First appearance by seven accused of MTF fraud results in one guilty plea

Wednesday 5th October 2011 2 Comments

The first appearance of seven people charged with defrauding Dunedin-based Motor Trade Finance saw one of the accused plead guilty for his role in the scheme.

Clark Lewis pleaded guilty to nine charges of obtaining funds by deception when he appeared at the Auckland District Court today. The charges have a maximum penalty of seven years imprisonment.

The other six people, including former MTF dealer Mark Whelan, entered no plea.

Last month, the Serious Fraud Office laid 110 charges against the group, claiming they had defrauded MTF of some $4.9 million by illegally obtaining loans and using those funds for personal gain.

Whelan faces 25 individual and 41 joint charges for spear-heading the scheme, while Richard Barnett, Jonathan Chiswell, Brett Donaldson, Steward Saunders and Karl Toussaint also face charges for their respective roles.

The SFO claims between July 2005 and February 2009 Whelan wrote a number of loans in the names of family, friends and associates using fake assets as security.

In early 2009 the loans went into default and MTF was unable to find the assets for repossession. The SFO opened its probe in September last year.

Dunedin-based MTF reported a profit of $2.9 million in the six months ended March 31, up from $2.8 million a year earlier, and had a loan book worth $393.7 million as at March 31, down from $446.1 million a year earlier.

In July, the lender replaced long-serving chairman Roger Bonifant with Stephen Higgs, and appointed Stephen McKewen as an independent director.

MTF has $40 million of perpetual preference shares listed on the NZX’s debt market, which last traded yesterday at 51.3 cents in the dollar.

BusinessDesk.co.nz

Comments from our readers

On 5 October 2011 at 8:30 pm Arty said:

When dealers are shareholders and they are on full recourse, the door is wide open. MTF did not take the time to ensure the loan security auctually existed before paying out on the loan. What does that say about MTF?? Very poor.

On 6 October 2011 at 8:08 am Dealer for 35 yrs said:

Having been a participant and unwilling shareholder in MTF, one can understand the pitfalls of full recourse shareholder generated loan paper. The only reason I can see dealers using MTF is the paper they write is 2nd or 3rd tier and acceptance 100%. The commisions are the same as non recourse. Seems MTF even accept loan paper with non existant securities. Very very hard company for good dealers to exit from. What comes around goes around MTF