IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2017-004-010580
[2019] NZHC 2032
THE QUEEN v
STEVEN ROBERTSON
Hearing: 20, 21, 22, 23, 24, 27, 28, 29 and 30 May, 4, 5, 6, 11, 12, 13, 14,
17, 18, 19, 20, 21, 24, 25, 26, 27 and 28 June, 1, 2, 3 July 2019
Counsel:
B M Finn, S B C O’Connor and C Brooke for Crown T A Simmonds and O J Cann for Defendant
Verdicts:
19 August 2019
VERDICTS AND REASONS OF KATZ J
Solicitors:B M Finn and S B C O’Connor, Meredith Connell, Auckland C Brooke, Financial Markets Authority
Counsel: T A Simmonds and O J Cann, Lorne Street Chambers, Auckland
R v ROBERTSON [2019] NZHC 2032 [19 August 2019]
Table of Contents
Paragraph
VERDICTS...................................................................................................... [1]
A. SUMMARY AND OVERVIEW..................................................................... [3]
Overview of Crown and defence cases........................................................... [3]
Summary of my findings................................................................................. [6]
B. RELEVANT RULES OF LAW AND PRACTICE..................................... [27]
C. EVIDENCE RELEVANT TO MULTIPLE CHARGES............................ [39]
General evidence of Mr Robertson’s dishonesty......................................... [40]
The FMA investigation................................................................................... [45]
Where did the money go?.............................................................................. [65]
D. TRADING ON BEHALF CHARGES – LAW AND GENERAL EVIDENCE [74]
Introduction.................................................................................................... [74]
Theft by a person in a special relationship – the law.................................. [75]
Did Mr Robertson have control over the relevant funds?.......................... [77]
Did Mr Robertson trade the complainants’ funds in the financial
markets (or other markets)?........................................................................ [85]
The complainants’ evidence – common themes........................................... [87]
PTT staff – evidence relating to “trading on behalf”................................. [91]
Mr Robertson’s knowledge of the activities of Mr Burns and Mr Lynn [129]
Documents signed by the complainants...................................................... [135] CMC markets.......................................................................................................... [153]
A potentially exculpatory document?......................................................... [162]
Summary of general findings/relevant circumstantial evidence.............. [168]
E. TRADING ON BEHALF – EVIDENCE RELATING TO
SPECIFIC CHARGES................................................................................ [169]
Introduction.................................................................................................. [169]
Charge 38 (Richard Trott).......................................................................... [172]
Charges 18 and 19 (John Eaton)................................................................. [180]
Charges 42, 43 and 44 (Paul Slack)............................................................ [207]
Charge 12 (Andrew Craighead).................................................................. [231]
Charge 30 (Edith Dyson)............................................................................. [251]
Charge 8 (Peter Bailey)................................................................................ [261]
Charge 31 (Owen Farmilo).......................................................................... [273]
Charge 5 (Blair Cousins)............................................................................. [282]
Charge 36 (Elaine Breach).......................................................................... [293]
Charge 47 (Mary Boyle (deceased))............................................................ [307]
Charge 33 (Angela Abercrombie)............................................................... [327]
Charge 21 (John Frandi)............................................................................. [346]
Charge 34 (Colin Gibson)............................................................................ [363]
Charge 46 (William Anderson)................................................................... [375]
Charge 16 (John Cairns).............................................................................. [387]
Charge 14 (Robert Sutherland).................................................................. [399]
Charge 39 (John Ballam)............................................................................. [415]
Charge 2 (Andrew Johnston)...................................................................... [428]
Charge 35 (David Hook).............................................................................. [445]
Charges 24 and 25 (Kenneth McKee)......................................................... [463]
Charge 1 (Alan Empson)............................................................................. [479]
Charge 27 (Michael Corcoran)................................................................... [490]
F. THE SHAREHOLDING CHARGES – LAW AND GENERAL EVIDENCE [500]
Introduction.................................................................................................. [500]
Obtaining by deception – the law.............................................................. [501]
Did Mr Robertson have control over the relevant funds?........................ [506]
Was Mr Robertson acting with a claim of right?...................................... [508]
The key issue................................................................................................. [509]
Background.................................................................................................. [511]
Evidence of PTT staff.................................................................................. [513]
The manner in which Mr Robertson ran his business.............................. [515]
Failure to complete share transfer formalities........................................... [518]
The nominee clause in shareholders’ agreements...................................... [526]
Failure to inform accountants of the existence of additional
shareholders.................................................................................................. [541]
Exclusion of shareholders from company affairs...................................... [543]
Lack of dividends......................................................................................... [553]
Inconsistent information provided to investors......................................... [556]
Summary of general findings/relevant circumstantial evidence.............. [560]
G. SHAREHOLDING CHARGES – EVIDENCE RELATING TO
SPECIFIC CHARGES............................................................................... [561]
Introduction.................................................................................................. [561]
Charge 13 (Andrew Craighead – Harrington).......................................... [564]
Charge 20 (John Eaton – PTT (Singapore) and PTT).............................. [574]
Charge 29 (Edith Dyson – PTT (Singapore))............................................. [593]
Charge 9 (Peter Bailey - PTT).................................................................... [606]
Charge 6 (Blair Cousins - PTT).................................................................. [614]
Charge 17 (John Cairns – Maxwell Foster)............................................... [627]
Charge 32 (Owen Farmilo – Maxwell Foster)........................................... [643]
Charge 23 (John Frandi – PTT (Canada))................................................ [654]
Charge 3 (Andrew Johnston- PTT)............................................................ [666]
Charge 26 (Kenneth McKee – Maxwell Foster)........................................ [678]
Charge 28 (Michael Corcoran – Alba)....................................................... [696]
H. UNAUTHORISED USED OF CREDIT CARD CHARGES................... [710]
Introduction.................................................................................................. [710]
Dishonest use of a document – the law....................................................... [712]
The process for charging credit cards........................................................ [718]
Charges 7, 10 and 11 (Blair Cousins and Peter Bailey)............................. [725]
Charges 40 and 41 (John Ballam)............................................................... [744]
Charge 4 (Andrew Johnston)...................................................................... [760]
Charge 45 (Paul Slack)................................................................................ [768]
I. CONCLUSION............................................................................................ [776]
VERDICTS
[1]I have today delivered the following verdicts:
Charge Charge details and complainant
Verdict
Charge 1
Theft by a person in a special relationship (Alan Empson)
Guilty
Charge 2
Theft by a person in a special relationship (Andrew Johnston)
Guilty
Charge 3
Obtaining by deception (Andrew Johnston)
Guilty
Charge 4
Dishonestly using document (Andrew Johnston)
Not guilty
Charge 5
Theft by a person in a special relationship (Blair Cousins)
Not guilty
Charge 6
Obtaining by deception (Blair Cousins)
Guilty
Charge 7
Dishonestly using document (Blair Cousins)
Guilty
Charge 8
Theft by a person in a special relationship (Peter Bailey)
Guilty
Charge 9
Obtaining by deception (Peter Bailey)
Guilty
Charge 10
Dishonestly using document (Peter Bailey)
Guilty
Charge 11
Dishonestly using document (Peter Bailey)
Guilty
Charge 12
Theft by a person in a special relationship (Andrew Craighead)
Guilty
Charge 13
Obtaining by deception (Andrew Craighead)
Guilty
Charge 14
Theft by a person in a special relationship (Robert Sutherland)
Guilty
Charge 15
(s 147 discharge)
---
Charge 16
Theft by a person in a special relationship (John Cairns)
Guilty
Charge 17
Obtaining by deception (John Cairns)
Guilty
Charge 18
Theft by a person in a special relationship (John Eaton)
Guilty
Charge 19
Theft by a person in a special relationship (John Eaton)
Guilty
Charge 20
Obtaining by deception (John Eaton)
Guilty
Charge 21
Theft by a person in a special relationship (John Frandi)
Not guilty
Charge 22
(s 147 discharge)
----
Charge 23
Obtaining by deception (John Frandi)
Guilty
Charge 24
Theft by a person in a special relationship (Kenneth McKee)
Guilty
Charge 25
Theft by a person in a special relationship (Kenneth McKee)
Guilty
Charge 26
Obtaining by deception (Kenneth McKee)
Guilty
Charge 27
Theft by a person in a special relationship (Michael Corcoran)
Guilty
Charge 28
Obtaining by deception (Michael Corcoran)
Guilty
Charge 29
Obtaining by deception (Edith Dyson)
Guilty
Charge 30
Theft by a person in a special relationship (Edith Dyson)
Guilty
Charge 31
Theft by a person in a special relationship (Rodney Farmilo)
Guilty
Charge 32
Obtaining by deception (Rodney (Owen) Farmilo)
Guilty
Charge 33
Theft by a person in a special relationship (Angela Abercrombie)
Guilty
Charge 34
Theft by a person in a special relationship (Colin Gibson)
Guilty
Charge 35
Theft by a person in a special relationship (David Hook)
Guilty
Charge 36
Theft by a person in a special relationship (Elaine Breach)
Guilty
Charge 37
(s 147 discharge)
---
Charge 38
Theft by a person in a special relationship (Richard Trott)
Guilty
Charge 39
Theft by a person in a special relationship (John Ballam)
Guilty
Charge 40
Dishonestly using document (John Ballam)
Guilty
Charge 41
Dishonestly using document (John Ballam)
Not guilty
Charge 42
Theft by a person in a special relationship (Paul Slack)
Not guilty
Charge 43
Theft by a person in a special relationship (Paul Slack)
Guilty
Charge 44
Theft by a person in a special relationship (Paul Slack)
Guilty
Charge 45
Dishonestly using document (Paul Slack)
Not guilty
Charge 46
Theft by a person in a special relationship (William Anderson)
Guilty
Charge 47
Theft by a person in a special relationship (Mary Boyle)
Guilty
[2]My reasons for these verdicts are set out below.1
A. SUMMARY AND OVERVIEW Overview of Crown and defence cases
[3] During the period 2009 to 2015 the defendant, Steven Robertson, operated various companies, including PTT Limited (“PTT”),2 that sold software packages to members of the public to assist them to trade on the New Zealand and Australian share, foreign exchange and commodities markets. Most of the packages also included an “alerts” service pursuant to which, investors were told, they would receive regular texts telling them when and what to buy (or sell).
The Crown’s case
[4] The Crown’s case is that, in addition to selling these software packages, Mr Robertson devised and implemented three schemes, each of them unlawful, to extract further money from a select group of “VIP” clients:
(a)First, Mr Robertson is alleged to have offered these clients (most of whom were elderly and had difficulty operating his software programmes) a “trading on behalf” service, pursuant to which he would trade their funds for them. The Crown says, however, that Mr Robertson never intended to actually trade their funds, and did not do so. Rather, he simply spent most of the money he obtained in this way for his own purposes, including funding a lavish lifestyle. The Crown alleges, in essence, that Mr Robertson was running a Ponzi scheme. These allegations underpin the charges of theft by a person in a special relationship.
1 The Financial Markets Authority (“FMA”) initially brought 47 charges against Mr Robertson under the Crimes Act 1961. At the conclusion of the Crown case I dismissed three of the charges, (charges 15, 22, and 37) pursuant to s 147 of the Criminal Procedure Act 2011.
2 PTT is an acronym for “Prosper Through Trading”. The other companies associated with Mr Robertson were Harrington Group Limited, Armstrong Group Limited, Maxwell Foster Limited, Gibson McLeod Limited and Alba International Limited. All of these companies are now in liquidation or have been removed from the Companies Register.
