A fraud which enabled a man running a pokie machine trust to take millions of dollars in backhanders, struck at the heart of the gambling regulation system, a Judge says.
Michael O'Brien, 58, appeared in the High Court in Wellington today and was jailed for four and a half years after earlier being found guilty of five charges of obtaining by deception.
Between 2010 and 2013 Michael O'Brien was effectively the operator of the Blenheim-based gaming machine society, the Bluegrass Trust, but hid his involvement from the Department of Internal Affairs, which regulates the gaming industry.
The Department considered he was unsuitable for such a position, as a result of his involvement in an earlier trust, which had also been investigated.
Crown Prosecutor Grant Burston said O'Brien's offending was selfish and greedy.
"The reason he set up Bluegrass and paid money to racing clubs was so he could continue to receive a third of those payments back to himself."
"An aggravating feature of his offending is that the money paid back to him [benefitted] him personally and deprived racing clubs and other community organisations of much needed funding."
Mr Burston said racing clubs believed they had no other choice but to pay back to O'Briena a third of what they received if they were to continue receiving grants from pokie machine profits.
Mike O'Brien's lawyer, Bruce Squire QC, said the extent to which people were deceived was extremely limited and it would be wrong to characterise his client's offending as sophisticated or clever.
He said while the court had found there was criminal conduct by O'Brien, there was no suggestion the trust did not operate in the way it was required to do under legislation.
"In the sense it had a limited ability as far as where the funds went. It had to be for the authorised purpose specified in its licence and there is no no suggestion funds went to other than the authorised purposes specified."
Mr Squire asked Justice Dobson to grant various sentence discounts which would have made O'Brien eligible for home detention, but the Judge refused, saying O'Brien's deceit struck at the heart of gambling regulation.
"You distanced yourself from the organisation of the trust, you represented your father as acting in your place by forging his signature on relevant documents and sending emails purporting to come from him."
"It was relatively sophisticated and served its purpose by deceiving those who were entitled to rely on the integrity of the applicants."
A second man, Kevin Coffey, who had been found guilty on one charge of obtaining by deception was also sentenced today and was ordered to serve 12 months home detention.
His lawyer said he had played a lesser role in the offending and Justice Dobson agreed, but highlighted the significance of Coffey's previous employment as a gambling inspector.
"DIA, even if subconsciously [would have] taken a measure of comfort from your involvement given your work at [New Zealand Community Trust] and earlier work as a DIA compliance officer."
A third man, Paul Max, will be sentenced later this month for his involvement in the fraud.