Accused wheedled $29m from investors, court told

Donald Rea

A man who allegedly defrauded investors out of $29 million invested only 10 per cent of the money, taking $9 million for himself and his family and investing some in a "Nigerian money-washing scheme", a court has heard.

Donald Moris Rea, of Tauranga, is accused of luring hundreds of people from around the North Island into investing in get-rich-quick schemes promising returns of up to 72 per cent per annum.

Rea's trial began yesterday at Tauranga District Court, where he faces one charge of theft by misappropriating proceeds held under direction between February 2000 and July 2003.

The trial follows a Serious Fraud Office investigation into Rea's activities.

Crown prosecutor Philip Morgan, QC, said Rea attracted people to the schemes by telling them he had access to private investment programmes run by Europe's top 25 banks.

He said Rea gave his schemes a "humanitarian focus", telling investors money would not be used to support American war efforts after September 11, 2001.

Investors were said to have poured $29 million into the schemes, $15 million of which Rea repaid.

He allegedly used money from new investors to give existing investors regular "interest" payments to make the schemes look legitimate.

"What he was really doing with his money was creating a facade of a successful business, creating an aura of him being a successful investor," Mr Morgan said.

He likened Rea's actions to "robbing Pete to pay Paul" but worse.

"The accused was dealing with the balance of it for his own personal benefit".

Of the $9 million Rea allegedly funnelled into international bank accounts and trusts for himself and his mother, partner, daughter and brother, he was said to have spent more than $400,000 on a boat and cars.

Mr Morgan said Rea invested only 10 per cent of the $29 million, putting some into a "Nigerian money-washing scheme" which promised investors a return of legitimate money once black dye had been washed out of bank notes.

"Not surprisingly he lost the lot," Mr Morgan said.

Rea is representing himself at the trial and was seated at a table between two prison guards yesterday.

The Crown's first witness was David Hassall, a forensic accountant who investigated the case for the Serious Fraud Office.

Mr Hassall told the court that there was no evidence of the type of returns Rea promised investors, nor of any returns from top 25 European banks.

"All the investments the defendant did make were failures and the capital was lost," he added.

Judge Ian Thomas told the jury of three men and nine women that the Crown must prove Rea received the $29 million and that an agreement existed between him and investors that required him to place their money with the top banks.

The Crown must also prove that Rea fraudulently used investors' money as his own, the judge said.

Thousands of documents are to be presented as evidence during the trial, which is expected to last five weeks.


THE ALLEGATIONS

Donald Moris Rea is alleged to have received $29 million from investors for get-quick-rich schemes

Repaid investors $15 million for appearance of success

Took $9 million for himself and his family, including putting:

* $4.25 million into his personal bank account at Lloyds TSB in London

* $2.57 million into his Timberlands Trust

* $1.3 million into his Sovereign Trust Fund

* $900,000 into his HSBC Auckland account

* $412,000 into a trust for his mother, Violet Rea