Share Investor: Allan Hubbard Fraud Trial

Showing posts with label Allan Hubbard Fraud Trial. Show all posts

Thursday, December 8, 2011

Allan Hubbard Saga: The Dirty Half - Dozen

I will be watching with interest the fraud case unfolding in January as 5 individuals were charged yesterday with 21 counts of fraud over the collapse of South Canterbury Finance in 2010.

Their dodgy behavior led to the biggest ever loss in a fraud case in New Zealand and has cost the taxpayer $1.7 billion dollars.

Serious Fraud Office CEO Adam Feeley said the 21 charges allege a variety of offences, including theft by a person in a special relationship; obtaining by deception; false statements by the promoter of a company; and false accounting. The charges carried maximum penalties of between seven and 10 years in prison.

These charges come after 14 months of investigation into the late Allan Hubbard and his involvement in the fraud as the head of South Canterbury Finance and readers will know that he was involved heavily in the day to day running of the company so would have been aware of at least some of the charges made against South Canterbury and even if he wasn't aware the buck stopped with him as head of the company.

What is thus far clear is that there has been systematic fraud within SCF for a number of years but what isnt clear is what part the tight five charged played in that fraud.

It will be a tough court case followed closely by the media and the only hope from this individual is that theses charges attract near or at the maximum sentences if the 5 are found guilty.

Adam Feely indicated yesterday that Allan Hubbard was "a person of interest" in the fraud investigation but he was unable to lay charges against him because of his demise and his estate cannot be charged - charges would clearly have been made yesterday had Hubbard still been around to face them.

I wasn't certain that others would be implicated in these fraud charges and Hubbard watchers would then have little idea what sort of justice he would face had he been able to face charges but we will be able to see with some detail what part he may have played as evidence is given from the tight five.

And Allan makes 6 if you like.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Wednesday, June 22, 2011

Allan Hubbard Saga: The Defence

The only possible defence to fraud charges (unless the Hubster pleads guilty) laid against Allan Hubbard on Monday afternoon would run along the lines of this scenario; making "unwise' decisions because of diminished responsibility - age, mental acuity, physical health, and so forth.

Hubbard's lawyers have already made great mileage out of Hubbard's mental stability a few months ago to stall an impending trial, and given the massive amount of evidence of fraud against him the defence of Mr Hubbard can only be made around his ability to stand trial. If this fails and he does go to trial and he is found guilty then any possible judicial or financial punishment is likely to be argued down by the defence for the same moral reasoning. They might argue for these reasons that it is not in the public interest to take this case to court and if convicted not in the public interest to seriously punish Hubbard.

In a post here yesterday the Serious Fraud Office outlined the possible defence Hubbard might have in lieu of any concrete evidence to refute the fraud charges that he faces.

Public interest considerations against prosecution include:

1. Where the Court is likely to impose a very small or nominal penalty;

2. Where the offence is not on any test of a serious nature, and is unlikely to be repeated;

3. Where there has been a long passage of time between an offence taking place and the likely date of trial such as to give rise to undue delay or an abuse of process unless:

a. the offence is serious;

b. delay has been caused in part by the defendant;

c. the offence has only recently come to light; or

d. the complexity of the offence has resulted in a lengthy investigation.

4. Where a prosecution is likely to have a detrimental effect on the physical or mental health of a victim or witness;

5. Where the defendant is elderly or a youth;

6. Where the defendant has no previous convictions;

7. Where the defendant was at the time of the offence or trial suffering from significant mental or physical ill-health;

8. Where the victim accepts that the defendant has rectified the loss or harm that was caused (although defendants must not be able to avoid prosecution simply because they pay compensation);

9. Where the recovery of the proceeds of crime can more effectively be pursued by civil action;

10. Where any proper alternatives to prosecution are available.

Hubbard's lawyers are likely to argue a number of the above points, especially points 5 and 6 that relate to his age and lack of previous form in trying to have the case thrown out of court, to mitigate a guilty verdict in terms of sentencing or to use as a bargaining chip to have the number of charges whittled down from the current 50 to a handful of the less serious breaches and a couple of the more serious ones.

He could of course just save investors in Hubbard Management Funds, and Aorangi more money by admitting his guilt before a trial because cash will be probably paid out of the remainder of what hasn't been squandered, to his extensive defence team that has already grabbed $2.5 million from Statutory Managers to cover legal fees thus far.

Hubbard and his defence team are unlikely to do that because of the time that can be bought with a drawn out defence and a legal bill that is going to make the eyes water.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Tuesday, June 21, 2011

Allan Hubbard Saga: Fraud Charges - The Detail

In the light of yesterday's charging of alleged fraudster Allan Hubbard with 50 plus counts of fraud and deception including; Theft by person in a special relationship, false statement by a promoter and false accounting, it is worth looking at what these charges mean in terms of their detail and evidence needed to charge and what possible judicial remedies are available to the Serious Fraud Office should Allan Hubbard face the courts in Timaru and be found guilty of fraud and deception of investors who lost 10s of millions in Hubbard Management Funds and Aorangi Securities.

Hubbard has strenuously denied any guilt at all and he has indicated he will fight the charges.

Charges were laid against Mr Hubbard because the evidence against him was overwhelming and it was in the public interest to charge him even though there could be questions - and an out argued by his lawyers, at the expense of investors - over his ability to stand trial on the basis of his health and age. This was considered the smaller of the reasons why Hubbard shouldn't be charged and the issue of public interest to get at the truth trumped the senility and bad health defence and therefore charges were laid.

From a statement from the SFO yesterday indicating some legal detail surrounding the charges from the Crimes Act 1961:

"Crimes Act 1961

Section 220 - Theft by person in special relationship

(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or

(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

Section 242 - False statement by promoter, etc

(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent—

(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978 ; or

(b) to deceive or cause loss to any person, whether ascertained or not; or

(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.

(2) In this section, false statement means any statement in respect of which the person making or publishing the statement—

(a) knows the statement is false in a material particular; or

(b) is reckless as to the whether the statement is false in a material particular.

Section 260 – False accounting

Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,—

(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.

4. Solicitor-General Prosecution Guidelines

The purpose of the Guidelines is “to ensure that the principles and practices as to prosecutions in New Zealand are underpinned by unified values. These values aim to achieve consistency in key decisions and trial practices. If these values are adhered to, New Zealand will continue to have prosecution processes that are open, fair to the defendant, witnesses and the victims of crime, and reflect the proper interests of society.” SFO Statement, 20 June 2011

Take a look at the full statement made yesterday by the SFO and pay particular attention to "the test for prosecution" which is in brief here:

"The Test for Prosecution is met if:

(i) The evidence which can be adduced in Court is sufficient to provide a reasonable prospect of conviction – the Evidential Test; and

(ii) Prosecution is required in the public interest – the Public Interest Test".

The test, if it reaches court, will be above all the preponderance of evidence against Hubbard and the prosecution arguing these charges in a manner that shows clear guilt. The outcome, even if Hubbard is found guilty, may be disappointing to people like me and to investors who have lost money because of Hubbard's business 'inconsistencies" because the defence may be argue diminished resposibility for a number of legal and "moral" reasons.

Stay tuned.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Share Investor

Thursday, December 8, 2011

Allan Hubbard Saga: The Dirty Half - Dozen

Wednesday, June 22, 2011

Allan Hubbard Saga: The Defence

Tuesday, June 21, 2011

Allan Hubbard Saga: Fraud Charges - The Detail

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