Mansion detention for Dominion Finance widow Butler
The widow of former Dominion Finance director Terry Butler has been sentenced to nine months' home detention in her mansion for her role in the lender's collapse.
Ann Butler, 64, pleaded guilty to misleading investors, ahead of trial, last month.
At Auckland High Court today she was sentenced along with fellow director Robert Barry Whale, who also pleaded guilty and was sentenced to 12 months' home detention.
Butler, who had no day-to-day involvement in the company, will serve her "mansion" detention at exclusive 9 Darwin Lane in the Auckland suburb of Remuera - a home with a capital value of $6.8 million, an annual rates bill of $20,000, and which is on the market.
Justice Robert Dobson allowed Butler partial exemption to leave the home for two hours up to three times a week to visit her elderly mother at her retirement home. She was also ordered to serve 80 hours of community work and to pay $300,000 reparation.
The Crown asked for starting points of two years and nine months imprisonment for Butler and two years and three months for Whale.
Butler, a non-executive director, ceased day-to-day involvement in Dominion Finance in 2005.
"You were not the leading light or most authoriative or influential of the board," Justice Dobson said.
However, her reliance and trust in her fellow directors and the company's management was not an excuse.
"A director's duty to ensure accuracy of any offer documents you put into the market is non-deligable."
Justice Dobson gave Butler sentencing discounts for personal circumstances – which include the trauma of caring for her husband through cancer treatment and the loss caused by his death in March, good character and her offer of $300,000 reparation.
Crown prosecutor Brian Dickey said the offer was "miserly", given the assets Ann and Terry Butler settled on family trusts, which the Crown estimates at more than $10.5 million.
But her lawyer, Timothy Mullins, said the trust would have to borrow to raise the money because its assets were illiquid.
Justice Dobson came down harder on Whale, a commercial law and taxation specialist.
He said the pair's admissions were at the point of gross negligence and made no finding of dishonesty. But Whale's qualifications meant his negligence could not be ignored.
Whale was sentenced to 12 months home detention, to be served at his home at 20 Inverary Avenue, Epsom, which has a modest capital value of $1.65 million. He was also ordered to serve 250 hours of community work and to pay $75,000 reparation.
Butler and Whale pleaded guilty to seven Securities Act charges brought by the Financial Markets Authority, which include making untrue statements in a prospectus and investment statements for Dominion Finance Group and its subsidiary North South Finance.
Their guilty pleas were entered on reliance of sentencing indications provided by Justice Dobson – detail of which cannot be reported.
The criminal charges carry a maximum penalty of five years' imprisonment or fines of up to $300,000, plus $10,000 for every day the offence continued.
Those charges will now be defended by their fellow directors Vance Arkinstall, Richard (Rick) Bettle and Paul Forsyth.
Earlier this week however, Messrs Arkinstall and Bettle made a last-ditch attempt to escape trial, applying to be discharged without conviction.
Their pre-trial application was heard at Auckland High Court on Monday. Justice Sarah Katz reserved her decision.
Mr Butler avoided trial due to his illness. He died on March 28.
Dominion Finance Group was placed in receivership in 2008, owing almost 6000 debenture holders $176.9 million. Subsidiary North South Finance was placed in receivership two years later, owing 3900 debenture holders $31 million.
Both companies were subsidiaries of NZX-listed Dominion Finance Holdings, which was placed in liquidation in 2009. They offered property and commercial loans.
Receivers have estimated recoveries of 12c in the dollar for debenture holders in Dominion Finance Group and of 65c in the dollar for those in North South Finance.
Civil proceedings brought against directors, also brought by the FMA, have been stayed pending resolution of the criminal trial.
Dominion Finance boss Paul Cropp was not charged by the FMA. However, he is serving a two year, seven months prison sentence after being found guilty of theft following a trial brought by the Serious Fraud Office earlier this year.
The theft charges involved related-party lending of about $13.57 million in breach of Dominion's trust deeds.
Cropp is the first chief executive in the recent finance company trials before the court to be convicted.
Mr Whale and a third company executive who has name supression were found not guilty of the charges.