The man has denied stealing $1.3 million from an Auckland rest home in an elaborate fraud spanning seven years. Photo / NZME
The man has denied stealing $1.3 million from an Auckland rest home in an elaborate fraud spanning seven years. Photo / NZME
A forensic investigation into the financial records of an Auckland rest home uncovered numerous cheques written out to third-party contractors who had worked on a staff member's new home, a court has heard.
Other cheques discovered during the probe recorded the payee as being a fruit and vegetable supplier, but it's alleged the cheques later turned out to have been made to other contractors and businesses connected to the man.
The man, who together with his wife ran the aged care operation from 2001 to 2012, is accused of siphoning about $1.3m from the business in offending spanning seven years.
He has name suppression, denies 49 dishonesty charges and is on trial this week before Justice Timothy Brewer in the High Court at Auckland.
Giving evidence on day three of the trial, the rest home's director told the court that after the man's alleged offending came to light in 2012, he began a detailed forensic investigation of the company's finances to track years of expenditure.
After finding that the company's financial records had disappeared from the facility's secure basement, he sought statements and cheques from the bank to reconstruct where they money had gone.
It's alleged the man used nearly 1100 cheques to fraudulently steal money from the company, including more than $430,000 in cashed cheques.
The director said there was no reason for company cheques to be cashed other than for petty cash purposes.
"I did some work tracking where those cash cheques went. I found that for a significant period of time they were propping up the [couple's] credit card."
The director discovered that another $660,000 in cheques had been written out in the man's name and signed off by either the man or his wife.
Other than reimbursement for the man's home phone and petrol costs, the vast majority of these payments were unauthorised, the director said.
Justice Timothy Brewer is presiding over the case in the High Court at Auckland. Photo / NZME
The director also discovered a series of cheques which a "reconciliation report" based on information provided by the man recorded as being made out to a fruit and veg supplier.
But when the director sourced the cheques direct from the bank, he discovered they had gone to third-party businesses and contractors that did not supply services to the rest home.
One of those contractors was a builder working on the man's newly built home on the city's fringe, the court heard.
There were also payments to energy suppliers and insurance companies that had no links to the rest home company.
Asking about the cheques, Justice Brewer said: "Some were made out to cash, some were made out to [the man], and one was made out to [the builder]."
The director replied: "Yes sir. They built [the man's] house."
The director's investigation also revealed that the man had overpaid his and his wife's salaries by about $265,000, the court heard.
The company eventually took the information to the police, who laid criminal charges against the man, including theft by a person in a special relationship and false accounting.
Under cross-examination by the man's lawyer, Fletcher Pilditch QC, the director said he had formed a friendship with the man in the 1990s, when their wives met through antenatal class.
When the man's previous retail business got into difficulty, the director had helped him prepare a scheme of arrangements to satisfy creditors.
The director later entered an agreement with a group of investors, including the man and his wife, to purchase the rest home.
Pilditch asked why the director had appointed his client to run the rest home operation when he had no experience in the aged care sector.
"Running a [retail] business is a far cry from running a rest home," Pilditch said.
The director replied they were similar "from an administrative perspective" - with both involving financial record keeping, payroll and IRD responsibilities.
Pilditch then challenged the director on the salary that had been paid to the man's wife, suggesting it was insufficient given her numerous responsibilities and overtime.
"Effectively between the two of them they had day-to-day management and control of the rest home," Pilditch said.
"They were going to be paid $66,000 between them for that."
The director said the $66,000 figure was only provisional, and had increased following negotiations, which included providing the wife with a company car in recognition of her being on-call after-hours.
