UPDATE:

The guilty verdict against National Finance 2000 director Carol Anne Braithwaite is a warning to company directors not to rely on anyone's judgment but their own, says the Institute of Directors.

Braithwaite was found guilty by a majority jury verdict in the Auckland High Court this morning on one charge of signing the failed finance company's 2005 prospectus containing an untrue statement. 

10.15am: 

In a majority verdict just returned this morning, an Auckland High Court jury has found National Finance 2000 director Carol Braithwaite guilty, on one charge of signing a prospectus containing an untrue statement.

The ex-wife of jailed fellow National Finance boss Allan Ludlow, Braithwaite is the only person in a series of recent finance company director trials to have a jury trial.

She will be sentenced on September 18.

Justice Pamela Andrews decided it was appropriate to grant Braithwaite bail to her Devonport, Auckland home, after listening to arguments from her lawyer Quentin Duff.

Braithwate was a first-time offender and her offence was not in the same category of seriousness as that of Ludlow, said Mr Duff.

Her risk of reoffending was low and her personal circumstances also supported bail: Braithwate is a single mother and sole caregiver for children aged 13 and 11.

Justice Andrews said her decision to grant bail was not indication of the sentence to come.

Mr Duff said while imprisonment could not completely be excluded, a sentence of home detention was more appropriate.

The Crown argued imprisonment was at least possible for Braithwate.

Although it was accepted Ludlow's offending was in a different category to Braithwaite, Crown lawyer John Dixon noted the starting point for Ludlow's sentencing was four-years imprisonment.

One of Braithwaite's worst breaches was linked to related party lending involving the purchase of Fiji apartments, "of which she was well aware", Mr Dixon said.

Speaking outside the court, Mr Duff - who pushed for a jury trial - said the jury had been very thoughtful over the two-week trial.

"This was always going to be a difficult case to win," he said.

UPDATE / July 24, 4pm:

Carol Braithwaite was shocked National Finance collapsed – she thought everything at the vehicle finance company was “going great”, a court heard this afternoon.

Under cross-examination by the Crown’s lawyer John Dixon, Ms Braithwaite told the court she and her co-directors would sit and listen to the company’s boss – her former husband Allan Ludlow – tell them everything was going well with the finance company.

“When we talked at meetings, everything seemed to be OK,” she said.

It was largely her husband’s assurance that gave her confidence to sign the 2005 prospectus for National Finance 2000.

Ms Braithwaite is now defending one charge of making untrue statements in that document.

Her two-week, jury trial at Auckland High Court continued today.

Ludlow is serving a six-year, four-month jail sentence after being found guilty in October of false accounting and theft by a person in a special relationship.

Ms Braithwaite’s confidence in Ludlow’s blanket assurance in the company, placed in receivership in 2009 owing investors $21 million, was in spite of the fact he already had one company failure under his belt, the Crown reminded her.

That was the original National Finance, which went broke owing about $600,000 in the late 1990s.

Ms Braithwaite said the difference was that that National Finance 2000 had an in-house accountant.

“Having that [accountant] to me, ensured everything would be OK,” she said.

Ms Braithwaite said she became a director largely because she was Ludlow’s partner and was investing money in the company.

Although she had no previous experience as a director, she said she tried to bring independence of mind to the directorship, but effectively followed the other directors.

Her co-directors told her financial information in the 2005 prospectus was full, correct and above board and she did not have reason to believe anything otherwise.

She did not know controls such as audit committees or credit control committees should have been insisted upon, she told the court.

And she was surprised to learn when she read the financial statements; she was getting $79,000-a-year in director’s fees, because she didn’t think she had been making anything from the company

She thought the $26,000 Ludlow was direct crediting into her bank account that year was for household expenses and was from him, not the company, she said.

She was equally surprised to learn she was making $100,000 in remuneration and other benefits a year earlier  – which meant the couple were earning $225,000 between them.

“I can’t explain it,” she told Mr Dixon. “It was probably Allan working out his income. It looks to me like he was dividing his income up.”

She told the court she did not know money spent on a Fiji apartment was a related party transaction. “I thought it was a dividend,” she said.

She was also unaware of National’s related party lending to Universal Marketing – run by Michael Pearce – the boyfriend of her then 18-year-old daughter.

Ludlow’s charge of theft by a person in a special relationship related to him breaching National’s trust deed with a $125,000 loan to Universal Marketing, which was incorrectly recorded as a dealer loan.

Ludlow told NBR ONLINE last year: “My step-daughter and her boyfriend are nothing short of little ****s I tried to help.”

The trial, before Justice Pamela Andrews and jury, is proceeding

This morning:

National Finance 2000 director Carol Braithwaite says her now-jailed ex-husband kept affairs of the troubled vehicle finance company hidden from her.

In "pillow talk", Allan Ludlow – National's managing director and sole shareholder – told Ms Braithwaite he was excited about the company and everything was going well, she told her lawyer, Quentin Duff, at Auckland High Court today.

Ludlow was sentenced to six years and four months in jail in October last year after being found guilty for his part the finance company's May 2006 collapse, which left some 2020 investors $25.5 million out of pocket.

Now Ms Braithwaite is defending one charge of making untrue statements in the financier's 2005 prospectus.

The charge, brought by the Financial Markets Authority, carries a maximum penalty on conviction of five years' imprisonment or a fine of up to $300,000.

Ms Braithwaite's is the first prosecution of a finance company director to be heard by a jury.

She told the court today she was more interested in being a homemaker and looking after her children than being a director of her husband's company.

But she accepted the directorship, which paid her fees of $79,000 annually, when the company needed a third director.

She told the court she certainly didn't want to be a director at the time she signed National's 2005 prospectus.

"Because the empire of Alan's was getting so big and I felt I was getting left behind a bit."

She was not involved with the "day-to-day stuff" at National Finance and had very little communication with its staff, she said.

Ms Braithwaite said nothing caused her to be concerned about the company before signing the prospectus in 2005 and she believed its contents to be true.

That was because her husband was "delighted" with the document and the accountant was also happy with it and had invested his own money in the business.

"Allan Ludllow assured me it was all OK," she said. "I thought this is all going great, the prospectus is correct."

Ms Braithwait read the prospectus before signing but did not discuss it with the company's auditor or trustee before she put her signature on the document.

"I didn't think that was what I was supposed to do."

Ms Braithwaite did not think her fellow directors would lie in prospectus statements.

She told the court she now knows she was wrong.

Ms Braithwaite is the last of four National Finance directors to face prosecution.

Director Anthony Banbrook, who was to be tried alongside Ms Braithwaite, entered a last-minute guilty plea to the charge last month. He will be sentenced next month.

National's accountant, John Gray, pleaded guilty to theft by a person in a special relationship and one charge of false accounting in November 2010 and was sentenced to a term of 18 months' imprisonment, later reduced after an appeal to nine months' home detention.

Ludlow was jailed after being found guilty of false accounting and theft by a person in a special relationship.

Ms Braithwaite and Mr Ludlow separated in 2008.