KEY POINTS:
The former boss of an online brokerage firm now facing multi-million dollar fraud charges had repeatedly filed statements making the company's financial situation look better than it was, Wellington District Court was told today.
Peter Marshall, 62, a sickness beneficiary from Upper Hutt, was responsible for Access Brokerage when it collapsed owing $3.9 million in client accounts in September 2004.
He pleaded not guilty to 14 Serious Fraud Office charges of false accounting with the intent to defraud, and making false statements with the intent to defraud between August 2001 and July 2004.
Crown prosecutor Kristy McDonald, QC, devoted a good part of her opening address to explaining some of the accounting terms and concepts to be used during the trial.
However, she said the issues were essentially not hard.
"They relate to whether accounting figures have been entered wrongly...and whether Mr Marshall did that, and whether or not he did it dishonestly, deliberately, intending to mislead whoever may rely on that information."
Access Brokerage was registered in 1986 and Marshall became chief executive in 2001.
Ms McDonald said Access was a discount brokerage, meaning it did not provide advice to clients, only a trade service.
Access founder Bill Garlick, who would give evidence in the trial, had set it up to provide for those with small amounts of money to invest.
"Rather than focusing on big corporate investors, Access was created to cater for the mums and dads market, the ordinary investor," Ms McDonald said.
When Marshall went on sick leave in July 2004, Mr Garlick temporarily took over as Access chief executive.
He discovered inconsistencies in Access reporting and advised the New Zealand Stock Exchange (NZX) in September.
NZX identified a "very significant" cash shortfall and the company was placed in liquidation, Ms McDonald said.
The shortfall was to the tune of $4.8 million.
Access clients were ultimately paid back by BNZ, which was "very fortunate" for those investors, Ms McDonald said.
Initially it was thought the inconsistencies in accounting were the result of a computer problem, but it soon emerged this was wrong.
The charges Marshall faced comprised 12 false accounting journal entries and two false reports filed to the NZX.
Ms McDonald said the false journal entries, which were relied on to create the reports to NZX, had the effect of showing a "far rosier" picture of Access' financial position then actually existed.
In one example of a false journal entry, the Crown alleged Marshall inflated the balance of the company's float account by $100,000.
A forensic accountant would testify that there was no sound accounting reason for the journal entry.
"The Crown says the only possible explanation is that this was done by Mr Marshall to deceive anyone reading the accounts and to provide background to a statement later made to the NZX to show Access was in a financially healthy situation, which it wasn't."
In a statement to the NZX, Marshall claimed a debt the company owed was $800,000 smaller than it actually was.
Ms McDonald said the jury would hear evidence that could lead them to infer Marshall was a capable and experienced accountant who must have made the false claims knowingly, deliberately and with intent to deceive.
"You might infer that he knew exactly what he was doing. He was not ignorant about accounting matters, he was not a muddler or incompetent."
The trial, before a jury of eight men and four woman, and Judge Bruce Davidson, is expected to take about three weeks.
- NZPA