(b)Second, Mr Robertson is said to have purported to sell shares in his various companies to many of the same group of “VIP” clients, in circumstances where he did not genuinely intend that share ownership would transfer, or that the purchasers would receive any other significant value. These allegations underpin the charges of obtaining by deception.
(c)Third, the Crown alleges that on some occasions, particularly when his companies had cash-flow issues, Mr Robertson simply helped himself to client’s funds by using their credit card details to debit their credit cards, without authority. These allegations underpin the charges of dishonest use of a document.
The defence case
[5] As I explain below, it is for the Crown to prove the charges. Mr Robertson is not required to prove (or disprove) anything. Some of the key submissions that Mr Simmonds made on behalf of Mr Robertson, however, included that:
(a)The funds allegedly paid for the purposes of trading on behalf were actually payments for trading software programmes, or were loans to Mr Robertson or his companies, as made clear in the paperwork signed by many of the relevant clients.
(b)The share sales were genuine transactions. Mr Robertson’s failure to execute share transfer forms or register the complainants’ shareholdings was because he understood that that was not legally required because, for example, the purchasers had agreed their shares could be held by a nominee. Further, they had not asked him to formally register their shareholdings at the Companies Office. The lack of paperwork and completion of formalities may also simply reflect disorganisation, carelessness and poor administration, rather than dishonest intent.
(c)Any unauthorised deductions from client credit cards were genuine errors, most likely made by PTT’s admin staff. When the unauthorised deductions were brought to Mr Robertson’s attention he arranged for refunds to be provided.
Summary of my findings
[6] The charges against Mr Robertson were brought by the Financial Markets Authority (“FMA”) following an investigation into his affairs, and those of his associated companies, that commenced in mid-2015. I have found Mr Robertson, guilty of:
(a)23 charges of theft by a person in a special relationship pursuant to s 220 of the Crimes Act 1961 (“the trading on behalf charges”);3
(b)11 charges of obtaining by deception pursuant to s 240 of the Crimes Act 1961 (“the shareholding charges”);4 and
(c)four charges of dishonest use of a document pursuant to s 228(1)(b) of the Crimes Act 1961 (“the credit card charges”).5
[7] I have found Mr Robertson not guilty of a further six charges. My detailed reasons are set out below. Given the length of these Reasons for Verdicts (“Reasons”) I set out a summary in this section of my findings in relation to the 38 charges in respect of which I have returned guilty verdicts.
The “trading on behalf” charges
[8] Although each of the “trading on behalf” charges are necessarily fact specific, there were remarkable similarities in the evidence of the various investors, none of whom had any prior relationship with each other.
[9] Mr Robertson operated a business, through various corporate entities, which involved selling computer software packages to members of the public, to assist them to trade on the financial markets. Each programme cost thousands of dollars. Most of the packages also included an “alerts” service pursuant to which, investors were told, they would receive regular texts telling them when and what to buy (or sell). These alerts were generally provided via a text message to the investors’ mobile phone. The information in the alerts generally came from Mr Robertson, albeit for a period he
3 This offence carries a maximum penalty of seven years’ imprisonment per charge.
4 This offence carries a maximum penalty of seven years’ imprisonment per charge.
5 This offence carries a maximum penalty of seven years’ imprisonment per charge.
delegated the responsibility to a young woman in his office who worked in a customer service role. She had no experience in relation to trading or financial markets, apart from some cursory training given to her by Mr Robertson.
[10] The software programmes were not easy to use, and some investors did not have the skills or time to master them. Some investors did not even own a mobile phone or computer. Others tried to master the software but became frustrated with it. When confronted with disgruntled investors, some of whom had been offered a money back guarantee with their purchase, Mr Robertson would sometimes offer them an alternative. He told them that if they gave him their money, he (or one of his companies) would trade it on their behalf by investing it in the financial markets. Many agreed to this proposal. A common theme of the investors’ evidence was that Mr Robertson is an extremely skilled salesman, who engendered trust and confidence. One complainant described him as being a “very persuasive sort of a fella… I reckon he could sell ice to an Eskimo”.
[11] Some of the investors were persuaded to advance funds for the purposes of trading on behalf by one of Mr Robertson’s staff members (usually James Burns or Jade Lynn) rather than Mr Robertson himself. I have found that Mr Robertson authorised and was fully aware of such activity on the part of his staff.
[12] Mr Robertson did not, however, trade any of the money he (or his staff) obtained from the investors for the purposes of trading on their behalf. In relation to the 23 “trading on behalf” charges I have found him guilty of, I am satisfied that Mr Robertson was aware of the requirement to trade those funds on behalf of the relevant investor but failed to do so. His offers to trade on behalf of investors were simply a ruse to extract more money from clients, most of whom were elderly, financially naïve, and inexperienced in relation to trading or financial markets.
[13] Mr Robertson used the funds obtained from investors in this way for his own purposes, which included funding a lavish lifestyle involving expensive European cars, frequent travel by private helicopter, luxury weekend getaways, overseas holidays (including by private jet), and spending large sums of money on jewellery.
[14] Although the documentation signed by most of the investors made no reference to Mr Robertson trading on their behalf, I am satisfied that this was a deliberate strategy on the part of Mr Robertson. He knew that what he was doing was unlawful and set out to create a false paper trial to disguise the reality of what was occurring. The investors were generally unperturbed about the precise terms of the documents they signed, but instead relied on their verbal dealings with Mr Robertson. They were generally simple, honest, people who had worked hard all their lives and were keen to generate a little extra retirement income from their limited savings. They trusted that Mr Robertson was a man of his word. As one complainant who had left school at 15 and worked on a farm all his life put it:
Like you take people on trust, for Christ’s sake. Like I can say I sold thousands of tonnes of wheat, over the phone, on a verbal contract. And you take people as it is; I sold the wheat, they put the money in my bank. That’s how I operate, on trust.
[15] After Mr Robertson had obtained their money, he generally distanced himself from the investors and became very difficult to contact. When they did manage to reach him to seek updates, he would either evade the issue, promise to send an update on their investment (which never arrived), or simply assure them that their investments were doing very well. On some occasions he would persuade an investor to contribute further funds.
[16] A few particularly tenacious investors received small payments from their purported profits, and a few received refunds, albeit generally only after third parties had become involved. In addition, after Mr Robertson became aware that the FMA were investigating him, a few of the investors (particularly those who had been most egregiously exploited) received refunds. Most of the investors, however, lost all of their money.
The shareholding charges (obtaining by deception)
[17] A particularly unfortunate subset of the VIP or “trading on behalf” clients were subsequently offered a further “opportunity” by Mr Robertson. He invited them to become shareholders in one of his companies, or in a company he claimed that he was planning to set up overseas. A number of investors took up the offer. This group of investors paid tens of thousands of dollars (and in some cases hundreds of thousands
of dollars) for fictitious shareholdings.
[18] I have found Mr Robertson guilty of all of the shareholding charges. I am satisfied that the sale of shareholdings was yet again a deliberate deception on the part of Mr Robertson, which generally enabled him to extract much larger sums of money from investors than the trading on behalf ruse.
[19] Mr Robertson’s general modus operandi in relation to the shareholding charges was to offer one of his existing VIP clients an opportunity to invest in one of his companies. Often, they were told that only a select few people were being given this opportunity. A number of them understood, based on what Mr Robertson had told them, that the money they had advanced to him to trade on their behalf was doing extremely well under his management. None of them undertook any meaningful due diligence in relation to this new investment opportunity or sought their own accountancy or legal advice. They accepted Mr Robertson’s assurances as to the value and future prospects of the company they were investing in.
[20] I have found, however, that Mr Robertson never actually intended to transfer either a legal or beneficial interest in the shares he purportedly sold, or to provide the investors with any other significant value. This conclusion is supported by multiple strands of evidence, including that no share transfers were ever executed, the new shareholdings were not recorded on the internal share register of the relevant company (indeed, such registers were not even kept), the Companies Office was not updated as to the changes in shareholding, the shareholders were not given an opportunity to participate in company affairs, and so on. In addition, the companies’ accountants were not informed of the new shareholders and they were not referred to in completed or draft company accounts. Overall, Mr Robertson continued to treat the relevant companies as exclusively his own. He even put one of the companies into liquidation without telling or consulting the purported shareholder.
[21] I rejected a submission on behalf of Mr Robertson that a nominee clause included in the shareholders agreements entered into by a number of the purported shareholders justified such treatment (or that Mr Robertson genuinely believed that it did).
[22]Again, most (possibly all) of these investors lost all of their money.
Credit card charges (dishonest use of a document)
[23] The final seven charges relate to the alleged unauthorised use of client’s credit cards. I have found Mr Robertson guilty of four of these charges and not guilty of the remaining three.
[24] The Crown’s case, in essence, was that when Mr Robertson or one of his companies was low on funds, Mr Robertson would resort to simply stealing sums of money out of investors’ credit card accounts, without telling them. If an investor noticed that there had been an unauthorised deduction and phoned to query it, Mr Robertson would invariably claim it was some sort of administrative error and offer to refund it.
[25] In respect of the three not guilty verdicts, although it was clear that unauthorised deductions had been made from the relevant credit cards, the Crown had not proved beyond reasonable doubt that Mr Robertson was the person who made those deductions.
[26] In respect of the four guilty verdicts, there was compelling evidence to support the inference that Mr Robertson was the person who had made the unauthorised deductions, using PTT’s E-Gate merchant facility. Three of the charges were closely connected and involved three separate deductions (on a Sunday) from two different credit cards, at a time when Mr Robertson did not have sufficient funds to pay a builder’s invoice of approximately $10,000 that was due for payment the following day. In respect of the fourth charge, contemporaneous text message evidence pointed to Mr Robertson as the person who had made the relevant deduction.
B. RELEVANT RULES OF LAW AND PRACTICE
[27] This was a Judge-alone trial. As with a jury trial, however, there are a number of matters that I (as the fact-finder) was required to keep in mind both during the trial and while I was considering my verdicts. I set out some of these matters in this section. Others are addressed elsewhere in these Reasons.
[28] The starting point is that the defendant is presumed innocent unless proved guilty. The Crown is required to prove that the defendant is guilty of each of the charges against him. The Crown must prove each element of each charge before I may enter a verdict of guilty on that charge.
[29] Mr Robertson did not give evidence at trial. He had no obligation to do so. That he did not give evidence does not add to the case against him. It is for the Crown to prove his guilt and he does not have to prove his innocence.
[30] As to the standard of proof, it is of course proof beyond reasonable doubt. That is a very high standard, which the Crown will have met only if I am sure that Mr Robertson is guilty of a particular charge. It is not enough for the Crown to persuade me that Mr Robertson is probably guilty or even that he or he is very likely guilty. On the other hand, it is virtually impossible to prove anything to an absolute certainty when dealing with the reconstruction of past events, and the Crown does not have to do so.
[31] A reasonable doubt is an honest and reasonable uncertainty left in my mind about the guilt of the defendant after I have given careful and impartial consideration to all of the evidence. In summary, if, after careful and impartial consideration of the evidence, I am sure that Mr Robertson is guilty of a particular charge, I must find him guilty. On the other hand, if I am not sure that he is guilty, I must find him not guilty.
