22 Dec 2010

Two finance company directors sent to prison

5:57 am on 22 December 2010

Two former directors of a collapsed finance company, which left investors out of pocket by $40 million, have each been given prison sentences.

The Serious Fraud Office investigated after Five Star Finance went into receivership in 2007.

Former executive director, Nicholas Kirk, who is 65, was sentenced to two years and eight months in prison. A former director, Marcus McDonald, 69, got two years and three months.

Each had pleaded guilty to two charges of theft in relation to the misuse of Five Star funds, as well as 16 charges under the Securities Act.

Sentencing the men on Tuesday, Judge Roderick Joyce told the Auckland District Court that more than 2000 investors had suffered losses, with many losing their retirement savings.

Earlier on Tuesday a third former director, Anthony Bowden, was sentenced to nine months' home detention and 300 hours of community service for misuse of company funds.

Joe Tregerthan, who lost more than $1 million in the Five Star crash, says other victims will not get a lot of joy out of the sentences.

He says many investors are in a worse predicament than him, with some of them having been badly stung. There have been suicides as a result of the collapse, he says, and a "whole raft of stress-related illnesses".

While the former directors have declared themselves bankrupt, Mr Tregerthan says, up until quite recently they were all living attractive lifestyles.

But he has never received an apology, he says, and he doesn't believe they're genuinely remorseful now.

A Ministry of Economic Development spokesperson says the sentences send a strong message to finance companies that they must not lie in their prospectuses, and will help restore confidence in the sector.