SFO says no charges to be laid against Blue Chip

Thursday 28th October 2010

The Serious Fraud Office (SFO) today announced it had completed its investigations into the Blue Chip group of companies and, while investigations were continuing in relation to one of its South Island franchises, it did not intend to lay charges against the Blue Chip group based on the available evidence.

SFO Director Adam Feeley said "the Blue Chip investigation has attracted intense public and media interest. However, in order to lay criminal charges there must be a reasonable prospect, based on credible evidence which could be admitted in Court, that an impartial jury could be satisfied, beyond reasonable doubt, that the person prosecuted has committed a criminal offence."

"We have concluded that this evidential threshold cannot be met."

"Some may consider that Blue Chip operated in a moral vacuum with high pressure sales techniques and less-than-forthcoming disclosures regarding the nature of the property investments.

The Court of Appeal in Bartle v GE Custodians & Tasman Mortgages described the Blue Chip business as a predatory and oppressive asset lending scheme which was inherently defective and fraught with risks."

"However, the SFO can only form a judgment on matters that cross a threshold into serious criminal acts. In this regard, we are satisfied that insufficient evidence exists for a criminal prosecution."

Feeley said the SFO had investigated a large number of Blue Chip's operations, including allegations of:

Misuse of purchasers’ deposit money
On-selling of previously sold apartments
Unauthorised amendment of loan applications
Use of false representations and documentation to obtain advances or fees and avoid penalties
False Representations to investors
False accounting for renovations at Mark Bryers’ home.

Feeley said "this is not a decision lightly made" and the SFO has collected an "enormous number of documents; conducted numerous interviews with investors; Blue Chip staff; and senior officers."

However, after extensive discussions with the Crown solicitors it concluded there is insufficient evidence to implicate any particular individual with criminal conduct.

Feeley said the matter could be reviewed if further, compelling, evidence came to light, but that discussions with interested parties to date had not revealed anything new to the SFO investigations already conducted.

The SFO had also referred matters of professional conduct of lawyers involved in the Blue Chip developments to the NZ Law Society for inquiry

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