[32] I must come to my verdicts solely upon the evidence that was put before me during the trial. Many of the complainants were elderly and unsophisticated. They have lost significant sums as a result of their dealings with Mr Robertson (regardless of whether this was a result of criminal offending). It is natural to have some sympathy for their circumstances. On the other hand, I heard evidence relating to Mr Robertson, and his general business practices, that painted him in a very poor light. I keep in mind, however, that I must reach my decisions uninfluenced by any feelings of prejudice against, or sympathy for, the defendant (or anyone else connected to the case).
[33] Three witnesses, Andrew Craighead, Colin Gibson and Robert Sutherland gave evidence by way of AVL. This is just one technique that the law provides for a witness to give evidence in certain circumstances. In this case, these three witnesses reside outside of Auckland; one in the South Island and two in Australia. I do not read anything into the fact that they gave evidence by way of AVL.
[34] The Crown case turns, in part, on circumstantial evidence. For example, a key strand of circumstantial evidence that the Crown relies on in this case is the similarity between the allegations made by a significant number of complainants who were not known to each other. In a circumstantial case, the fact-finder must look to the combined effect of a number of independent items of evidence when considering each charge. While each separate piece of evidence must be assessed as part of the inquiry, the ultimate verdict on each charge will turn on an assessment of all items of evidence viewed in combination. The underlying principle is that the probative value of a number of items of evidence is greater in combination than the sum of the parts. The analogy that is often drawn is that of a rope. Any one strand of the rope may not support a particular weight, but the combined strands are sufficient to do so.6 The logic that underpins a circumstantial case is that the defendant is either guilty or is the victim of an implausible, unlikely series of coincidences.
[35] When assessing the evidence in a circumstantial case, it is not sufficient to evaluate each separate strand of evidence in isolation and then stop. Having considered each strand of evidence separately, it is necessary for the decision-maker to then stand back and assess the cumulative effect of all of the different strands of evidence. Consideration of the onus and standard of proof only occurs at the second stage of the process. The individual strands of evidence do not have to be proved beyond reasonable doubt.7 The onus and standard of proof only comes into play once the combined weight of all of the strands of evidence is being considered.8
[36] All of the charges require the Crown to prove the defendant’s state of mind at the time of the alleged offending. This requires the drawing of an inference, based on
6 R v Guo [2009] NZCA 612 at [49]–[50] and R v Hoto (1991) 8 CRNZ 17 (HC) at 21.
7 Thomas v R [1972] NZLR 34 (CA) at 38–39 and R v Puttick (1985) 1 CRNZ 644 (CA) at 647.
8 R v Puttick (1985) 1 CRNZ 644 (CA) at 647. Applied in Ngarino v R [2011] NZCA 236 at [26].
all of the circumstantial evidence that is relevant to the issue of knowledge or intent. As the Court of Appeal observed in R v Coleman:9
… obviously one cannot see into another’s mind. The fact finder must draw inferences as to the accused’s state of knowledge from facts proved. The drawing of inferences inevitably involves the application of common sense and of the fact finder’s knowledge of the world and of how it works to proved facts.
[37] An inference is a conclusion drawn from facts that the fact-finder accepts as reliably established; it is not a guess or speculation. On the issues of knowledge and intent, the ultimate question is whether I am satisfied beyond reasonable doubt that the relevant element has been proved, taking into account all of the evidence relevant to that issue.
[38] Each charge is, in effect, its own trial, and separate consideration and verdicts are required. However, in deciding whether a particular charge is proved, I am entitled to draw on all of the evidence in the case. If that combined evidence establishes a pattern of conduct, that is, a propensity to act in a certain way, then I can use that conclusion to assist in deciding whether a particular charge is proved. Obviously, for the propensity evidence to help, the particular charge must fall within the established pattern.
C. EVIDENCE RELEVANT TO MULTIPLE CHARGES
[39] In this section I set out some of the evidence that is relevant across all (or most) of the charges.
General evidence of Mr Robertson’s dishonesty
[40] During the trial I saw a videotaped interview that Mr Robertson had with the FMA’s investigators. It is routine to give an accused person the opportunity to comment on the allegations against him or her. An accused person does not have to say anything, but here Mr Robertson chose to do so. The statements he made in his FMA interview were not given on oath, and what he said was not tested by cross-examination. Subject to those qualifications, his statements to the FMA are normal evidence, just like all the other evidence. I assess it accordingly.
9 R v Coleman CA180/04, 15 December 2004 at [12].
[41] I accept the Crown submission that Mr Robertson was not only evasive but also lied in his interview with the FMA. Specific examples are referred to below in relation to particular charges.
[42] It is also clear that Mr Robertson operated his business in a generally dishonest way, over an extended period. He used false names (including “Steve Harrington”). Indeed, this appears to have been a common (and open) practice by PTT sales staff, with Mr Robertson, Mr Burns and Mr Lynn all using false names at times (often just a slight variation on their actual name) including in documents sent to clients. There were special mobile phones allocated for “references” so that the sales team could use each other as “referees” for prospective clients.
[43] Mr Robertson lied about where PTT had offices. He closed down his original company, Harrington Group Limited (“Harrington”) as a result of bad publicity and simply transferred its business to PTT (without informing the person he had purportedly sold Harrington shares to). Further, as I set out in further detail below, Mr Robertson paid Ms Lawson a nominal sum to be the “name of the company” for PTT, in order to hide his association with that company. He adopted the same practice in relation to other companies, even pressuring Emma Clark, the office junior (a teenager) to be the director and shareholder of one of his companies. Ms Lawson and Ms Clark (and other staff members who performed similar roles) were exposed to the potential for significant personal liability as a result, given the manner in which Mr Robertson ran his businesses. Mr Robertson, meanwhile, was able to disguise his association with businesses that, in reality, were exclusively owned and controlled by him.
[44] Obviously, lies and generalised dishonesty do not by themselves prove the case against Mr Robertson. But in a case involving allegations of widespread, systemic deception of investors, I accept the Crown submission that dishonesty on the part of Mr Robertson is one strand of circumstantial evidence that is relevant to my assessment of guilt. I keep in mind, however, that before giving weight to any lies, I must be sure that Mr Robertson did lie. Further, people lie for various reasons. At the risk of stating the obvious, just because Mr Robertson lied, or engaged in generally dishonest
practices, it does not mean that he is guilty of one or more of the offences with which he has been charged.
The FMA investigation
[45] During the period May to July 2015, a number of clients received refunds. In addition, Mr Robertson embarked on an intensive period of collating (and often retrospectively creating) documentation for many of the transactions that are the subject of charges now before the Court. Mr Robertson relies on many of those documents as supporting the genuine nature of the various transactions before the Court. To understand the context in which those documents were created (and accordingly the weight they can carry) it is helpful to set out a timeline of the FMA investigation, and the events that preceded it.
[46] On 13 November 2014, the FMA sent a letter to PTT’s accountants expressing concern that PTT and individuals acting on its behalf may be in the business of providing financial services in breach of financial markets legislation. The letter included a number of actions that PTT were required to take, and various information that PTT was required to provide to the FMA, by 10 December 2014.
[47] Shortly afterwards, on 16 November 2014, Mr Robertson sent a text message to Ms Lawson asking her to send him an up to date list of “VIP” clients. (As I set out below, I accept Mr Lynn’s evidence that “VIP” was commonly used as a product code for trading on behalf clients.)
[48] On 10 December 2014, Glaister Ennor, the solicitors for PTT, responded to the FMA’s letter advising that PTT did not offer services that would be in breach of the financial markets legislation.
[49] On 19 February 2015, Mr Lynn resigned from PTT. Sometime between February and April 2015, Mr Robertson discovered that Mr Lynn had set up a competing business (together with Mr Burns) and was contacting PTT’s clients. Mr Robertson issued court proceedings. Mr Lynn, meanwhile, threatened to report Mr Robertson to the FMA. Mr Burns became involved, effectively as an intermediary. Between 6 and 8 May 2015, a number of text messages were exchanged between
Mr Burns and Mr Robertson. These focussed on the need for Mr Burns to reign Mr Lynn in, on the basis that involvement of the FMA or the media would be “bad for the industry”. About a week later, on 15 May 2015, Mr Robertson sent a text to Charlotte Bolton asking, “how many VIP clients do we have?” Ms Bolton responded, “Not sure, may be about 50 thereabouts”.
[50]On 18 May 2015, Mr Robertson wrote to Mr Burns reiterating that:
Another thing to consider is whether the letter goes to the FMA it will all be in the public arena. Not what we need in the industry.
[51] Mr Burns responded in agreement and said that he hopefully had the situation under control. The following day, 19 May 2015, Mr Robertson sent a text to an unknown person saying:
Call me when you get a chance. Interesting news. I’ll be the one writing to the FMA.
[52] On the same day, Mr Robertson had an exchange of emails with Ms Lawson (headed ”files”) which included a list of clients who appear to be VIP clients. Some of those clients started receiving refunds at about this time. An internal PTT document lists a number of clients who were given refunds, commencing on 19 May 2015, through to 5 June 2015.
[53] Also, at about this time, Mr Robertson asked Ms Bolton to call a number of clients to ask them to provide details of all the payments they had made. Ms Bolton and Mr Robertson exchanged emails on the topic on 20 and 21 May 2015. The focus appears to be on VIP clients, or clients who had purchased shares from Mr Robertson. A further email from Ms Bolton, on 21 May 2015, refers to “clients you asked me to double check the contracts”. She then provided a list of clients who “have clauses that we will trade on their behalf in them”.
[54] For reasons I set out when I come to consider the shareholding charges, it appears that about this time (or later) Mr Robertson started compiling a handwritten list of clients he had sold shares in Maxwell Foster and PTT to, and collating (or creating) documentation associated with those transactions.
[55] By Monday, 2 June 2015, Mr Robertson was aware that someone had reported him to the FMA. On that date, his wife, Lisa Robertson, sent him a text message stating:
What client went to FMA? I’m sure James [Burns] and Jade [Lynn] helped them.
[56] The following day Mr Robertson sent a text message to his accountant, Fergus Cleaver of Cleaver Partners, advising him that “the FMA have started to call our clients”. The discovery that the FMA had started contacting his clients prompted a fairly frenetic period of activity by Mr Robertson in the following days and weeks, most of which related to his “VIP” clients. I address this further in the context of particular charges. To give a couple of examples, however:
(a)On 3 June 2015, entirely unprompted, Mr Robertson gave one of the complainants, Mr Sutherland, a $20,000 refund from his personal account. When Mr Sutherland queried Mr Robertson about what the payment was for, he said that under New Zealand banking or taxation law they were carrying too much money in Mr Sutherland’s account and needed to “stay within the requirements”.
(b)On the same day, Mr Robertson also repaid another complainant, David Hook, $10,000 from his personal bank account. This was a refund of monies that Mr Hook said that he had paid to Mr Robertson in February 2015, to be traded on his behalf.
[57] PTT’s internal records indicate that extensive refunds were paid during the three-day period from 3 to 5 June 2015, immediately after Mr Robertson’s discovery that the FMA were contacting his clients. During the same period Mr Robertson sent text messages to Ms Bolton and Ms Lawson asking if they could recall “who may be shareholders” of PTT or Maxwell Foster. Mr Robertson then sent a further text to both Ms Lawson and Ms Bolton stating:
can we meet first thing at the office with the aim of identifying all PTT and Maxwell Foster clients who have loans and shareholdings with us. We will need to put this in spread sheets ASAP. Pretty sure some of this is done already.
[58] On Friday, 5 June 2015, Mr Robertson exchanged emails with Ms Lawson regarding an “updated refund schedule”. Ms Lawson updated Mr Robertson regarding all the clients she was chasing for documents, that were being provided with refunds, and so on. Mr Robertson requested that she add a couple of further clients (one of whom was the complainant Andrew Johnston) to the PTT shareholders file that was being collated.
