KEY POINTS:
Peter Marshall, former managing director of Access Brokerage, has been sent to jail for three years for fraud.
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.
A jury of 11 last month found him guilty on all 14 counts.
Access Brokerage was registered in 1986 and Marshall became chief executive in 2001.
In the Wellington District Court today, Crown prosecutor Kristy McDonald QC asked the judge for a starting point of five years imprisonment.
The Crown maintained the offending was significant and "took issue" with any suggestion of real remorse, as Marshall maintained he had done nothing wrong.
Home detention was not an option as the extent of the offending meant Marshall could not be given a sentence low enough to consider it.
Marshall's lawyer Brooke Gibson said he accepted in normal circumstances a period of imprisonment, starting at five years, would be imposed.
However, he said the court was required to take Marshall's particular circumstances into account.
Marshall's latest medical report showed there was a "significant possibility" that his client would suffer a stroke or heart attack over the next few years, and said that risk would be heightened if he was sent to prison.
Marshall's actions had not been motivated by personal greed, rather his offending was a "misguided attempt to save the firm".
He urged the judge to impose a sentence at the low end of the scale, so Marshall could be considered for home detention.
Judge Bruce Davidson said although Marshall did not benefit personally from the fraud, his continued employment with its associated salary, bonds and cash advances yielded him around half a million dollars over the period.
His offending had a significant impact on the public confidence in sharebroking, and the industry in general, he said.
Judge Davidson acknowledged Marshall's health had been poor and said the collapse of Access had no doubt exacerbated this.
His cardiologist said Marshall had a 50 per cent risk of suffering a heart attack over the next five years, and a 20 per cent risk of suffering a stroke.
"There is clear evidence that a sentence of imprisonment will elevate those risks."
Judge Davidson said he believed Marshall's offending was motivated by a desire to keep Access going and to keep staff employed.
"Your strong sense of pride got in the way of your good sense and logic.
"I think you were too proud to admit that Access was insolvent...too proud to admit you were guilty of this offence.
"You could not take such a public humiliation."
Aggravating factors in deciding his sentence were the facts the offending was prolonged, including large amounts of money and it was "repetitive and determined".
Also, "you abused trust given to you by (company owner Bill Garlick) by staff, by investors, by the Stock Exchange ... by the commercial community generally.
"All of that trust you abused," Judge Davidson said.
Mitigating factors were Marshall's previous "exemplary record," his poor health and his remorse.
Judge Davidson said due to the dishonesty of the crime, the scope, and the need to deter others and achieve consistency in sentencing, he must send him to jail.
"If staying true to my oath as a judge I could avoid jail for you I would, but I can't," Judge Davidson said.
"It gives me no pleasure whatsoever to send you to jail."
He told Marshall if he had pleaded guilty to begin with, he would quite possibly be looking at a sentence of two years of home detention at this point.
"That can not now occur."
During the trial, Crown prosecutor Kristy McDonald QC said the NZX identified a ``very significant' cash shortfall and the company was placed in liquidation.
Former Access employees said they had detected shortfalls in client funds years before the firm collapsed in late 2004.
Marshall has been free on bail until today's sentencing.
Rowan Macrae, head of communications at NZX said today anyone engaging in fraudulent behaviour should take a lesson from the sentence that's been handed down to Marshall.
``We are happy that the responsibility for what happened at Access Brokerage has been firmly allocated where it should lie, which is with the then managing director who committed fraud.'
She said NZX now runs a ``very, very strict reporting regime' and is sent daily and monthly updates of brokers. The last time Access Brokerage was inspected it was by a third party, but now all broker inspection is carried out in-house by trained NZX staff and this system was underway in 2004.
``The key point to make is that Mr Marshall actually committed fraud so obviously he was subject to serious fraud office investigation which is a whole other level.'
Former employee Linda Hassell told the court during the trial there were a number of instances of shortfalls of funds in the company's expense account for a number of years before the company's collapse and at one point the shortfall was up to $1 million.
Another employee, Valerie Wenk, told of a number of times when transfers were made from the trust account where clients' funds were held to the firm's expense account to cover expenses.
Wenk said she spent a lot of time trying to fix discrepancies and had problems reconciling reports that had to be filed with NZX.
At one point she was aware of a shortfall of $3.5 million.
SFO forensic accountant David Osborn told the court false entries in Access' financial journals were used to show the company as solvent, then also used to report to the NZX that the firm could meet its client obligations. to clients.
A 2005 Securities Commission report found that NZX's broker compliance regime suffered from inexperience, inadequate training and poor understanding of relevant rules during the period leading up to Access' collapse.
The Bank of New Zealand, which jointly underwrote the shortfall in funds with NZX, is seeking to recover its $4.8 million losses from the market operator and regulator and from auditors Deloittes.
The BNZ and liquidator Korda Mentha, which is also taking action to recover $400,000 in costs from the market operator and auditor Deloittes, say the two firms' inspections of Access' books should have raised concerns long before the online sharetrader went belly up.
In February the Court of Appeal overturned a 2006 High Court decision which prevented BNZ from taking action, but NZX is seeking leave to take the matter to the Supreme Court.
- NZPA, ADAM BENNETT, JACQUELINE SMITH
