Final verdicts in joint fraud agency operation – SFO

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Source: Serious Fraud Office – Final verdicts in joint agency operation

Guilty verdicts have been handed down in a Serious Fraud Office (SFO) prosecution in the High Court at Wellington today.

Two defendants, Noelene Kay Banton (61) and Johannes Hendrik Maria Middeldorp (63) faced alternate Crimes Act charges of dishonestly reproducing documents with intent to deceive or dishonestly using documents with intent to deceive.

The charges followed a major joint enforcement agency operation with OFCANZ and the Commerce Commission which was led by the SFO. The defendants have been on trial for seven weeks.

Both defendants were found guilty of six charges of dishonestly reproducing documents with intent to deceive and one charge of dishonestly using documents with intent to deceive. They were both acquitted on two charges.

The scam involved copying pre-existing advertisements from genuine publications and promising prospective advertisers their advertisements would be printed and distributed. The number of magazines to be circulated was grossly misrepresented. To encourage purchase, the magazines were titled in a way that suggested support of worthwhile causes such as road safety, parenting or family support. The scheme attempted to obtain more than $1 million from approximately 1,000 victims.

SFO Director, Julie Read said, “The SFO is committed to coordinating activities with those of other agencies to maximise our impact. Successful, effective prosecutions such as Operation Edit, clearly demonstrate the benefit of this approach.”

Two other defendants who have pled guilty were respectively sentenced to home detention and community work. One other defendant who pled guilty is yet to be sentenced.

Ms Banton and Mr Middeldorp will reappear for sentencing on 12 June 2015.

Background to investigation

A multi-agency taskforce combining Serious Fraud Office (SFO), the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Commerce Commission, New Zealand Customs Service, and Inland Revenue was established in May 2012 to combat a long running invoicing scam.

Labelled Operation Edit, the combined operation resulted in the execution of search warrants and other activity in 25 locations in the North and South Islands. This joint action by 67 staff resulted in six arrests.

Crimes Act offences

Section 228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,-
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.

Section 258 Altering, concealing, destroying, or reproducing documents with intent to deceive
(1) 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 cause loss to any other person,-
(a) alters, conceals, or destroys any document, or causes any document to be altered, concealed, or destroyed; or
(b) makes a document or causes a document to be made that is, in whole or in part, a reproduction of any other document.

(2) An offence against subsection (1) is complete as soon as the alteration or document is made with the intent referred to in that subsection, although the offender may not have intended that any particular person should-
(a) use or act upon the document altered or made; or
(b) act on the basis of the absence of the document concealed or destroyed; or
(c) be induced to do or refrain from doing anything.

Section 66 Parties to offences
(1) Every one is a party to and guilty of an offence who-
(a) actually commits the offence; or
(b) does or omits an act for the purpose of aiding any person to commit the offence; or
(c) abets any person in the commission of the offence; or
(d) incites, counsels, or procures any person to commit the offence.

(2) Where 2 or more persons form a common intention to prosecute any unlawful purpose, and to assist each other therein, each of them is a party to every offence committed by any one of them in the prosecution of the common purpose if the commission of that offence was known to be a probable consequence of the prosecution of the common purpose.

About the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO’s role is the detection, investigation and prosecution of serious or complex financial crime. The SFO’s focus is on investigating and prosecuting criminal cases that will have a real effect on:
• business and investor confidence in our financial markets and economy
• public confidence in our justice system and public service
• New Zealand’s international business reputation.

The SFO operates three operational teams; the Evaluation and Intelligence team along with two investigative teams.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”

Part 2 of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:
• the suspected nature and consequences of the fraud and/or;
• the suspected scale of the fraud and/or;
• the legal, factual and evidential complexity of the matter and/or;
• any relevant public interest considerations.

The SFO’s Annual Report 2014 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO’s strategic goals and performance standards. Both are available online at www.sfo.govt.nz

 

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Selwyn Manning, BCS (Hons.) MCS (Hons.) is an investigative political journalist with 23 years media experience. He specializes in reportage and analysis of socioeconomics, politics, foreign affairs, and security/intelligence issues. Selwyn has extensive experience as a commentator and has provided live political analysis to a wide range of television and radio organizations broadcasting in New Zealand, Australia and globally including the BBC (Five Live, London) and BBC (World Service). He is currently a correspondent to Australia's FiveAA radio, and is a regular live-on-air panelist on Radio New Zealand's The Panel with broadcaster Jim Mora.

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