[59] On 7 June 2015, Mr Robertson contacted Mr Cleaver and asked if there was any way he could be removed as a shareholder of PTT (one share was in his name). At about this time, Mr Robertson also arranged for shareholder agreements to be sent out to a number of clients who had not previously received documentation of their purported share purchases. Various other documents (such as loan agreements) were also created and sent to clients during this period, in relation to various transactions that potentially might be of interest to the FMA.
[60] Mr Robertson also requested Ms Bolton to start sending text message trading alerts to VIP clients. These clients had not previously received such messages, consistent with their understanding that Mr Robertson was trading on their behalf. On 12 June 2015, Ms Bolton sent a text message to Mr Robertson regarding this:
Hi VIP clients you asked me to put on the alert phone for texts. One has now called in asking why he is getting them. He doesn’t mind but doesn’t know what to do with it and is confused. He spoke to Emma about it. Not sure what I should do? Should I put him into a separate group and not send them?
[61] Work on obtaining the necessary paperwork for a number of clients continued throughout June. On 9 July 2015, Mr Robertson sent text messages to Ms Lawson and Ms Bolton advising that they needed to focus on getting all documents back “today”, including loan documents in respect of various clients (including the complainant Blair Cousins) as well as “any outstanding programme purchases paperwork”. On the same day, he asked Ms Lawson whether there were any signed loan documents for another complainant, Andrew Craighead, to which she responded “no”. Mr Robertson contacted a number of clients during this period (and met with some of them) to arrange for them to retrospectively sign paperwork.
[62] On 13 August 2015, the FMA executed search warrants in respect of Mr Robertson’s home and the offices of his associated companies. His various companies were placed in receivership on the same date.
[63] A number of the documents created by Mr Robertson during this period and retrospectively provided to clients feature in my discussion of individual charges below. Further, a number of the complainants were given refunds during this period, sometimes quite unexpectedly.
[64] In determining Mr Robertson’s knowledge and intent at the time the various transactions were entered into, I treat with considerable caution any actions that he took (and documents he created retrospectively) at times then Mr Robertson was aware of the FMA’s potential (or actual) investigation. This applies, in particular, to the period from mid-May 2015 onwards. Although there may be exceptions, the overall circumstances strongly support the inference that Mr Robertson was actively creating a false paper trial during this period, in relation to transactions that might be of particular interest to the FMA.
Where did the money go?
[65] It was not in dispute that Mr Robertson did not trade any of the relevant investors’ funds (his position, in essence, was that he was not required to). The Crown submitted that it is circumstantially relevant what he did do with their funds and, further, that evidence regarding Mr Robertson’s personal expenditure and lifestyle is relevant to the issue of motive. The Crown argued that greed and an associated desire on the part of Mr Robertson to maintain a lavish and extravagant lifestyle was a key motive for his offending. Mr Simmonds submitted, on the other hand, that such evidence should be treated with caution. Evidence of extravagant personal expenditure, or a desire to live a lavish lifestyle, does not constitute proof of fraud.
[66] Joella Harris gave expert forensic accountancy evidence for the FMA. She was, however, a careful and impressive witness, who had clearly undertaken a thorough and detailed investigation. Her evidence was not challenged, and I accept it. Based on her evidence, it is clear that the money that Mr Robertson obtained from investors was used to either fund his companies or his lifestyle.
[67] Mr Robertson and his businesses had large outgoings; large mortgage payments to make; debts and financing payments to attend to; rental bills; staff wages: and significant commission payments to his sales staff. Money, and the appearance of it, clearly mattered to Mr Robertson. Ms Harris found evidence of substantial funds being spent on what appears to be personal, rather than business, expenditure, during the relevant period. This included over $800,000 spent on travel, the majority of which appeared to be personal. A further $138,000 was spent on jewellery. $145,000 was spent on entertainment, such as dining out at restaurants. Approximately $146,000 was spent on clothing and footwear. $420,000 was spent on household items such as furniture. A further $365,000 was spent on repairs or maintenance of personal property. Approximately $170,000 was spent on childcare and school expenses and $450,000 was paid in personal mortgage repayments.
[68] Ms Lawson confirmed it was “very common” to get requests from Mr Robertson to transfer funds for personal expenses, “quite common” to get requests to transfer company money to Mr Robertson’s wife, Lisa Robertson, and “very common” to get requests to pay Mrs Robertson’s bills.
[69] Mr Robertson lived in a high value residential property (subject to a mortgage) and owned luxury vehicles (an Audi Q7 and a Bentley Continental, purchased on credit). He purchased a Mercedes for his wife as a Christmas present. He travelled frequently by private helicopter, as evidenced by extensive text message evidence, for example:
Hi Matt ,1 flew to craggy with u on Friday. what would be the cost of picking us up at airport tomorrow, touching down at elephant hill for lunch then up to kidnappers. Then next day pick up at cape on to craggy for lunch then airport…
[70] Other text messages refer to first class overseas travel or travel by private planes, to various destinations. On one occasion Mr Robertson sent a text message to his wife regarding a forthcoming trip to Fiji: “Pack your bags miss fancy pants. We r off at 1pm ish Tuesday. Private jet”. Mrs Robertson replied “Nice... Private jet bit unnecessary and extravagant don’t you think!” to which Mr Robertson responded, “you r a Robertson”.
[71]On 2 March 2015, Mr Robertson wrote and signed a personal note which reads:
I am going to be so rich that what is going on now will feel like loose change
[72] Money that clients paid into bank accounts controlled by Mr Robertson was his only real source of income. It is clear from Ms Harris’s evidence that the sale of alerts-based trading programmes would not, in itself, have been sufficient to fund Mr Robertson’s lifestyle. Maintaining such a lifestyle required that Mr Robertson secure income from one or more other sources.
[73] I accept the Crown submission that Mr Robertson’s clearly strong desire to live a lavish lifestyle, and the fact that he did so, is relevant to motive. This evidence therefore forms part of the broader context in which the charges against Mr Robertson fall to be considered. It is, however, simply one strand of evidence that is relevant to assessing Mr Robertson’s state of mind at the relevant time. Obviously, it does not follow from the fact that a person lives a lavish lifestyle that they are necessarily a fraudster. On Mr Robertson’s account, his lifestyle was funded by legitimate earnings, together with extensive borrowing from his clients.
D. TRADING ON BEHALF CHARGES – LAW AND GENERAL EVIDENCE
Introduction
[74] I now turn to consider the charges of theft by a person in a special relationship, pursuant to s 220 of the Crimes Act. In short, the Crown alleges that Mr Robertson obtained funds from investors by promising to trade those funds on their behalf, in circumstances where he had no intention of doing so (and did not do so).
Theft by a person in a special relationship – the law
[75]Section 220 relevantly provides:
220 Theft by person in special relationship
(1)This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a)to account to any other person for the property, or for any proceeds arising from the property; or
(b)to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2)Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3)This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.
(4)For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
....
[76]The issues I must determine in relation to each charge are:10
(a)Did Mr Robertson have control over the funds identified in the charge?
(b)Were those funds in Mr Robertson’s control in circumstances that required him to deal with them in accordance with the requirements of the named complainant (namely, to trade or invest them on behalf of that complainant)?
(c)Did Mr Robertson know of those circumstances (namely, that he was required to trade or invest the funds on behalf of the complainant)?
(d)Did Mr Robertson intentionally deal with the otherwise than in accordance with those requirements (ie by not trading or investing them on behalf of the complainants)?
10 These issues are based on the summary of the elements of the offence in Tallentire v R, [2012] NZCA 610 at [51], [2013] 1 NZLR 548; as approved by the Supreme Court in Nicholls v R [2013] NZSC 39, 2 NZLR 493 at [3].
Did Mr Robertson have control over the relevant funds?
[77] Ms Harris prepared a detailed schedule of all relevant payments into the bank accounts of Mr Robertson and his associated companies. Her evidence was not challenged, and it did not appear to be in dispute that the specific payments referred to in each charge had indeed been made.
[78] I must determine, however, whether Mr Robertson had “control” over those funds. A person will “control” property where they have the legal ability to determine how it is used or applied.11 A factual analysis is required as to the extent of the defendant’s actual control of the property in question (and the relevant company, where property is owned or possessed by a company).12 The mere fact of theoretical control through ownership or directorship of a company will not alone be enough to make out offending covered by s 220.
[79] In this case, Mr Robertson was the overall “boss”, who had oversight of all of the relevant companies. Although Mr Robertson frequently used staff members as nominal shareholders or directors, it was clear that none of them had any involvement in company decision-making, which was entirely Mr Robertson’s domain. Real power lay with Mr Robertson at all times. In practical terms, each of Mr Robertson’s associated companies was, in reality, a “one-man company” that was entirely controlled by Mr Robertson.
[80] Mr Robertson’s control was not simply theoretical. It was clear from the evidence, including text message evidence and the evidence of former staff members, that Mr Robertson maintained a close and relatively constant oversight of the financial affairs and business operations of all of his associated entities, and made all key financial decisions. Ms Lawson’s evidence (supported by numerous contemporaneous documents) was that almost everything she did – signing documents, sending emails, coding bank statements, transferring money between accounts, liaising with clients, and providing client refunds – derived from an instruction from Mr Robertson. Mr Robertson controlled and approved wages, sales staff commissions and client
11 R v Douglas [2012] NZHC 1746 at [202]–[203].
12 R v McGurk [2015] NZCA 148 at [48].
refunds. The other former staff members who gave evidence also all reported directly to Mr Robertson.
[81] Ms Lawson, Ms Bolton and Ms Clark all gave evidence that demonstrated Mr Robertson’s control of the various company bank accounts, including that he regularly checked the balances of his accounts and moved money around as required. This was corroborated by contemporaneous text messages to and from Mr Robertson. Further, Mr Robertson used company bank accounts, in effect, as his own personal “piggy bank” during the relevant period, including for extensive personal expenditure. He was the primary beneficiary of the monies in the various bank accounts.
[82] The evidence also demonstrated that Mr Robertson was in charge of the sales team and kept a close eye on the sales being done by his staff. Mr Lynn, Ms Lawson and Ms Clarke all gave evidence of Mr Robertson’s overarching role in relation to sales, and this is also supported by the contemporaneous text messages.
[83] The evidence of the former staff members regarding Mr Robertson’s high degree of control over his businesses was corroborated by the evidence of the complainants, who reported that the office staff were generally unable to deal with any queries beyond the routine and would defer to Mr Robertson on such matters. In relation to “VIP” and shareholder clients in particular, Mr Robertson was often the only person with specific knowledge of, and involvement in, the ongoing “management” of their investments.
[84] Based on this evidence (and the further evidence in relation to each specific charge that I outline below) I am satisfied, for each of the s 220 charges, that the Crown has proved that the specific payments referred to in each charge (as identified by Ms Harris) were indeed made. I am also satisfied that Mr Robertson had control over the relevant funds. I therefore do not address this issue further, in the context of specific charges.
Did Mr Robertson trade the complainants’ funds in the financial markets (or other markets)?
[85] As part of her investigation, Ms Harris looked into and identified certain instances of actual trading by Mr Robertson. She identified that, in 2010, Mr Robertson had traded on behalf of two Harrington clients using the CMC Markets platform. One of those clients had deposited $10,000 and the other $400,000 (neither client is a complainant in this case). Mr Robertson’s performance as a foreign currency trader, however, was dismal. Between 4 May 2010 and 13 September 2011, he made approximately 505 foreign currency trades, resulting in an overall loss of $181,805.
