The forensic accountant and the ‘red flags' he found in alleged theft probe
Hamilton District Court
Photo:
RNZ / Cole Eastham-Farrelly
A businessman was allegedly paying himself fees for professional services that he was not qualified to receive, and without the knowledge of the company directors.
That man is now before the courts fighting three charges of theft by a person in a special relationship and obtaining by deception between 2015 and 2018.
Forensic accountant Dennis Parsons on Tuesday told a jury in the Hamilton District Court that he discovered a number of "red flags" when he went through the company's books, which the 73-year-old defendant was in charge of.
In total, the Hamilton man, whose name and identifying details are suppressed, is alleged to have unlawfully obtained $111,079.80 and spent some of that money on personal items, including weedkiller and Hush Puppies shoes.
The name of the company he was formerly associated with also has interim name suppression.
On day two of the trial, Parsons continued giving evidence, detailing the report he compiled for the company's board of directors in 2018.
He initially did one report, covering a 13-month period, but given what he discovered he was asked by the board to extend the ambit of his investigation to another year.
Parsons was initially contacted by one of the company directors to investigate because of "alleged misappropriation" by the defendant.
He was able to put the allegations into three categories: money that had vanished by way of cash cheque, the defendant's personal loan, and the personal expenditure.
Asked by Crown solicitor Tom Sutcliffe if he recognised any red flags, Parsons said he wouldn't expect to see brokerage being charged by the company.
"Because under the Credit Contract and Consumer Finance Act, the creditor [company] ... can charge reasonable fees, documentation fees, search fees, and can charge brokerage ... but only charge these fees that it has paid out to a third party.
"Because there was no broker, they couldn't charge a fee for paying itself."
He said most of the transactions were from customers who either walked in or were refinancing existing loans.
"So there's no broker involved in these transactions.
"So it's my understanding they were not entitled to charge these at any rate.
"That was the first red flag."
The second was when he discovered the cheques were made out to cash.
"Quite simply, you need to be able to account for who you pay the money to.
"If it goes into a cash currency we don't know where it's gone after it has been cashed at the bank.
"So if [defendant] cashed it, he had $600 in his hand and we don't know what happened to that."
The only way it could be traced is if the cash was being put back into the company bank account, but that didn't happen, he said.
"There was no record of what happened to the cash," Parsons said.
During his investigation, Parsons said he spoke with the broker used by the defendant.
Parsons said the broker told him he didn't receive his share of some of the broker fees.
Parsons also discovered broker forms that had the broker's name on them but not his signature.
When asked by Sutcliffe what his concerns were about the cash cheques, Parsons said the cheques could have just been made out in the name of the broker.
Sutcliffe then asked him to justify the defendant's alleged deposits.
"$600 is banked as cash by [defendant] into his account. Then he's used broker fees to reduce his debt."
All up, the defendant is alleged to have reduced his personal loan by $18,600 by the various cash deposits, he said.
"You would expect to see reasons for each of these credits," Parsons said.
His investigation also uncovered purchases of weedkiller and sprayer worth $182.56, a $140 smoke alarm, a $849 vacuum cleaner, Hush Puppies and shoe care kit, Wet and Forget Tiger Paw Shower Witch cleaner worth $229, and a Sunbeam "big fill" toastie machine, charged to either the company's office or general expenses.
He also got his personal car cleaned at Trim Effects Waikato, worth $172.50, noting that it had been "damaged by rubbish".
The man says he has done nothing wrong.
"My defence is quite simple. I have committed no crime," he told the jury on Monday.
"I'm simply carrying the can for a poorly governed company."
The man said a "disconnect" had developed between himself and the board of directors.
The trial is expected to last about two weeks.
- This story was first published on
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