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SFO Investigates Nathans Finance

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Dec 24 NZPA - The Serious Fraud Office (SFO) is investigating finance company Nathans Finance, which went into receivership in August 2007.

Confirming the move today, SFO director Grant Liddell said the investigation followed a complaint made by the receivers, PricewaterhouseCoopers.

It was likely to take some time, given the complexities associated with the case, Mr Liddell said.

Nathans Finance was a subsidiary of VTL Group, which was Nathans largest debtor.

At the time of the receivership VTL owed Nathans about $112 million, with a further $59m owed to Nathans by parties associated with VTL's business activities, Mr Liddell said.

Confirmation of the SFO investigation comes a day after the Securities Commission announced it had laid charges against the directors of Nathans Finance, alleging they misled investors by making false statements in company prospectuses.

The Securities Commission has laid criminal charges and issued civil proceedings against John Hotchin, Donald Young and Kenneth Moses.

Criminal charges and civil proceedings have also been filed against a fourth director believed to be resident in Australia.

"The commission believes Nathans' offer documents misled investors about the risks of investing in Nathans Finance, especially the risks of its extensive related party lending," commission chairwoman Jane Diplock said. The commission alleged that directors made untrue statements in the company's December 2006 prospectus and investment statement, and a prospectus extension certificate in March 2007.

The statements related to Nathans having adequate liquidity, diversified lending, robust lending processes and no bad debts.

The commission also alleged that advertising letters sent to members of the public contained untrue statements.

Mr Hotchin had resigned his directorship by the time the adverts were sent out.

The criminal charges carry a maximum penalty of five years' imprisonment or fines of up to $300,000.

They were laid in Auckland District Court at Auckland on December 12. The defendants have been summonsed to appear on January 23, 2009.

The penalties in the civil actions are up to $500,000 against each of the directors.

The civil action is a first step towards seeking compensation for investors, and the commission will consider pursuing compensation claims in due course, Ms Diplock said.

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