Gavin Clifford Bennett has gone to jail for eight years for defrauding $23 million from South Canterbury Finance and using some of it for a free-spending, grandiose life-style.
Christchurch District Court Judge Jane Farish imposed the jail sentence today on six representative charges laid by the Serious Fraud Office listing 894 separate transactions when 54-year-old Bennett was a director of Datasouth.
As well as the six fraud charges, Bennett has admitted two charges of false accounting.
His company was arranging loan finance to provide computer systems for clients through South Canterbury Finance but the arrangements turned out to be a Ponzi scheme which continued for about six years before it was discovered.
Bennett ensured that repayments on these loan agreements were always made on time by committing more frauds to obtain more money.
Over that period, Bennett paid rental for two luxury residential apartments in The Rocks, Sydney, spend $Aust429,000 on food and beverages, and spent $900,000 on regular payments to various female companions. He also travelled widely, and spent $Aust16,000 on jewellery and flowers.
Serious Fraud Office prosecutor Sarah Allen said the frauds involved obtaining $64.5 million illegally and the direct loss to South Canterbury Finance was $23 million. It had been premeditated offending in creating false documents for leases that did not exist, using the details of genuine customers. It had been a significant breach of trust, she said.
Bennett created Datasouth in 1993. The company went into liquidation in March 2011 and 42 staff lost their jobs.
Allen said that because South Canterbury Finance was covered by the Crown Retail Guarantee Scheme, it ended up being the taxpayer rather than small investors who covered the $23 million losses.
She itemised some of Bennett's spending. "Trying to minimise his personal expenditure which was unrestrained does not sit well with personal remorse."
Defence counsel James Rapley said Bennett accepted the scale of the fraud and the loss. He urged the judge not to impose a minimum non-parole term, and suggested a jail term of five to six years.
He said Datasouth Finance Ltd had experienced financial difficulty, leading Bennett to commit the fraud by creating fictitious rental agreements. It was different to the usual Ponzi scheme because Bennett was taking money from South Canterbury Finance which was used to make payments back to the same company.
He accepted that Bennett had spent millions on himself over the six year period. Since the investigation began he had displayed "considerable remorse". "The years he will spend in jail will be very difficult and it will send a message to others in the community and act as a deterrent."
Judge Jane Farish said the offending had been described as "an unprecedented level of fraud".
Some of the amounts he spent on living expenses and luxury items were extraordinarily large. He was living a lavish and grandiose lifestyle. "Your company was your alter ego, and your alter ego got away with you."
She said she would reduce his jail term because of his co-operation with the investigation.
She had to bear in mind that the victims were effectively every taxpayer in the country.
It was sophisticated, premeditated dishonesty which continued for a long time.
Judge Farish imposed an eight year jail term with a minimum non-parole term of three-and-a-half years.