SPI Property men plead guilty in financial filing case

Murray Alcock.

Two men who ran a property fund have admitted three charges for failing to file financial statements following a crackdown earlier this year.

Seven directors of eight companies raising money from the public were this year charged by the Financial Markets Authority for breaching the Financial Reporting Act.

These companies had persistently failed to file financial statements on time or at all, the regulator said in July when announcing the charges.

Filing these sorts of statements are basic requirement for firms issuing securities to the public. A number of directors have already admitted the charges and late last month, Murray Alcock and Allister Knight pleaded guilty to three each.

The pair are both directors of SPI Property Fund and SPI Capital.

The SPI Property Fund, owned by SPI Capital, was envisioned as a vehicle to buy mainly commercial, industrial and retail properties in New Zealand, according to offer documents.

"The defendants, Alcock and Knight entered guilty pleas to three charges of failing to file financial statements under the Financial Reporting Act, relating to SPI Property Limited, at an appearance in the Auckland District Court on Friday 31 October. The other non-filing charge relating to SPI Capital Limited was withdrawn," the FMA said.

The pair are scheduled to be sentenced next January.

Promotional material from 2007 said the SPI fund was aiming to raise $75 million and was "an incredible investment vehicle" in which money was secured against assets.

Accounts filed with the Companies Office after charges were laid say the fund raised $1.8 million from investors in 2008, of which $905,214 had been returned by the end of March last year. The $1.8 million was not allocated to capital, as less than $4.75 million - the minimum amount required for the offer to proceed - was raised.

Almost $900,000 had yet to be repaid as at March 31 last year. As well, close to $580,000 of interest has accrued on investors' funds by that time.

An auditor report attached to these accounts said SPI Property's board had not complied with the Securities Act, the Companies Act and Financial Reporting Act:

"As at March 31, 2013, the company had funds held on behalf of investors totalling $894,786 from subscriptions received relating to a prospectus issued in 2008. "The board has failed to comply with s36A of the Securities Act 1978 to hold those funds in trust until they were returned to investors."