Lombard to face trial in mortgage offer case

Lombard Financial Services has a case to answer after issuing offer documents for a contributory mortgage which contained misleading statements, Judge David Ongley says in a written judgment issued in Wellington District Court yesterday.

Lombard Financial Services and its directors, former cabinet ministers Bill Jeffries and Hugh Templeton, Alan Lawson Beddie and Michael Reeves, face 27 charges under the Securities Act relating to a contributory mortgage offer for Village Care New Plymouth. All have pleaded not guilty.

It is alleged that Lombard Financial Services inflated the value of the rest home and misled investors by basing the investment's value on an assumed "going concern" of the business rather than on the land and buildings, and did not adequately disclose this.

The prosecution alleged that a debenture in the offer was a separate issue of debt security and should not have been included in the contributory mortgage offer. Defence lawyers argued the debenture was collateral security supporting the mortgage security.

- NZPA