Options traders sentenced for theft and false statements

SFO Acting-Director Nick Paterson

Gregory Alan Arnott (51) and Mark James Whelan (41) have been sentenced in the Auckland District Court today following charges laid by the Serious Fraud Office (SFO).

Mr Arnott entered guilty pleas in June to offences under the Crimes Act, comprising five charges of theft by person in a special relationship and five charges of making a false statement. He was sentenced today to six years’ imprisonment.

At trial in July, Mr Whelan faced 10 Crimes Act charges comprising three of theft by person in a special relationship and seven of making a false statement. He pleaded guilty after giving evidence at his trial and was sentenced today to two years’ imprisonment. His  sentence is to be served cumulatively with a prior sentence of four years and four months’ imprisonment which Mr Whelan received in May 2013.  This earlier sentence was in relation to fraudulently obtaining loans totalling $4.9 million in a previous SFO prosecution.

The SFO’s charges against the pair related to their involvement with Derivatek New Zealand Limited (Derivatek) and Global Futures Trading Limited (Global Futures).

Mr Arnott was director of Derivatek and traded in options on behalf of New Zealand clients on the Australian Stock Exchange. Between April 2008 and May 2012, he used $2.5 million received from investors for purposes other than options trading, including repaying other investors and funding a portion of an advance fee in a failed endeavour to obtain a US$20 million loan.

In order to conceal the fraud Mr Arnott issued false statements to his investors which indicated that their investments were generating healthy profits, when in reality all invested funds had been lost by February 2009.

Mr Whelan incorporated Global Futures in November 2006. Mr Whelan used Global Futures to obtain funds from high net worth individuals to be traded through Derivatek. Between July 2008 and February 2010 Mr Whelan used approximately $1.2 million of investors’ funds to pay for a variety of personal expenses and to fund part of the advance fee for the $US20 million loan. To conceal this activity, Mr Whelan issued false statements to the investors.

SFO Acting-Director Nick Paterson said, “This was a case where investment was largely based on a trusted relationship with the defendants. It is a reminder that investment decisions should not be based on this factor alone and independent advice should always be taken.”

This article is tagged with the following keywords. Find out more about My Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7977 0.0012 0.15%
AUD 0.9075 -0.0005 -0.06%
EUR 0.6268 0.0003 0.05%
GBP 0.4948 0.0005 0.10%
HKD 6.1875 0.0094 0.15%
JPY 85.2720 0.0330 0.04%

Commods

Commodity Price Change Time
Gold Index 1248.5 4.340 2014-10-21T00:
Oil Brent 86.2 0.820 2014-10-21T00:
Oil Nymex 82.5 -0.260 2014-10-21T00:
Silver Index 17.5 0.190 2014-10-21T00:

Indices

Symbol Open High Last %
NZX 50 5233.1 5284.3 5233.1 0.89%
NASDAQ 4359.2 4419.5 4316.1 2.40%
DAX 8693.1 8889.8 8717.8 1.94%
DJI 16406.0 16620.8 16399.7 1.31%
FTSE 6267.1 6372.3 6267.1 1.68%
HKSE 23300.5 23460.8 23088.6 1.06%
NI225 15038.2 15188.1 14804.3 2.59%