Hawkins company fined after misleading investors

Budget Loans, owned by former Equiticorp chief and convicted fraudster Allan Hawkins, has been fined $30,750 after pleading guilty of misleading investors.

Budget Loans is a subsidiary of Hawkins’ company Cynotech Holdings, which took over National Finance 2000’s loan book after its collapse in 2006.

The firm appeared in the Auckland District Court yesterday and was fined after pleading guilty to 34 charges of breaching the Fair Trading Act, the Commerce Commission said in a statement.

When Budget Loans took over National Finance’s loan book, it sent a ‘welcome letter’ to National Finance’s debtors advising them that their loan was now owned by Budget Loans.

Debtors who received the welcome letter were charged a $15 fee.

“The $15 ‘welcome letter’ fee was not disclosed before it was charged and Budget Loans therefore misled debtors by representing that it was entitled to charge the fee, when it was not,” Auckland enforcement manager Graham Gill said.

Budget Loans has agreed to reverse or refund more than $400,000 of the approximately $500,000 of overcharged interest and fees. The court recognised this reparation in setting a fine for the offending.

Budget Loans also voluntarily reversed or refunded an additional $571,000 to its debtors in relation to credit fees that were not the subject of the current charges.

Cynotech chairman Allan Hawkins was one of the first “vultures” to step into the fray when finance companies began tipping over in 2006.

The company bought the $23 million worth of non-performing and performing loans belonging to National Finance for $7.7 million.

Cynotech then listed on the stock exchange and shareholders recently agreed to a controversial takeover whereby they would swap their shares for preference shares in a shell company owned by Mr Hawkins.

Hawkins was convicted of fraud, jailed and declared bankrupt in the early 1990s after Equiticorp's collapse.