[86] Ms Harris also identified several other accounts which appeared to involve Mr Robertson trading on behalf of family members or clients other than the current complainants. The amounts involved were generally fairly modest, however, and the final trading took place during the period July to August 2013. No further accounts were located, with any third party, that evidenced any further trading being conducted by Mr Robertson. There is no evidence of any trading by Mr Robertson on behalf of any of the complainants. I am accordingly satisfied, to the required standard, that Mr Robertson did not trade on behalf of any of the complainants.
The complainants’ evidence – common themes
[87] I heard evidence from 21 complainants. Most of them were retired or approaching retirement, having worked hard all their lives including as farmers, a butcher, construction contractors, a warehouse manager, a caregiver and a port worker. A common theme of their evidence was that most of them were keen to supplement their retirement income. As a group, the complainants were generally trusting, somewhat naïve, and unsophisticated in financial matters.
[88] I address the complainants’ evidence in detail in the context of specific charges. Common themes, however, included that:
(a)The software programmes were not easy to use, and some investors did not have the skills or time to master them. Some investors did not even own a mobile phone or computer. Others tried to master the software but became frustrated with it. When confronted with disgruntled
investors, some of whom had been offered a money back guarantee with their purchase, Mr Robertson (or one of his staff) would offer a “trading on behalf” option as an alternative, which involved the investor giving their money to Mr Robertson. He (or one of his companies) would then trade it on their behalf by investing it in the financial markets.
(b)Seven of the complainants13 gave broadly similar evidence of being invited by Mr Robertson (or occasionally Mr Burns) to join a select group of clients in an FX currency trading club (‘the Club”) being operated by Mr Robertson and/or PTT staff.14 This was typically described as being a pooled investment fund for Club members that Mr Robertson or his team would trade on their behalf in exchange for a share of the profits. Several investors were told that Club profits could only be paid out annually (usually in response to a request for a payment of profits from their investment).
(c)Although all of the complainants said that they advanced funds on the clear understanding that their funds would be traded on their behalf, the documents they signed often characterised the relevant transactions as loans or purchases of computer software. Mr Robertson gave various explanations for this, and the complainants relied on what they were told verbally, rather than what was in the documents. (As discussed further at [143] to [152] below).
(d)It was put to all of the complainants that they were mistaken in their recollection that Mr Robertson (or one of his staff) had offered to trade on their behalf. They were all firm in their evidence that they were not mistaken, despite extensive cross-examination on the topic.
(e)Many investors sought updates from Mr Robertson as to how their investments were performing. After Mr Robertson had obtained their
13 Messrs Trott (2009), Eaton (2011), Craighead (2011), Cairns (2014), Hook (2015), McKee (2015)
and Corcoran (2015).
14 There was also evidence, including internal PTT documents, linking a possible three further complainants to the Club.
money, however, he generally distanced himself from the investors and became very difficult to contact. When they did manage to reach him, he would either evade the issue, promise to send an update (which never arrived), or simply assure them that their investments were doing well. Sometimes he would mention specific percentage increases or figures.
(f)There are numerous text messages and emails from investors evidencing their attempts to obtain updates on the performance of their investments. None of these investors were told that their understanding that Mr Robertson (or his team) was trading on their behalf was mistaken.
[89] I found all of the complainants to be credible (honest) witnesses. However, they were not always reliable (accurate) in all aspects of their evidence. This is not unusual, particularly given the lapse of time since the relevant events and the age (and sometimes poor health) of some of the complainants. I address any reliability issues that arose below, in the context of particular charges. I note, however, that almost all of the complainants were clear in their recollection of the key issue (that offers/promises were made to trade on their behalf) even if they could not recall some of the surrounding detail.
[90] The sheer number of unrelated people who gave very similar evidence of their interactions with Mr Robertson and offers by him (or his staff) to trade on their behalf, is in itself circumstantially compelling.
PTT staff – evidence relating to “trading on behalf”
[91] Mr Robertson’s original office, through which he ran his various companies, was in Kumeu. Later, a second office (at which the sales team was based) was set up in premises on Queen Street, Auckland. Most of the administration, however, continued to take place in the Kumeu office. A number of former staff members gave evidence.
Jade Lynn
[92] Mr Lynn was employed by PTT as a salesperson in March or April 2014. He left at the end of that year, or early the following year, to set up a competing business (Cambrian Limited). When he departed he took PTT’s client base with him, without authority, which resulted in Mr Robertson issuing proceedings against him. Such conduct obviously reflects poorly on Mr Lynn’s own business ethics.
[93] There were numerous other examples of ethically questionable behaviour on the part of Mr Lynn. Under the apparent tutelage of Mr Robertson and Mr Burns, Mr Lynn became schooled in PTT’s “hard sell” culture which often involved elderly and somewhat vulnerable people being “cold called” and subjected to high pressure sales tactics. This is reflected in Mr Lynn’s resignation email to Mr Robertson, which stated that:
Mate, I’ve been thinking a lot these last whiles with my not being well and all, and wondering why the hell my health has been so compromised this last year when the previous 20 years I’d not been sick ever, even for a day! … And I’m really thinking now perhaps this particular environment is not conducive to my health and wellbeing.
My ethics were challenged a lot throughout the last year and I really had to push past a load of personal values to make it work and overlook certain “practices”.
Clearly I did push through because I made it work, yet my health kept breaking down and it’s really tolled on my system.
So mate I’m gonna call it quits and go another way …
[94] Although Mr Lynn initially gave an entirely implausible explanation about this email actually referring to Mr Robertson’s conduct in his personal life, Mr Lynn eventually acknowledged that he found the “boiler room” sales environment very difficult, and you had to be “almost manipulative in the way that you communicate with a client and close the deal”. Mr Lynn said that this challenged his ethics greatly in relation to the way in which “we would present and close sales and bring clients on board”.
[95] Although Mr Lynn had a tendency to minimise his own unethical conduct, and sometimes gave glib or evasive answers to questions, I am satisfied that his evidence about key aspects of how PTT operated its business, including in relation to the selling
of trading on behalf packages, was truthful and reliable. Those aspects of his evidence were broadly consistent with the evidence of the investors, contemporaneous documents, and evidence given by other PTT staff members.
[96] Mr Lynn started as a sales contractor for PTT around March/April 2014. His evidence was that from around mid-2014 Mr Robertson authorised him to offer clients trading on behalf as an option. He said that:
It became something that I could offer to clients. So if I sold to a client that had
– that either didn’t have a smartphone or an ability to operate the trading platform or they called in with complaints that they didn’t know how to operate it and they weren’t receiving the necessary support to do it then that was an option that could be discussed with Steve.
[97]Mr Lynn further stated that:
I understood [there] was a trading team, that they were watching the markets on a regular basis so they were able to take advantage of potential trades more often than the trade alerts that would otherwise go out to the clients to act of their own accord. So if they would accept investment of trading on behalf, and we had to run every trading on behalf client via Steve directly, then they would deposit further funds at their own discretion, it was up to them how much they wished to put in and then trades would be placed on their behalf.
[98]Mr Lynn said that Mr Robertson told him that:
…the returns were better than if they were just to place the one trade per day, because with trading on behalf it might be that two or three or four or five trades would be placed in a day so their potential returns would be a lot higher.
[99]Mr Lynn further explained the trading on behalf offering as follows:
It was a pretty standard offering. I did have to get permission because there was a conversation that it wasn’t available to everyone, it was something that the first preference was the clients would operate the platform on their own accord, and only in the event that if they couldn’t do so that then, you could do it for them.
[100] When clients sought reports or updates, Mr Robertson told Mr Lynn to “…just let them know, either send them to him and he would deal with it directly, or if that instance arrived, that reports would be coming to them soon”.
[101] Later in 2014, when the FMA sent a letter to PTT querying whether its practices breached financial markets legislation, Mr Lynn said Mr Robertson told them they could not offer trading on behalf under the PTT banner. However, subsequently
Steve had said to us that everything was cleared by the FMA. I had a private conversation in the office with him where he told me that we could no longer do the trading on behalf but his lawyer had advised him under a side agreement that we still could potentially continue on doing that.
[102] Mr Lynn explained that on the documentation for “trading on behalf” sales “product codes” such as “VIP”, “Upgrade” or “+” (as in “FX+” or “Gold+”) would generally be used to record that the transaction was, in fact, a trading on behalf transaction. For example, the transaction would be recorded as the sale of a “VIP Package” or an “FX+ package” or an “upgrade” to some other package that the client had previously purchased. All of these, however, were effectively code words for trading on behalf.
[103] Mr Lynn said that he initially received five per cent commission for trading on behalf sales, but this later increased to five to ten per cent (which was less than the commission of 15 per cent for selling alerts-based programmes).
James Burns
[104] Mr Burns started working for PTT in approximately December 2013, as a salesperson. He left in early 2015.
[105] Mr Burns has a number of previous convictions for dishonesty offending. Most recently, he was sentenced to home detention in the High Court at Wellington on 19 September 2014 on a number of charges of dishonest use of a document relating to his involvement in a fake invoicing scam. He was working at PTT at the time of his sentencing, although his offending occurred prior to his employment at PTT. Mr Robertson was aware of this offending. The start date of his sentence was deferred by the Court on the basis of “extreme difficulties” that would be caused to his employer, PTT.
[106] In his evidence in Court, Mr Burns claimed that he was “not aware of” the concept of trading on behalf. He asserted that any references to trading on behalf were
actually references to a “VIP upgrade” service, pursuant to which select VIP clients would be provided with extra tuition on how to operate the computer software they were provided with. Although this explanation mirrored what Mr Robertson had said in his own FMA interview, it contradicted what Mr Burns had previously said to the FMA (as well as the ordinary and obvious meaning of the phrase “trading on behalf”).
[107] It became quickly apparent that Mr Burns was intent on giving evidence helpful to the defence (no matter how implausible). I declared him to be a hostile witness and gave the Crown leave to cross-examine him. Most of Mr Burns’ evidence was evasive, implausible and rambling. He frequently gave answers that were directly contradicted by other evidence, including contemporaneous documents. On most key issues, his evidence was contrary to that of other former PTT staff members.
[108] Mr Burns was neither a credible nor a reliable witness. It was clear that most of his evidence in court, at least on the key issues, was untruthful. I have no doubt that he repeatedly perjured himself in the witness box.
[109] In contrast to his evidence in Court, in his FMA interview, Mr Burns demonstrated a clear knowledge and understanding of PTT’s trading on behalf activities (in the ordinary sense of that term) and explained his own role, and that of Mr Robertson, in relation to such activities. He never suggested to the FMA that “trading on behalf” was actually some kind of codename for providing clients with extra support and tuition to enable them to trade themselves. Prior to giving a statement to the FMA, Mr Burns was informed that he would be committing an offence if he gave evidence he knew to be false or misleading. He was also told that he did not have to give answers that might incriminate himself and was informed of his right to consult a lawyer. Mr Burns acknowledged that he understood those rights and obligations prior to making a statement. He then gave a fairly full, and in my view largely honest, account of the relevant events. What he told the FMA (to the extent it was adduced in evidence) was broadly consistent with the evidence of numerous other witnesses, and the contemporaneous record. It was also inherently plausible (for example, that “trading on behalf” means exactly what it says).
