Share Investor

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

Monday, June 20, 2011

Allan Hubbard Saga: Hubbard to Face Fraud Charges

Well, I was skeptical that Allan Hubbard would be charged with fraud over dodgy goings on at Aorangi Securities and Hubbard Management Funds but just a few hours ago fifty charges under sections 220, 242 and 260 of the Crimes Act have been laid today in the District Court in Timaru by Adam Feely of the Serious Fraud Office.

The charges relate to theft by a person in a special relationship, false statements by a promoter and false accounting and they carry a maximum prison term of 10 years.

I was of the view only a few months ago that Hubbard would cop a plea and plead guilty to minor charges after his lawyers had stalled for time over the last year at times citing the need to get extra paperwork and his own counsel even questioning his mental capability to stand trial.

I have always been of the view that Mr Hubbard has been guilty of some very serious charges in relation to the aforementioned business and associated companies like South Canterbury Finance and there was enough evidence to support that view and I feel more than slightly vindicated to have had that view and still stick by it even after pressure from self-appointed and self-interested feral Hubbard supporters like Paul Carruthers , whose defense while being interviewed on radio live this afternoon was to attack the interviewer because he really had little substantive of factual to say.

In a SFO statement on the fraud charges it is clear why they were made and the deliberations Feely and his people had made before laying charges:

“Whatever the public may think, in considering whether serious fraud has been committed, the motives or lifestyle of an alleged offender are ultimately irrelevant. We have to consider matters such as whether deceit has occurred; the losses caused by that that deceit; and whether the facts meet the prescribed elements of one or more criminal offences.”

Mr Feeley said that prior to making a decision to lay charges the SFO gave very careful consideration to the Solicitor General’s Prosecution Guidelines, including the issue of whether a prosecution was in the public interest.

“The decision to charge has been reached only after extensive analysis of the evidence, as well as discussions with senior prosecution counsel, including the Crown Solicitors and the SFO Panel Counsel,” he said.

“Throughout the investigation we have been aware of the level of public interest in, and support for, Mr Hubbard, and the issues of Mr Hubbard’s age and health which have been raised by his lawyers.”

“However, we also have to consider the interests of justice and the interests of the investors relative to the evidence we have obtained during our inquiries.”

“We are satisfied that, on balance, there is strong public interest in having this matter put before the Court, and any issues regarding fitness to stand trial will be matters for the Court to adjudicate on.” SFO Statement 20 June 2011

So the pros and cons have been weighed and on balance we are going to see a trial and I would concur fully with the decision to do so.

As I wrote months ago if there was no trial and a consensus come to on minor changes nobody from either side would have been happy. This way the public can rightly assess the guilt or otherwise of Hubbard based on the facts put before a count.

As has been the case through this saga and the dodgy goings on over the collapses of South Canterbury Finance I expect Mr Hubbard to come out at some stage and strenuously deny the charges and evidence of fraud and claimed he is innocent .

I will be glued to the Timaru courts to see what happens next as my readers will likely be and we will see how Mr Hubbard's defence goes.

A guilty plea that would save taxpayers further expense would be the best way to go.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Share Price Alert: ASB Preference Shares - A & B Class

ASBPA 1 Year Chart

With interest rates on the rise for lending and investing because of impending inflation and a flight to less risky cash investments like bank term investments the stocks ASB Capital No 1 Ltd [ASBPA.NZX] (1 year chart above)and ASB Capital No 2 Ltd [ASBPB.NZX](1 year chart below) might be worth a second glance.

These stocks offered by the ASB Bank basically mirror what the company offers for term investments plus an additional margin for taking a slight risk on any possible capital losses through sharemarket fluctuations.

These two stocks have both been punished in terms of capital losses with term investment rates basically below the current inflation rate when tax is removed with the "A" shares dipping below 70c in 2009 and the "B" shares below 60c in 2009 and trading at 66c in late March.

ASBPB 1 Year Chart

Both stocks were issued at a $1.00 face value 9 and 8 years ago and also carry imputation credits that make them even more attractive than term investments.

Over the last month or so a"A" shares have piled on 7c or 10% to currently trade 77c and "B" class shares up 8c or 12% to be currently trading at 75c.

These shares look set to approach their face value over the following year as interest rates rise and will probably breach their face value as they did when they were first issued and interest rates were high.

No time for patience here, get in while they are cheap.

Disc I own ASBPB shares in the Share Investor Portfolio

Share Price Alert Series

Xero Ltd 2
Pumpkin Patch Ltd 4
Pumpkin Patch Ltd 3
Hallenstein Glasson Holdings Ltd
Telecom New Zealand Ltd 4
Telecom New Zealand Ltd 3
Port of Tauranga Ltd
Freightways Ltd 3
Goodman Fielder Ltd 2
Freightways Ltd 2
Telecom New Zealand Ltd 2
Ryman Healthcare Ltd
Charlies Group Ltd
Fletcher Building Ltd 2
Contact Energy Ltd
Steel & Tube Ltd
Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd 2
The Warehouse Group Ltd
Pumpkin Patch Ltd 2
Hallenstein Glasson Holdings Ltd 2
Fletcher Building Ltd
Restaurant Brands Ltd
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd

ASB Bank Pref Shares A @ Share Investor

Long Term View: ASB Capital Preference Shares (A)
Discuss ASBPA @ Share Investor Forum

ASB Bank Pref Shares B @ Share Investor

Long Term View: ASB Capital Preference Shares (B)
Discuss ASBPB @ Share Investor Forum

ASB Bank @ Share Investor

Bryce the Banker: The Final Insult
Banks not participating in Recession
Bank Guarantees: Time for banks to return the favour
The Return of Bryce
Banking Madness!

c Share Investor 2011

Share Investor

Wednesday, June 22, 2011

Allan Hubbard Saga: The Defence

Tuesday, June 21, 2011

Allan Hubbard Saga: Fraud Charges - The Detail

Monday, June 20, 2011

Allan Hubbard Saga: Hubbard to Face Fraud Charges

Share Price Alert: ASB Preference Shares - A & B Class

Total Pageviews

Translate

Search Share Investor

Share Investor Blog Archive

Share Investor

Share Investor Portfolio Individual Shareholder Websites

Market/Financial News

Stockmarket/Business Blogs/Share Forums

My Favourite Reading