UPDATED: Lombard Finance sentence pales next to stigma of conviction, defence says

Thursday 29th March 2012

Defence lawyers for the convicted Lombard Finance & Investments directors say the criminality of their offending is at the bottom end of the range, and the prospect of a sentence pales compared to the stigma of a criminal conviction.

The Crown is seeking a custodial sentence for the directors of the failed lender, and prosecutor Colin Carruthers QC told the High Court in Wellington that a starting point of 2 years to 2 ½ years was appropriate for non-executive directors Douglas Graham, Lawrence Bryant and Bill Jeffries.

For former chief executive Michael Reeves, Carruthers said 2 years and 9 months was an appropriate starting point. David Hurd, counsel for former justice minister Jeffries, said the consequence of a criminal conviction was to end his client’s career.

He urged Judge Robert Dobson not to underestimate the impact of that sanction when sentencing the directors.

Paul Davidson QC, council for Graham and Bryant, told the court being labelled a criminal is the “ultimate humiliation” for his clients, and that “the law has created criminal liability for what may be nothing more than a material misjudgement.”

Judge Dobson is hearing mitigating factors from counsel today as he prepares to deliver a sentence after finding them guilty last month of making misleading statements in offer documents.

Hurd characterised the offending as at the bottom end of the range, saying it was an “innocent error of judgement” and in a “different universe” from the Bridgecorp and Nathans Finance cases, which have both been cited by the prosecution as the benchmark for sentencing.

He said the starting point should be community service for his client, who doesn’t have the funds to meet a financial penalty.

Jeffries is the only one of the four who has so far confirmed he will appeal the decision. Davison said a sentence of community service or a pecuniary penalty was appropriate for the directors given the lack of dishonesty in their actions.

At the time of the verdict, Judge Dobson said the directors’ offences were a “material step away from the seriousness required for a custodial sentence” and that the law created “criminal liability for what may be no more than a material misjudgement about the accuracy and adequacy of the description of the state of financial health of the company, as directors authorise it in offer documents.”

Lombard Finance went into receivership in April 2008, owing approximately $127 million to about 4,400 investors.

(BusinessDesk)

BusinessDesk.co.nz

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