[110] I set out specific aspects of what Mr Burns told the FMA on the issue of trading on behalf, below. This evidence is consistent with the evidence of a number of other witnesses, and with the contemporaneous documents. I find it to be both reliable and credible.
[111] Mr Burns said that Mr Robertson explained to him that: “I’ve got a system going where I’ve got a pool. I trade on their behalf. I send them out returns, yada yada yada.” Mr Burns acknowledged that he himself sold trading on behalf packages, but said that he would not sell to those sorts of clients without Mr Robertson’s “say so”, and that he only sold trading on behalf packages under Mr Robertson’s direction and instructions.
[112] Mr Burns said that when talking to Mr Robertson about potential trading on behalf clients, Mr Robertson would say:
Give him a ring, I’ve got a trading on behalf of platform, I trade on a guy’s behalf so I’ll give him good returns.
….
He told me the percentages, what they get, and his connections in the marketplace and he looks after the clients and he pays them out. I can’t remember exact details but it was quarterly or yearly, or whatever it was. It was a system that he told myself and Jade that he would trade on their behalf on a daily basis and give them dividends and returns.
[113] Mr Burns told the FMA that, as far as he knew, Mr Robertson was accepting trading on behalf clients for the whole time he was working for him. He said that one of the reasons he left PTT was because his eyes were opened to the fact that what Mr Robertson was doing was “not official, it was bordering on illegal and there was no trading on behalf because he wasn’t actually trading”.
Sharon Lawson
[114] Ms Lawson15 started working with Mr Robertson in 2011 and was the senior administrator for his business. Ms Lawson said that she had no particular experience in finance and that her role comprised a range of general office duties. She reported
15 Although she is now called Sharon Parsons, for ease of reference I will refer to her as Sharon Lawson, as this is the name she was known by during the relevant period.
solely to Mr Robertson. Initially Ms Lawson and Mr Robertson worked together at the Kumeu office. After a sales office was set up in Queen Street, however, that became Mr Robertson’s main base. Nevertheless, Mr Robertson continued to call into the Kumeu office “on a daily basis” (albeit for only brief periods of five to thirty minutes) after the Queen Street office was set up.
[115] Ms Lawson’s evidence was that she frequently heard Mr Robertson offering to trade for people when he was walking around on the phone at the Kumeu office. For example, if a client was unable to use the CMC trading platform, she frequently heard him say something like “let’s upgrade them and trade on behalf”. She said that the frequency of this varied across her time at PTT, but that it became more frequent and “a lot more noticeable” towards the end.
[116] Ms Lawson also described seeing a folder called the “FX Club” – although she didn’t know what it was for. (The “FX Club” is discussed in further detail below).
[117] Ms Lawson was the sole PTT director and the sole PTT shareholder until one share was transferred to Mr Robertson, on 5 May 2015. Ms Lawson explained that Mr Robertson asked her to “be the name on the company” because his previous company, Harrington, had received some bad publicity. As a result, Mr Robertson created PTT and effectively transferred Harrington’s business to it. Mr Robertson provided Ms Lawson with an indemnity letter and told her that she “would have no involvement whatsoever”. He paid her $500 (in cash) for agreeing to undertake this role. Mr Robertson subsequently had Ms Lawson sign a bare trust deed confirming that she held all her shares in PTT on trust for Mr Robertson. Ms Lawson regularly signed documents in her capacity as a director of PTT but had no understanding of what she was signing. She said that she simply signed whatever Mr Robertson asked her to.
[118] I found Ms Lawson to be a largely credible witness save that, in my view, she tended to minimise her knowledge of Mr Robertson’s conduct and business practices during the relevant period. I also found her to be a broadly reliable witness although, again, I suspect she knew somewhat more than she was willing to disclose.
Charlotte Bolton
[119] Ms Bolton began doing customer service for PTT around December 2013/early 2014. She considered all clients described as “VIP” in paperwork as those whom Mr Robertson dealt with personally:
If I saw VIP, I knew that was for Mr Robertson….So my instruction given to me by Mr Robertson was VIP clients for him and he would look after them.
[120] Ms Bolton’s evidence was that her usual responsibilities for clients, such as customer service, were not required for the VIP clients. Rather, she created and maintained a “VIP list” of clients on Mr Robertson’s instructions, so that he could deal with those clients. (This is corroborated by contemporaneous documents, including text messages). When VIP clients had issues, she would refer these to Mr Robertson to deal with. (Again, this is corroborated by contemporaneous text messages, for example in relation to William Anderson — charge 46). Ms Bolton said that she did not know exactly how Mr Robertson would deal with these clients. She referred at some points to trading on their behalf, at others to providing extra assistance for the client. She was not always clear or consistent on what she understood terms like “VIP” and “VIP upgrade” to mean. Ms Bolton also gave evidence of Mr Robertson directing her to look for trading on behalf clauses in client contracts in May 2015 (details of which are set out at [53] above).
[121] One of Ms Bolton’s responsibilities was to send out the text message alerts to clients. Initially Mr Robertson would give her the information to send out. Then for a period, a man called Chris Eagle would provide the information. As time progressed, however, Mr Robertson asked Ms Bolton to draft the alerts herself and showed her how to look up commodities or currencies online and see how they were trading. Ms Bolton felt very uncomfortable doing this, as she had no knowledge or expertise to advise people about trading.
[122] In or about early June 2015, Mr Robertson asked Ms Bolton to start sending out trading text message alerts to VIP clients, who had not previously received these (refer [60] above) consistent with their understanding that Mr Robertson was doing the trading for them.
[707] Alba was the last entity created and used by Mr Robertson and the last entity in which he purported to sell shares. It was incorporated in July 2015, not long before the FMA intervened on 14 August 2015. This arguably sets it apart from the other entities in which Mr Robertson sold shares. Some of the strands of evidence that have assisted me to determine the genuineness (or lack thereof) in relation to some of the other share sales do not apply to this transaction, given that Alba was placed into receivership only 10 days after Mr Corcoran had purchased his shareholding.
[708] A number of strands of evidence do, however, provide some guidance as to Mr Robertson’s intent at the time. In particular:
(a)At the time of this purported share sale, Mr Robertson had, just over three months previously, fraudulently obtained $50,000 from Mr Corcoran on the basis of a false promise to invest it in his fictitious “Currency Club.” Mr Robertson had then misappropriated these funds and used them for his own purposes.
(b)At the time of this purported share sale, Mr Robertson had a long history of fraudulent sales of shares in his various companies (or prospective companies) to unwitting investors, dating back to 2011. By 2015 Mr Robertson’s modus operandi was well developed. The majority of the fraudulent transactions used the same Glaister Ennor template that was used here. By 2015 the fraudulent sale of shares in his various companies had developed into one of Mr Robertson’s key income streams.
(c)Mr Robertson appears to have been desperate for money by late July 2015, as evidenced by the note he wrote himself: “Need big
$$ Corcoran deal a must”. In May 2015, Mr Robertson had become aware of the real prospect of a FMA investigation and by early June 2015 it was a reality, with the FMA contacting Mr Robertson’s clients (to his knowledge). As a result, he appears to have ceased soliciting “trading on behalf” funds after obtaining $50,000 from Mr Corcoran in April 2015. At the same time as this source of income dried up, Mr Robertson was attempting to mitigate his risk in relation to the FMA investigation by making numerous refunds to high risk clients (particularly those he had offered to trade on behalf of). PTT had insufficient funds to meet the high volume of refunds being made, and some of them therefore had to be made from Mr Robertson’s personal bank account.
(d)No share register for Alba was ever identified. Nor was Mr Corcoran’s shareholding registered at the Companies Office, in the ten days or so prior to Alba being placed in receivership.
(e)Mr Robertson’s responses to questioning as to who had prepared the financial forecasts for Alba were evasive and, in my view, dishonest. His first answer (that he had prepared the document) was no doubt the correct one. The fact that he was reluctant to admit this, however, casts doubt on his bona fides.
(f)Mr Corcoran was told that Alba would be involved in offshore development of automated software for FX trading. He said that this was what incentivised him to invest. That is not, however, how Mr Robertson explained Alba’s intended business to the FMA. Further, three and a half months previously, in April 2015, Mr Robertson had sold a 10 per cent interest to Maxwell Foster to Mr McKee on the basis, in essence, that the automated software he told Mr Corcoran that Alba would be developing had already been developed. In his dealings with Mr McKee, that software was presented as being an asset of Maxwell Foster that was ready for market (as corroborated by Mr McKee’s 21 September 2015 email to Mr Robertson). Indeed, Mr McKee’s understanding was that Maxwell Foster had started selling automated trading packages in July 2015.
[709] I found Mr Corcoran’s evidence to be credible, and also reliable on all key issues. There is nothing to suggest that this share sale differed in any way from the large number of preceding share sales I have addressed above. Taking into account the specific evidence I have set out and findings I have made in relation to this charge, and the other findings and observations I have made at [506] to [508], [560] and [562] above, I am satisfied that the Crown has proved all of the elements of this charge beyond reasonable doubt. ,By deception and without claim of right, Mr Robertson obtained $125,000 from Mr Corcoran by purporting to sell shares in Alba without intending that share ownership would transfer, or that any other significant value would be received by Mr Corcoran.
H. UNAUTHORISED USED OF CREDIT CARD CHARGES Introduction
[710] The final group of charges relate to the alleged unauthorised use of customer’s credit card details (which were generally obtained at the time of their initial purchase of products or services and subsequently held on file).
[711] The Crown alleges that, when Mr Robertson or one of his companies was low on funds, Mr Robertson would steal sums of money out of investors’ credit card accounts. If an investor noticed that there had been an unauthorised deduction and phoned to query it, Mr Robertson would invariably claim it was some sort of administrative error. These allegations underpin the seven charges of dishonestly using a document, which are brought pursuant to s 228 of the Crimes Act.
Dishonest use of a document – the law
[712] Mr Robertson faces seven charges of dishonestly using a document under s 228 of the Crimes Act. That section relevantly provides:
228 Dishonestly taking or using document
(1) Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration, —
…
(b) dishonestly and without claim of right, uses or attempts to use any document.
…
[713] The leading authority in relation to s 228 is the decision of the Supreme Court in Hayes v R.27 The Supreme Court confirmed that the offence under s 228 requires proof that the defendant used the document in question, that he or she did so dishonestly and without claim of right and with intent to obtain a pecuniary advantage.28
27 Hayes v R [2008] NZSC 3, [2008] 2 NZLR 321.
28 Hayes v R [2008] NZSC 3, [2008] 2 NZLR 321 at [23].
[714]“Document” is defined in s 217. The section relevantly provides:
document means a document, or part of a document, in any form; and includes, without limitation, —
…
(c)any disc, tape, wire, sound track, card, or other material or device in or on which information, sounds, or other data are recorded, stored (whether temporarily or permanently), or embodied so as to be capable, with or without the aid of some other equipment, of being reproduced; or
…
[715]“Dishonestly” is defined in s 217 as follows:
dishonestly, in relation to an act or omission, means done or omitted without a belief that there was express or implied consent to, or authority for, the act or omission from a person entitled to give such consent or authority
[716]In this case, the elements of the s 228 charges that the Crown must prove are:
(a)That Mr Robertson used a document (namely the E-Gate merchant facility that enabled client credit card accounts to be accessed and money taken).
(b)That the money was taken from the client’s credit card account “dishonestly”. That is, in circumstances where the deduction was not authorised, and Mr Robertson knew that.
(c)That this was done without any claim of right.
