The alleged mastermind behind failed finance company Five Star Finance had a '''fulsome understanding' of the transactions he was arranging, the High Court in Auckland has heard.
The Crown has opened its case against Neil Allan Williams who is being tried on theft and dishonesty charges.
Williams is currently in prison after being convicted of Securities Act charges brought by the Financial Markets Authority (FMA), but was back in court today to face two charges of theft by a person in a special relationship and five charges of dishonestly using a document.
The latest charges have been laid by the Serious Fraud Office (SFO).
The "shadow director" was sentenced to three years and seven months in prison in April after his conviction for misleading investors through Five Star's prospectus.
Five Star Finance and its subsidiary, Five Star Consumer Finance, went into receivership in 2007 owing $54 million to investors. They have since got back 22.5 cents in the dollar.
The trial of the 79-year-old is expected to take up to three weeks, and will be heard by Justice Murray Gilbert without a jury.
Williams reiterated his plea of "not guilty" to all the SFO charges this morning, before the trial was adjourned.
Crown prosecutor Brian Dickey presented his opening statement, focusing on the theft charges against Williams.
The offending related to the fraudulent use of investor funds between 2003 and 2007, Dickey said.
The Crown claims while Williams was not formally a director of Five Star Finance or its associated company, he was the "mastermind" behind related-party transactions which misled investors and breached the company's trust deed.
Dickey said today that Williams' role was that of the "architect" of the Five Star group, and of many of the relevant transactions and transactional structures.
"He acted like he was equal to the named directors."
Williams referred to himself as the "internal auditor", the "architect" and "founder" of the Five Star Group, and the "general", Dickey said.
The defendant was part of a scheme that disguised advances of investor funds as loans, Dickey said.
The misappropriated funds were received by parties, or businesses, related to the directors of Five Star and Williams.
It was reasonable to conclude Williams was the architect of the overall scheme and the transactions which underpinned the offending, Dickey said.
Williams, an experienced accountant and businessman, had a "fulsome understanding" of the trust deed, and purposefully structured the fraudulent transactions to avoid its requirements.
The trustee and investors were misled about the extent of the transactions. Investors were left exposed to greater risk than they were entitled to expect, he said.
It is expected the first witness to give evidence will be Five Star Consumer Finance's general manager, Wayne Wade, tomorrow morning.
The Crown will call 24 witnesses during the trial.
Wade will talk about the nature of the company's consumer and commercial lending, and Williams' position and influence in the Five Star Group.
The firm's directors, Marcus Macdonald and Nicholas Kirk, each received prison sentences of more than two years, while a third director Anthony Bowden served home detention on the charges laid by the Financial Markets Authority. They have completed their sentences.
The three directors will also give evidence during the current trial.
Macdonald, Kirk, Bowden, and Williams, through his wife, were all shareholders in equal proportions of Five Star.
Williams referred to the group as the "three musketeers", and from 2001, when Bowden joined as a non-executive director, the "four musketeers".
However, Williams was never a registered director of the finance company. Between 1995 and 2000 he was bankrupt and prohibited from being a director or manager.
The trial is ongoing.?
- ? Fairfax NZ News
Source: http://www.stuff.co.nz/business/industries/8834090/Trial-of-Five-Star-Finance-director-begins
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