High Court jury find director and property developer guilty of $40m Auckland hotel fraud

The group used fake documents to gain a bank loan to develop the Waldorf Celestion Apartment Hotel. Photo / Brett Phibbs

A company director and property developer have been found guilty of defrauding a bank of more than $40 million to develop a four-star Auckland hotel.

Leonard John Ross, 51, and Michael James Wehipeihana, 46, were found guilty today by a jury of obtaining by deception and using fraudulent documents to gain a loan from ANZ for Emily Projects to develop the Waldorf Celestion Apartment Hotel.

Their trial began at the start of last month in the High Court at Auckland.

They were convicted on three charges of obtaining by deception and two representative charges of using forged documents.

Ross, Emily Projects' director, and Wehipeihana, a property developer, were two of four men charged over the development project the Serious Fraud Office (SFO) began investigating from at least March 2016.

Financial consultant Vaughn Stephen Foster and lawyer Timothy Upton Slack had earlier pleaded guilty to obtaining by deception.

They were each sentenced to 10 months' home detention.

Ross and Wehipeihana will be sentenced later this year.

The now-defunct company Emily Projects developed the Celestion Apartments on Auckland's Anzac Ave and Emily Place.

The group made false statements and used forged documents to get a loan from ANZ for Emily Projects to develop the Waldorf Celestion Apartment Hotel.

A loan facility of about $41m was obtained for the two-tower project.

ANZ did not lose any funds as a result of the fraud.

SFO director Julie Read said in a statement after the verdicts: "Mr Ross and Mr Wehipeihana misled the bank to ensure that Emily Projects Limited obtained the loan facility. The SFO is committed to investigating and prosecuting this kind of offending to maintain the integrity of the mortgage market for the benefit of honest borrowers."

Emily Projects went into liquidation in 2012 and its liquidators, Timothy Downes and Greg Sherriff, said in their final liquidators report in October 2015 that investors had claimed $2.89m from the firm and two other creditors had claimed $671,000.

These creditors had been paid $420,310, a return of 11.8c in the dollar.