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Developer pleads guilty in finance case

NZ NewswireNZ Newswire 7/08/2016

One of five men charged in a case brought by the finance market watchdog has pleaded guilty, as a trial kicks off for his four co-accused.

Peter Chevin was due to stand trial along with Paul Bublitz, Bruce McKay, Richard Blackwood and Lance Morrison over a combined 98 counts of theft by a person in special relationship, along with dozens of charges of making false statements by a promoter over their roles in companies Mutual Finance and Viaduct Capital.

But while his co-accused pleaded not guilty to start a trial at the High Court in Auckland on Monday, Chevin, a former Auckland property developer, admitted to the 10 charges he faced.

Crown lawyer David Johnstone told the court Chevin would not be asked to take the stand against the other men.

Prosecutors say Strategic Finance founder Bublitz and Viaduct chief executive Nick Wevers - who died in 2014 - set up Viaduct to get more cash for their various struggling property developments - but didn't tell investors about the links between the companies.

Mr Jonhstone told the court Bublitz and his co-conspirators deliberately misled investors in Viaduct Capital and Mutual Finance over a series of transfers made to the other companies, which benefited them at the cost of clients.

He told Justice Mark Woolford the companies from the beginning amounted to a "conspiracy to commit criminal offences".

Mutual Finance collapsed in July 2010 owing about 340 investors about $9.3 million, $9m of which was covered by the government's retail deposit guarantee.

Viaduct called in the receivers two months before Mutual, owing 110 investors some $7.8m, of which $7.5m was guaranteed.

Bublitz's property development company Hunter Capital got into trouble after the global financial crisis in 2007 - it was "asset rich and cash poor", Mr Johnstone said.

The Crown alleges the defendants comprised a plan at Blublitz's holiday home in Pauanui in January 2009 to buy an existing finance company - Priority Capital, later renamed Viaduct Capital - covered by the government's retail deposit guarantee scheme.

Mr Johnstone said the men then set up a complex network of shell companies to distance Bublitz from Viaduct Finance, even though he was pulling the strings in the background and earned $240,000 from the business.

"He effectively controlled Viaduct after acquiring it," Johnstone said, including instructing Wevers on how to run the finance company, setting salaries and the strategic direction.

The Crimes Act charges carry maximum penalties of seven and 10 years' jail.

Viaduct lost its Crown guarantee in 2009 after Treasury asserted it failed to comply with rules on related-party lending and general business conduct by not undertaking due diligence on loans from Hunter Capital Group.

The trial is set down for 12 weeks.

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