KEY POINTS:
Dozens of well-heeled Aucklanders are millions of dollars out of pocket because of the activities of a local businessman they once called a friend.
The reactions from friends, relatives and business associates of Ed Harman range from bruised to bitterly angry, following the collapse of five companies associated with him.
Mr Harman, a quarter-owner of upmarket waterfront eatery Mikano and a former owner with his father John of successful North Shore boat equipment business Maxwell Marine, has reportedly apologised to his creditors, but has not said if or how they will get their money back.
His creditors include high-powered professionals such as Sarah Roberts, partner and former national chairman of the Buddle Findlay law firm, who is owed money through two companies she owns with Mr Harman.
Exactly how much has been lost and what the businesses invested in is far from clear. One estimate puts the losses as high as $30 million.
Liquidators estimate in their initial reports that the companies collectively owe $6 million to around 50 creditors.
However, as many of their assets are shares in or loans to other entities in Mr Harman's complex web of companies, the total is likely to be much more.
Ed Harman is a director of 33 New Zealand-registered companies, and resigned his directorships of another 20 in the last two months.
The Weekend Herald understands one investor alone has lost $3 million.
Another investor said the minimum amount Mr Harman required people to put in was $100,000.
Mr Harman's $2.4 million Coatesville home is on the market, and his share of Mikano is likely to be sold.
Many of the failed companies' creditors are also shareholders and directors of associated entities, and most are his personal friends.
So close are the associations in his upmarket community of investors that few were willing to speak to the Weekend Herald, and none would - or could - explain what his businesses did.
"I'd rather not make any comment," said John Gosney, his co-owner in Mikano. "He's involved in offshore and local businesses. He probably got caught out in this whole credit crunch thing."
Mr Gosney owns 75 per cent of the restaurant and has other interests, including as a director of troubled finance company Dorchester Pacific.
His wife and Mr Harman's wife are sisters.
Mr Gosney said he hadn't spoken to Mr Harman for some time.
Saying family relations were "a little bit strained is probably the best way of putting it".
He said he asked Mr Harman to resign as a director of Mikano and two related companies in June, because he "knew it could be all going to get messy".
Mr Gosney confirmed Mikano was owed some money, a short-term loan the business had made to Mr Harman as a favour. "People loaned surplus cash to Ed on a short-term basis."
Former sharebroker Craig Greenwood, who co-owns insurance finance company Clearmont Financial Services and is married to social column regular Sarah Paykel, said his business was a creditor only in a "personal" capacity.
He was also unwilling to discuss the nature of the investments, but said they were wide-ranging and complex.
"You're going to see an interesting story come out of this at some point, but it's interesting in the sense it's very sad, and a lot of people will lose a reasonable amount of money."
Liquidators KordaMentha could not comment on what the five companies did or why they had failed.
Sarah Roberts would not comment because of professional privilege.
Hawkes Bay freight transport businessman Peter Roebuck, who is a co-director with Mr Harman in a cluster of entities owned indirectly by two of the failed companies, said he was owed "hundreds of thousands".
"How he's lost it I really wouldn't know. I'm just the bloody sucker on the outside."
Creditor Ron Czerniak, an executive at Maxwell Marine, worked for Ed Harman for 13 years, "and a certain amount of trust went along with that".
Ed Harman counts among his friends people such as John Cobb, co-head of investment bank Goldman Sachs JB Were, with whom he has a company investing in an Australian interest. It's understood Mr Cobb is not owed any money.
Even KordaMentha liquidator Grant Graham was a co-shareholder with Mr Harman eight years ago in a company that was intended to invest in global capital management.
WHO'S WHO
The five companies associated with Ed Harman now in the hands of the liquidators are:
* Fairthorne Ventures, through which he owns 25 per cent of Mikano
* Fairthorne Trading
* Fairthorne Investments, which owns both Fairthorne Trading and Fairthorne Ventures and is in turn held by a nominee company, Stapway Nominees
* Paeroa Investments, owned by Ed and John Harman
* Wake Investments, owned by Ed Harman
DISAPPEARING INVESTMENTS
Just what Ed Harman's businesses did is something of a mystery.
Descriptions include software, escalator advertising, the management of residential rental property, and trading in investments, shares and foreign currency.
There have been references to interests in the United Kingdom, Europe and the United States.
Escalator Advertising Ltd - owned in part by two of the companies in liquidation - is apparently a member of the Reserve Bank's Austraclear real-time settlement system.
This system allows banks, trustee companies, investment funds and the like to electronically deal in securities such as bonds, shares, cash and foreign currency.
Warkworth farmer Alan Stevenson was persuaded to invest $100,000 in Mr Harman's ventures.
"This was the minimum amount he would accept; I would have put in less if I could."
There was no prospectus - something that is required by law when an investment opportunity is offered publicly.
Mr Stevenson understood that his money had gone into convertible notes, which would convert to shares after 12 months with the promise of good profit. In the meantime he received a half-yearly 12 per cent interest payment.
The transfer into shares didn't happen, and Mr Stevenson says he "tried and tried and tried" to get his money out. Then the December 2007 interest payment failed to materialise.
A spokesman for Ed Harman said the investments were in "high-growth assets". Mr Harman had been running the business for about 15 years, putting his own equity in.
With the credit crunch, some investors had called for their money back, and a lack of liquid assets had forced him to put the companies into voluntary liquidation.
