2 Sep 2011

Former directors of Nathans Finance jailed

9:34 pm on 2 September 2011

Two former directors of failed company Nathans Finance have been jailed after being found guilty of breaching the Securities Act.

The company went into receivership in 2007 owing $174 million to about 7000 investors.

After a three-month trial in the Auckland High Court, Donald Young, Kenneth (Roger) Moses and Mervyn Doolan on Friday were each found guilty of five breaches of the Securities Act by making untrue statements in company documents.

Doolan has been jailed for for two years and four months and ordered to pay $150,000 in reparation.

Moses was sentenced to two years and two months in prison and ordered to pay reparation of $425,000.

Young was sentenced to home detention for nine months, plus 300 hours' community work and ordered to pay reparation of $310,000.

Another director, John Hotchin, earlier admitted misleading investors and was sentenced to home detention for 11 months, a fine of $200,000 and 200 hours of community service.

Justice Heath says the sentence should send a clear message to directors of companies who fail completely in their statutory obligations to protect potential investors.

"My conclusions were based primarily on the misleading impression conveyed to potential investors by the prospectus and the investment statement as later incorporated by reference into the subsequent offer documents."

Doolan and Moses are seeking bail pending an appeal. The bail application will be heard on Monday afternoon.