(d)Finally, that this was done with intent to obtain a pecuniary advantage.
[717] Ms Harris prepared a schedule of the relevant payments and it was not in dispute that the relevant credit card deductions were made, using the E-Gate merchant facility. Further, if it is proved that Mr Robertson was involved in any particular transaction, there can be no issue that it was done with intent to obtain a pecuniary (financial) advantage. Rather, for all of the transactions, the issues can be distilled to two key questions:
(a)was Mr Robertson aware of the relevant transaction by virtue of either making it himself or authorising it to occur; or
(b)was the money taken by Mr Robertson (or on his instructions) dishonestly, or is it possible that the relevant deduction was made in error?
The process for charging credit cards
[718] Ms Lawson gave evidence of the process for charging client credit cards. She said that she, Ms Bolton, Ms Clark and Mr Robertson each had the passcode to use the merchant facility to take money from credit cards. However, she needed authorisation from Mr Robertson to make any payments. She confirmed that typically it was the administrative staff who processed payments. She said that she invariably needed paperwork and authorisation if she was to process payments. When asked about the possibility of errors she said, “we just don’t” and “I don’t” make errors of the kind described “because you cannot make a mistake with a credit card unless you’re trying to process it for funds”.
[719] Ms Lawson accepted that she only saw Mr Robertson making credit card payments at the Kumeu office “occasionally” before he moved his main base into the city office. He could have been doing so after that, but she had no knowledge of that. She noted that on the couple of occasions when she saw merchant summaries for sales she was not aware of, they were additional sales that were done after her business hours.
[720] In terms of the cash flow of the companies, Ms Lawson said that it was “quite common” for the Maxwell Foster/PTT balances to go below zero. Sometimes wages were even deferred because there was no money in the account. Ms Clark confirmed that Mr Robertson sometimes paid her from the Maxwell Foster account because there was not enough cash in PTT.
[721] Ms Bolton said that she generally did not do credit card payments, except on rare occasions, when Mr Robertson asked her to. She said that Ms Lawson and Ms Clark did most of the credit card payments. She gave a few isolated examples of when Mr Robertson had asked her to make credit card payments.
[722] Ms Clark said that as far as she knew, only she, Ms Lawson, Mr Robertson and Ms Bolton had the user-name and password needed to make credit card payments. She
said that Mr Robertson had access to the merchant facility on the computer in his office. Her evidence was that signed authorisation was needed for payments, but when salespeople (Mr Lynn, Mr Burns, sometimes Mr Robertson) were looking over her shoulder, she sometimes did it based on verbal assurances that authorisation had been given. In such cases she would always follow up for authorisation but could not remember if she always received it. She said that she would “triple check” payments to avoid errors. She could not recall Mr Robertson ever coming to her and saying that she had made a mistake with credit card payments.
[723] Mr Lynn said that, during the period he was working at PTT, only Mr Robertson, Ms Lawson and Ms McGrath were able to take client payments. If Mr Robertson or Ms McGrath were not available, then details could be sent through to Ms Lawson at the Kumeu office. He said that he had neither the ability or authority to process credit card payments.
[724] Mr Burns said that he had zero involvement in processing credit card payments and would refer that on to Ms Lawson because “that was her job”. If Ms Lawson was unavailable, however, because she was sick or maybe not answering her phone, he would give the payment details to Mr Robertson. He could not recall any staff at the Queen Street office making credit card payments.
Charges 7, 10 and 11 (Blair Cousins and Peter Bailey)
[725] Charges 7, 10 and 11 relate to three credit card deductions (totalling $10,000) on 29 September 2013 that the Crown argues are related. I therefore deal with these three charges together.
Charge 7 (Blair Cousins)
[726]Mr Cousins’ first dealings with Mr Robertson were in April/May 2012.
[727]I have found that, on or about 1 September 2013, Mr Robertson obtained
$14,000 from Mr Cousins by deception, by purporting to sell shares in PTT to him without intending that share ownership would transfer, or that any other significant value would be received by Mr Cousins. I found that the Crown had not proved,
however, that Mr Robertson stole $5,000 of Mr Cousins’ money that he believed that Mr Robertson had promised to trade on his behalf (charge 5).
[728] I now turn to consider charge 7, which (like the other two charges) also relates to events that occurred in September 2013. Charge 7 alleges that, on 29 September 2013, Mr Robertson dishonestly and without claim of right used a credit card in the name of Mr Cousins by withdrawing an amount of $4,000 using the E-Gate merchant facility in the name of PTT, with intent to obtain a pecuniary advantage.
[729] At 3.59 pm on Sunday 29 September 2013, $4,000 was deducted from Mr Cousins’ credit card using PTT’s E-Gate merchant facility. Mr Cousins recalled getting a call from Mr Robertson some time prior to this date about putting some more money in for shares in PTT. Mr Cousins said he did not agree to do this, because he felt his money would be wasted. Mr Cousins stated he was very clear about not wanting to invest further and said “no” quite forcefully.
[730] Mr Cousins said when he saw his credit card statement at the end of the month he saw that there had been an unauthorised deduction. He phoned Mr Robertson to ask for the money to be returned. No explanation was given for the deduction, just that it was an error. He accepted that it was possible that Mr Robertson had told him that there must have been a misunderstanding, although no specifics were discussed. He said that Mr Robertson told him he would return the money, and, on 15 November 2013, Mr Cousins was refunded $4,000 from PTT.
[731] Mr Cousins also received a credit note for $4,000 for computer software, dated the same day. Mr Cousins said that he did not know what this was about. He was not aware of any purchase of computer software that this could relate to. When referred to a tax invoice dated (Sunday) 29 September 2013 for a Gold package for $4,000, Mr Cousins had no recollection of purchasing such a package, or even discussing the possibility of such a purchase with Mr Robertson. His recollection was that his conversation with Mr Robertson about the $4,000 coming out of his account was in regard to shares and definitely not the purchase of a Gold package.
[732] In his FMA interview, Mr Robertson said $4,000 being withdrawn from Mr Cousins’ credit card without his permission on 30 September 2013 did not ring any bells with him. He said he imagined that one of the people with an access code would have processed that payment.
Charges 10 and 11 (Peter Bailey)
[733] Mr Bailey’s first dealings with Mr Robertson and Harrington were in July 2012. In December 2012, he advanced AUD50,000 to Mr Robertson to trade on his behalf. I have previously found Mr Robertson guilty of theft in relation to that sum, which he did not trade on Mr Bailey’s behalf, but misappropriated for his own purposes (charge 8).
[734] I have also found that Mr Robertson subsequently (during the period 11 February 2013 to 4 April 2013) obtained further sums (of $15,300 and AUD140,000) from Mr Bailey by deception, by purporting to sell shares in PTT to him (charge 9 above).
[735] I now turn to consider charges 10 and 11, which relate to two separate deductions of $3,000 from Mr Bailey’s credit card on 29 September 2013. The Crown alleges that Mr Robertson dishonestly and without claim of right used Mr Bailey’s credit card account on that date by withdrawing two separate amounts of $3,000 using the E-Gate merchant facility in the name of PTT, with intent to obtain a pecuniary advantage.
[736] On 29 September 2013, two payments of $3,000 were deducted from Mr Bailey’s credit card. Mr Bailey stated that he rang Mr Robertson after he realised that there had been unauthorised deductions to his credit card and asked what was going on. He said that Mr Robertson apologised to him and told him some new girl had used a lot of people’s credit cards unauthorised. During this conversation, Mr Bailey said that he was offered a gold trading package for half price, in lieu of a refund of one of the unauthorised $3,000 deductions. He accepted that offer. It was agreed that the other $3,000 would be refunded, which it was (on 11 October 2013). He received an apology email from Mr Robertson on the same date.
[737] In cross-examination, Mr Bailey accepted there could have possibly been a discussion about the purchase of an alerts package prior to the deductions being made. He was clear, however, that he had not given the green light for any deductions to be made for his credit card for such a package.
Evidence relevant to all three charges
[738] On the morning of Sunday 29 September 2013, Mr Robertson’s builder “Warren” sent him a text message asking, “can we get the last 10k befor [sic] the end of the month”. Mr Robertson responded “Yep. Will sort tomorrow.”
[739] Mr Robertson did not have sufficient funds in his accounts, however, to make a $10,000 payment. That afternoon, outside of normal working hours, the sum of
$4,000 was deducted from Mr Cousins credit card account, and two deductions (each of $3,000) were taken from Mr Bailey’s credit card account.
[740] The opening balance of Mr Robertson’s accounts on Monday 30 September 2013 (with the extra $10,000) was around $9,200. Mr Robertson text his builder that day regarding the “exact amount” he owed. A payment of $9,500 to “Town and Country” his builder, was then made that day. The closing balance of his accounts on 30 September 2013 was negative.
Discussion
[741] Mr Simmonds submitted that it is possible that these three deductions were mistakenly made by administrative staff. Further, given Mr Bailey’s acknowledgement of a possible discussion of an alerts package prior to the deductions being made (even though he said he did not authorise a deduction) the possibility of a genuine mistake in relation to one of the $3,000 deductions from Mr Bailey’s card cannot be excluded. In relation to both Mr Bailey and Mr Cousins, Mr Robertson arranged for refunds once the deductions were drawn to his attention, which Mr Simmonds submitted is not consistent with dishonesty.
[742] I am satisfied, however, that all of the elements of these three charges have been proved beyond reasonable doubt. The overwhelming inference from the facts I have
outlined is that Mr Robertson was under pressure to pay his builder prior to the month end, did not have sufficient funds to do so, and helped himself to the credit cards of Mr Cousins and Mr Bailey to put his accounts in funds so that the payment to his builder could be made. There is no evidence that Ms Lawson was involved in making these deductions and, given that they occurred on a Sunday, that would be highly unlikely. No other person appears to have had either the motive or the opportunity to process these transactions, on a Sunday. September 2013 was prior to Mr Lynn, Mr Burns, Ms Clark, or Ms Bolton working for PTT.
[743] Although Mr Robertson, using his notable sales skills, was subsequently able to persuade Mr Bailey to forgo a refund of one $3,000 deduction, and to accept a gold package in lieu, I accept Mr Bailey’s evidence that he did not at any stage authorise a
$3,000 deduction prior to it being made. Similarly, I accept Mr Cousins’ evidence that he had not authorised a $4,000 deduction from his account in respect of a purchase of computer software, prior to 29 September 2013. The subsequent creation of a paper trail to that effect appears to have been yet another example of Mr Robertson endeavouring to cover his tracks. It is also relevant, in my view, that at the time of the relevant transactions Mr Robertson had a history of deceptive conduct in relation to both Mr Cousins and Mr Bailey.
Charges 40 and 41 (John Ballam)
[744] Mr Ballam is a former dairy farmer, who now works as a farm consultant. I have previously found Mr Robertson guilty of theft in relation to the sum of $8,450 that Mr Ballam advanced to Mr Robertson on 5 October 2014 to trade on his behalf (charge 39). I now turn to consider charges 40 and 41, which both relate to allegedly unauthorised deductions from Mr Ballam’s credit card.
[745] Charge 41 is first in terms of the chronology. It alleges that on 11 December 2014 (about two months after Mr Robertson’s theft of $8,450 from Mr Ballam) Mr Robertson dishonestly and without claim of right used a credit card in the name of Mr Ballam by withdrawing an amount of $5,000 using the E-Gate merchant facility in the name of PTT, with intent to obtain a pecuniary advantage.
