KEY POINTS:
A retired Army officer and his wife were given nearly $1.5 million to invest, but spent the money on themselves, their children and their businesses, a district court hearing was told yesterday.
George Frederick McIntyre, 54, and Jennifer Margaret McIntyre, 38, were in the Christchurch District Court for a depositions hearing on charges brought by the Serious Fraud Office.
Fraud office prosecutor Nicholas Till said the McIntyres were adjudicated bankrupt in February 2004, and their companies placed into liquidation, leaving many investors unpaid.
The hearing will run until tomorrow and then adjourn. Another two weeks of evidence will be heard later.
The SFO plans to call about 30 investors, bank officials and its own investigators as witnesses.
The hearing is before justices of the peace John O'Hara and Percy Acton-Adams.
Mr Till said George McIntyre retired as an Army major in 1992 and became a self-employed insurance agent.
Jennifer McIntyre worked with him selling insurance, and the couple formed Advance Financial Services, acting as brokers for insurance companies.
The McIntyres were the shareholders and directors of four companies - G.F. and J.M. McIntyre, Cromac Group, Cromac Group International and Cromac Pacific, which was registered in Fiji.
Their clients were mainly serving or former Army personnel, Mr Till said.
"The couple used George McIntyre's Army contacts and travelled to military camps throughout New Zealand giving financial presentations and promoting themselves as budget and financial advisers, mortgage brokers, and brokers selling superannuation schemes and general insurance," he said.
"The McIntyres were usually aware when clients were due to receive a superannuation pay-out and suggested that money could be invested with them, with a good rate of return."
Between July 1998 and February 2004, they received $1,438,100 from more than 30 clients.
"The McIntyres deposited client money into the bank accounts of their companies and into their personal bank account," Mr Till said.
"They took no action by way of investing or managing the borrowed capital to ensure that their companies could repay the capital and interest on the due date.
"Funds in the 'business' bank account were used for the day-to-day running of their business including phones, wages, vehicle expenses, travel and accommodation.
"They also used the funds to pay personal expenses for themselves and for their son and daughter."
Expenses for their children included rent, vehicles, insurance and hire purchase payments.
"There were no investments made on behalf of the investors. There were no purchases of major assets. In the few cases where investors were repaid, the repayments were made from new investor funds."
Mr Till said an accountant's analysis showed the McIntyres' financial situation became progressively worse until there was no possibility of investors receiving their money back.
"The McIntyres knew this, and it was a fact that investors would have wanted to know before investing. Despite their knowledge of their steadily worsening financial position, they kept silent about it and continued to solicit loans and investments from the public."
The couple received some income from commissions, but it was not enough to cover their costs and repay investments and interest.
The McIntyres face joint charges of conspiracy to defraud and obtaining money by deception. Jennifer McIntyre returned from Fiji, where she now lives, for the hearing.
- NZPA
