Investors - who lost at least $88 million when the group collapsed in 2007 - are furious Macdonald will live in $1 million North Shore home despite being a bankrupt.
Joe Tregerthan, who lost $1 million when Five Star Debenture Nominee Ltd collapsed, was friends with Macdonald for more than 40 years.
He said the subsidiary company - which went into liquidation in November 2007 owing $34 million - was funded by fewer than 250 investors, who were friends, family and clients of the Five Star directors.
Mr Tregerthan was concerned that Macdonald would lead a better lifestyle than many investors because of a "cynical bankruptcy".
He believed many of Macdonald's assets were held in trusts or in the name of his wife. Christine Macdonald is listed as one of the owners of the $1 million home on the North Shore purchased in January 2008. She is also a shareholder in seven companies and a director of two.
Investors had suffered "horrendously" in the past four years as a result of the Five Star collapse and Macdonald's criminal behaviour, Mr Tregerthan said.
Many were forced to downsize their homes, sign up to new mortgages and had stress-related illnesses, as well as "many broken dreams".
"This, among other things, has resulted in suicide attempts, premature deaths, broken and strained relationships ... an 80-year-old having to return to the workforce, and a woman in her 60s taking a stressful nightshift job in a hospital."
Mr Tregerthan said investors were fully behind High Court legal action by the Five Star liquidator to claw back the $50 million in related party loans.
But liquidator Paul Sargison, a partner at Gerry Rea, said there had no "significant recoveries" so far.
At sentencing, defence lawyer Alex Witten-Hannah told the court Macdonald did not purposely divert investors' funds for his own benefit or for the benefit of any particular third party.
Macdonald is in Rangipo Prison, near Taupo, with fellow director Nicholas George Kirk, 65, who was also jailed in December.
He was sentenced to two years and eight months in prison after pleading guilty to the SFO and MED charges - but is also likely to be released at his first Parole Board hearing in November.
A third director, accountant Anthony Walpole Bowden, was sentenced to nine months' home detention and 300 hours' community work for breaches of the Securities Act.
He pleaded not guilty to the SFO charges and will stand trial with Neill Alan Williams, a discharged bankrupt who the Crown alleges acted as a shadow director.
All four were banned as company directors for five years in May 2010.
Papers obtained by the Weekend Herald under the Official Information Act and court documents outline the tangled web of related party loans to companies and entities connected to the Five Star directors and Williams.
About $19 million was loaned to companies or trusts allegedly connected to Williams.
Five Star marketed itself as a low or modest risk finance entity which made small consumer loans, around $3500 over three years, for clients to make household purchases such as fridges.
Instead, Five Star was investing large sums in complex commercial and related party loans - totalling more than $50 million. In 2007, Five Star Consumer Finance collapsed with losses of $42 million. Other companies in the group, Five Star Finance and Five Star Debenture Nominee, owe another $43 million.
While other economic factors contributed to the business failures, Judge Roderick Joyce said Macdonald and Kirk's criminal actions "played a significant part in the losses" and the related party loans of $50 million were "cunningly conceived".
"But in my consideration the admitted wrongdoings, given they were very significant to the financial safety of the enterprise characteristics, must surely be recognised as a highly significant factor in the turning of the Five Star Group into, metaphorically speaking, a house of cards awaiting its fall."
Judge Joyce said prudent investors would not have invested - or continued to invest - had they known Five Star's true financial position and been aware of the high-risk related-party lending.
While Kirk and Macdonald did not have previous convictions, Judge Joyce noted their offending was over a prolonged period. He cut their sentences in half for pleading guilty and agreeing to give evidence against Williams. Macdonald also received credit for expressing remorse and was ordered to pay $92,000.
