnz.govt.nz/cases/r-v-graham/at_download/fileDecision

It is past time for our justice system to revisit the meaning of "justice"!
they have lost touch lately.

It is past time for our justice system to revisit the meaning of "justice"!
they have lost touch lately.

Specific and verified examples please.

What do you bet ? ...a slap over the hand with a wet bus ticket. Shame on them. Respectable business men..i don't think so...fraudsters nothing more nor less.NZ really is a banana republic

You are quite correct Rewi and I agree with that judgement, BUT he could have added "for too long NZ has put up with high profile people given sinecure positions as Directors solely to attract (greedy and naive) investors. It has to stop."