Ex-finance company owner admits $1.5m mortgage fraud

A former finance company owner has admitted defrauding four banks of nearly $1.5 million.

The Serious Fraud Office prosecution against Richard Albert Essex, of Onehunga, is the latest mortgage fraud case to appear before the courts.

Essex pleaded guilty at the Manukau District Court yesterday to one charge of using a document with intent to defraud. He has been remanded on bail until his sentencing on July 14 at the court, where he could receive up to seven years in jail.

Between August 9 and December 4, 2001, Essex applied for loans totalling $1.48 million from four banks - TSB, ASB, BNZ and Westpac - using false documents to support his application.

In June Essex had taken over New Zealand Debt Repay.

The company, incorporated in 1998, offered financial assistance to homeowners in financial difficulty. It would enter into "sell and buy-back" agreements where clients would sell their properties to the company and agree to re-purchase the property 12 months later for a higher price. The clients also had to sign occupation licences.

Under the terms of the company's sale, Essex would refinance all properties owned by the company and release the former directors from personal guarantees they had given on the company's debt.

The agreement also included a clause that properties which had buy-back agreements in place would still be valid once Essex took over.

Prosecutors said Essex refinanced the mortgages on the properties with various banks, supporting his applications with false documents and information relating to his income, employment and his ownership of the properties. Essex also failed to disclose the buy-back agreements.

The largest loan was for a $468,000 mortgage from the BNZ on four properties in Papatoetoe, Manurewa, Te Atatu and Howick.

Essex left the country on December 5, 2001 - the day after obtaining a $250,000 loan from Westpac. Some $35,000 was remitted to an account in Indonesia. He returned to New Zealand last August.