The Serious Fraud Office has laid charges against gold trader Robert Kairua, accusing him of lying to attract investors and misapplying $400,000 in funds.
He is the director of Grace Holdings NZ Ltd, which traded under the name BullionBuyer.
The SFO launched an investigation into the company nearly a year ago, about the time Grace Holdings was placed into liquidation.
Grace Holdings blamed the liquidation on the actions of its chief trader and convicted drug user Gus Geldman.
The SFO alleges false statements were made about the company to solicit investors, and investors were provided with false statements that failed to report the true position of their investments.
Mr Kairua is also accused of using more than $400,000 in investor funds for uses other than the investments promoted.
At the time of Grace Holdings' collapse it held about $US3.3 million in investor funds, according to the SFO.
Acting chief executive Simon McArley says this is the latest in a string of cases involving investment advisers and the application and reporting of funds.
"While poor investment decisions or performances are not a crime, investment advisers and managers must be truthful with investors as to the purpose for which funds will be applied and the performance of those investments."
When Grace Holdings went into liquidation, it blamed the failure on its chief trader, New York-born Mr Geldman, who was at the time in custody in the US on other fraud charges.
In 2001, Mr Geldman was found not guilty in the US of conspiracy, securities fraud and wire fraud.
He then moved to Florida, where he racked up multiple drug convictions for substances including cocaine and heroin, for which he was repeatedly jailed.
In September 2011 he was arrested again for wire fraud in the US. The charges eventually landed him in jail for five years.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Order Paper: Rob Hosking on good intentions, political correctness and social investment
- Levante S is the ultimate Maserati SUV… and it’s coming to NZ
- Is Pence poised to dump Trump? asks Michael Coote
- Michael Wigley on the rising cybersecurity challenges for boards; the risks for directors; and how to deal with them
- NBR Radio: best of the week ended May 26, with Grant Walker