Hi-tech fraudster to be sentenced

File photo / Bay of Plenty Times

Judge David McKegg will tomorrow sentence a Nelson businessman convicted of cheating investors out of $5.3 million by claiming he had invented a revolutionary form of data compression - a key issue in computing.

Philip James Whitley had boasted his technology meant he would be "richer than Bill Gates". At one point he had his own bodyguards, owned two black 300C Chryslers, and bought a $2m mansion in Redwood Valley.

Whitley, 49 and now a sickness beneficiary, was charged with two counts of making a false statement as a promoter in 2007. The charges, which carry a maximum punishment of 10 years' imprisonment, were laid by the Serious Fraud Office (SFO), which said that in the nine months from August 2006 to May 2007, 490 investors sank $5.3m into Whitley's company NearZero.

The investments were based on Whitley's claims to investors that he had invented and patented a revolutionary "lossless" method of compressing data. If the technology was genuine it would have been worth billions of dollars.

Judge McKegg said when he convicted Whitley in Nelson District Court in May that the technology could not have been patented because it didn't exist, and that Whitley's presentation to investors, and the documentation he supplied to investors, were false.

Whitley has since told the Nelson Mail he hoped he would get home detention as a sentence so he could work to pay back creditors. As recently as April, he became a director of another company, Latitude 41 Degrees, and told the newspaper that this was a software development company not related to compression technology.

SFO director Adam Feeley said Whitley's scam was not sophisticated, but the background knowledge required to explain the alleged technology and the alleged patenting was complex and technical.

- NZPA