$29m fraud trial ends as accused dies

Donald Rea

A man accused of conning $29 million from hundreds of investors has died two days into his trial.

His death leaves those who are out of pocket bitter, and with little chance of getting their money back.

Donald Moris Rea had been due to appear for the third day of a five-week trial at the Tauranga District Court yesterday when his wife told the judge her 58-year-old husband had died suddenly the night before.

Crown prosecutor Philip Morgan, QC told the Herald that Rea died of an apparent heart attack.

His wife, Catherine Rea - named in the Serious Fraud Office (SFO) prosecution as receiving more than $200,000 of the money her husband allegedly gleaned through fake investment schemes - drove from Hamilton with the news.

Judge Ian Thomas said Rea's death ended the trial, but it was uncertain what would happen to his remaining assets.

Rea had $650,000 when statutory managers took control of his accounts in 2003 and the SFO investigation was launched.

The SFO found Rea got $29 million from investors over three years, telling them he was putting their money into schemes at Europe's top 25 banks that would earn returns of up to 72 per cent.

Some investors gave Rea hundreds of thousands of dollars.

He repaid $15 million in "interest" to investors to maintain an air of legitimacy, but funnelled $11.8 million into trusts and bank accounts in countries including Switzerland, Singapore and Denmark for himself and his family.

He bought properties, cars and boats with some of the money, investing only 10 per cent of the total he received.

He lost that in dubious investments, including a Nigerian scam.

Rea represented himself at his trial and pre-trial appearances, often challenging court procedure.

"I live under the law of the gods," he said at his depositions hearing.

On the first day of the trial on Monday, he complained to the judge that he was bored by Crown evidence.

"So far as the jury will think, I'm a pretty crooked person, given that you haven't given me a chance to talk to them," he said.

Next morning he was agitated, rising repeatedly as Mr Morgan questioned the first Crown witness.

Rea later had a chance to cross-examine the witness, a forensic accountant.

Mrs Rea acted as a "McKenzie friend", or assistant, to her husband at the trial.

She told the Herald yesterday: "Donald's waited for three years to get his day in court. He got one hour yesterday. He finished about half past four and by 7 o'clock last night he was dead."

She declined to answer questions.

Several investors were at the court. One man, who did not want to be named, said he felt "blown away" that Rea had died.

"We don't get closure. We don't get to find out where our money went. We don't know where we stand now," he said.

A female investor said she felt cheated but was "a bit sad for Kate [Catherine Rea]".

Other investors also expressed a fondness for "Don".

A woman who said she had lost $10,000 hugged Mrs Rea and held her hand.

Mr Morgan said the Crown would have sought close to the maximum seven-year prison term for the charge Rea faced - theft by misappropriation.

He said the purpose of the investigation was not to recover money. Investors would have to try that through the statutory managers or civil court.

Thousands of hours were poured into the SFO investigation, he said.

The SFO did not want to comment yesterday on the time or money spent on the case.

Director David Bradshaw said Rea's death was sad for those close to him and he did not want to diminish their loss.

"There are lessons for all New Zealanders arising out of my investigation into Mr Rea's activities but right now is not the time for me to be talking about them," he said.

Rea is not the first defendant to die during an SFO trial.

Elva Mary Medhurst, 78, died while standing trial with her cousin on two charges of theft by misappropriation in the Auckland District Court in April last year.

Her cousin, Patricia Lenine Mabel Walsh, was found guilty on 50 fraud counts and sentenced to seven years in prison after she conned friends into giving her $2 million which she lost in a Nigerian money scam.

Sound too good to be true? It probably is

Potential investors need to listen carefully to the stories they are told, said Vance Arkinstall, chief executive of the Investment Savings and Insurance Association.

"If someone is promising returns of 70 per cent, that just does not stack up," he said. "There's no investment that is going to provide that sort of return. It's the old saying: If it sounds too good to be true, then it usually is."

Mr Arkinstall said investors should ensure their investment was a risk they could afford to take. They also had to be satisfied and comfortable with the person they were dealing with, checking references if necessary.

"So much of the industry is credible, but the whole thing gets spoiled by the minority that pops up from time to time and drags people into scams."