[746] Charge 40 alleges that on 3 February 2015, Mr Robertson dishonestly and without claim of right used a credit card in the name of Mr Ballam to withdraw a further sum of $2,800 using the E-Gate merchant facility in the name of PTT, with intent to obtain a pecuniary advantage.
[747] Mr Ballam’s evidence was that, sometime after his initial purchase of the FX Currency Trading programme, he received a phone call from Mr Lynn. Mr Lynn told him that he needed to place a minimum of $5,000 into an account to be traded on his behalf, as the $3,450 he had previously paid was only to purchase the package and were not funds that could be used for trading on his behalf. Mr Ballam said he considered the need to pay an additional $5,000 for the trading account and decided that paying the $5,000 (by cheque) “…was the only way that I was gonna be able to get the whole thing up and running”. He did not commit to paying the additional $5,000 in December, however, and only agreed to do this the following February.
[748] Mr Lynn texted Mr Robertson at 09.28am on Thursday 11 December 2014 saying, “Fucking Jack Ballam!!!”. The logical inference is that this text was connected in some way to Mr Lynn’s conversation with Mr Ballam about the further $5,000.
[749]Later that day, $5,000 was deducted from Mr Ballam’s credit card by PTT. The
$5000 payment is not listed in the PTT sales book. However, a sales sheet/invoice was prepared for “payment received” ($5,000) in respect of a “FX Currency Trading Upgrade Program” with “Jayde Lynne” noted as the sales representative, dated 12 December 2014.
[750] On 3 February 2015, a further $2,800 was deducted from Mr Ballam’s credit card by PTT. This payment is listed in the sales book on 3 February 2015, but no sales person or product details are recorded. There is also no corresponding paperwork in the client file for this amount of $2,800, nor a product to link it to. There is, however, a text from Mr Robertson to Ms Bolton at 9.17 am 4 February 2015, stating “If jack Ballan calls let me know”. The payment had been processed the previous evening.
[751]Ms Lawson’s recollection of this payment was:
I do recall the merchant facility showing the credit card payment, but we had no idea who the sales [agent] was and what product they purchased.
[752] On 11 February 2015, Ms Lawson sent a text message to Mr Robertson informing him that she had received Mr Ballam’s paperwork and $5,000 cheque. Ms Lawson received a reply from Mr Robertson advising her to bank the cheque with fast clearance and not to alert Mr Lynn (who was chasing his commission at the time).
[753] Sometime in February, Mr Ballam’s wife noticed that a total of $7,800 had been taken out of their joint credit card, without authority (namely the 11 December 2014 and 3 February PTT deductions). Mr Ballam tried contacting Mr Robertson about these unauthorised withdrawals. He found it difficult, however, to reach him as he was always out of the office or too busy to take the call. Mr Ballam managed to get hold of the office and spoke to two office ladies on different occasions. Ms Bolton told him that the only one able to give him information about his account was Mr Robertson.
[754] Mr Ballam said that, quite some time later, Mr Robertson called him “in desperation to refund the $5,000”. Based on a handwritten file note on Mr Ballam’s PTT file, this conversation appears to have occurred on 5 June 2015. Mr Ballam was refunded $5,000 the same day. (This was shortly after Mr Robertson’s discovery that the FMA were contacting his clients). The $,2800 was not refunded.
[755] At about this time, or shortly afterwards, Mr Robertson appears to have asked Mr Ballam to provide him with a summary of his various transactions (as he did with a number of other clients). Mr Ballam provided that summary, by email, on 11 June 2015. In his email he confirmed that Mr Lynn had requested $5,000 be paid to PTT to go into a trading account, and that Mr Ballam had sent a cheque for that amount on 11 February 2015:
Not known to me was that on Dec 11th 2014 $5000 was drawn by PTT from our Mastercard. Feb 3rd 2015 $2800 was drawn by PTT from our Mastercard…Only new about them when checking thru bank statements. This is very disappointing given the assurances by Jayde and yourself to ‘trust you & give it a go’”.
[756] In his FMA interview, Mr Robertson said he was not aware of the unauthorised deductions from Mr Ballam’s credit card. He claimed not to recall Mr Ballam’s email of 11 June 2015, or any phone calls with Mr Ballam about the contents of that email. Mr Robertson implied that maybe it was Mr Lynn who had phoned Mr Ballam (despite the fact that Mr Lynn had left PTT some months previously). He said that Mr Lynn often put on his accent and spoke to clients. Mr Robertson said that any unauthorised credit card transactions would have been done by admin.
[757] I am not satisfied that charge 41 has been proved beyond reasonable doubt. Not long after this transaction (later in December) Mr Lynn went overseas on holiday. He resigned from PTT on his return to New Zealand in February 2015. Although Mr Lynn denied any involvement in this payment, he clearly had a motive to get as many payments processed as possible in December, in order to get his commission paid prior to his overseas holiday (and his resignation). His text message to Mr Robertson on Thursday 11 December 2014 (“Fucking Jack Ballam!!!”) clearly evidences a degree of frustration – presumably because he was having some difficulty in extracting the further $5,000 he was seeking from Mr Ballam. Although Mr Lynn did not have access to the E-Gate merchant facility himself, Ms Clark (who worked in the same office) did, and regularly processed credit card deductions on the instruction of sales staff (occasionally without written authorisation from the client). The possibility that Mr Lynn arranged for Ms Clark to make the unauthorised deduction from Mr Ballam’s credit card, on the promise that written authorisation would follow, cannot be excluded.
[758] As for charge 40, I am satisfied that it has been proven beyond reasonable doubt. It is highly improbable that this payment could have been processed by Mr Lynn. He had no financial incentive to do so, as no sales agent was recorded for the transaction (and hence he was not entitled to any commission for it). Further, he seems to have largely departed PTT by this time. At most, he acknowledged the possibility that he could have popped into PTT’s offices for a day or so in February. He had already made the decision to depart PTT by this time, however, and gave formal notice shortly afterwards. (He appears to have been waiting on payment of his outstanding commissions before doing this).
[759] The juxtaposition of the timing of the payment on the evening of 3 February 2015, and Mr Robertson’s text message to Ms Bolton at 9.17 am the next morning (to let him know if Jack Ballam called) is striking. There is no evidence on Mr Ballam’s PTT file of any other events occurring at that time that this text could be linked to, such as the sale of a package or product. Further, a common theme throughout the evidence of numerous complainants was that it was extremely difficult for them to get hold of Mr Robertson. Mr Robertson was clearly anxious, however, that on this occasion Mr Ballam not be simply “fobbed off” as was the usual practice. His text message to Ms Bolton speaks powerfully of a guilty mind and a recognition that, if Mr Ballam realised what had occurred, and phoned to complain about it, the best course would be for Mr Robertson to front foot the issue. As a further strand of circumstantial evidence, it is also relevant that Mr Robertson had engaged in similar conduct previously, when he made unauthorised deductions from the credit cards of Messrs Cousins and Bailey.
Charge 4 (Andrew Johnston)
[760] Mr Johnston is a dairy farmer in the South Island. I have previously found Mr Robertson guilty of charge 2, which relates to his theft of $25,675 from Mr Johnston, being funds that were advanced for trading on Mr Johnston’s behalf on or about 2 September 2014. I have also found Mr Robertson guilty of obtaining
$10,000 from Mr Johnston by deception, by purporting to sell him shares in PTT on 2 March 2015. I now turn to consider charge 4, which alleges that on 8 May 2015, Mr Robertson dishonestly and without claim of right used Mr Johnston’s Visa credit card by withdrawing an amount of $5,000 using the E-Gate merchant facility in the name of PTT, with intent to gain a pecuniary advantage.
[761] On Friday 8 May 2015, $5,000 was deducted from Mr Johnston’s credit card by PTT, without his authority. Ms Harris’s expert forensic accountancy evidence was that this payment to PTT was transacted at a time when the balances of Mr Robertson’s business and personal accounts were in a somewhat parlous state. The deposit of
$5,000 helped to take PTT’s bank account out of overdraft. A subsequent transfer from PTT’s bank account to Maxwell Foster’s bank account also took that account out of overdraft.
[762] Mr Johnston said that, after he noticed $5,000 had been taken out of his account, he contacted PTT. He said he first spoke to Ms Bolton, and then Mr Robertson rang back and told him it was a mistake and a mix-up with somebody else’s account.
[763] Mr Johnston appears to have been one of the clients that Mr Robertson asked his administrative team to contact in early July 2015. On Friday 3 July 2015, Ms Bolton sent him an email referring to a conversation they had had that day and asking him to reply to her email “with the figures and dates we discussed”. The following Tuesday (7 July 2015) Ms Bolton sent an email to Mr Robertson advising that Mr Johnston had “called in with a few requests”. In relation to the unauthorised credit card deduction, her email stated that:
The last $5k that was taken from his credit card, he was advised it was a mistake and would be refunded but he hasn’t received the refund yet.
[764] Ms Bolton also said in her email that Mr Johnston had told her that “alarm bells keep going off and especially since he had to send in all the transactions to us”. Mr Robertson replied, “Ok I will call him”.
[765] Mr Johnston said that he received a phone call from Mr Robertson around this time who said something along the lines that there had been an error and he would sort it out. The $5,000 was subsequently refunded, on 22 July 2015.
[766] No sale of $5,000 is recorded in the PTT sales book at the relevant time and there are no contemporaneous documents in Mr Johnston’s client file that suggest any “mistake” had occurred. In his FMA interview, Mr Robertson denied any knowledge of these events and said that such matters were generally dealt with by “admin”.
[767] I am not satisfied that the Crown has proved this charge beyond reasonable doubt. Although the circumstances are obviously suspicious, given that Mr Robertson had a history of making unauthorised credit card deductions from client accounts when he (or his companies) needed funds, the possibility of a genuine administrative error cannot reasonably be excluded.
Charge 45 (Paul Slack)
[768] Mr Slack is a retired concrete and earth working contractor. He had no experience in trading or financial markets.
[769] I have previously found Mr Robertson guilty of two charges of theft by a person in a special relationship in relation to Mr Slack (charges 42 and 43), involving a total sum of $13,650. I found Mr Robertson not guilty of a further charge of theft by a person in a special relationship (charge 42).
[770] I now turn to consider charge 45, which alleges that, on 15 May 2015, Mr Robertson dishonestly and without claim of right used a credit card in the name of Mr Slack by withdrawing an amount of $5,000 using the E-Gate merchant facility in the name of PTT, with intent to obtain a pecuniary advantage.
[771] On 12 May 2015, $5,000 was deducted from Mr Slack’s credit card account. It appeared to be common ground that this was payment for the commodities programme that is the subject of charge 44, although Mr Slack was not sent the documentation relating to this programme until 4 June 2015.
[772] On 15 May 2015, a further sum of $5,000 was deducted from Mr Slack’s credit card. Ms Harris’s evidence was that, at the time of this deduction, the balances on Robertson’s various accounts were hovering around overdraft. Various refunds to investors, wages, and a bank transfer had put the Maxwell Foster bank account into overdraft – until $5,000 was received from Paul Slack’s credit card. There is no evidence of any other “sales” around this time that this payment could relate to.
[773] On the morning that the payment was deducted, Friday 15 May 2015, Mr Robertson exchanged various text messages with Ms Lawson in which he sought information regarding the balances of PTT and Maxwell Foster’s bank accounts. At
10.51 am she reported that Maxwell Foster’s account was $425 overdrawn. At
11.11 am the unauthorised deduction of $5,000 was taken from Mr Slack’s credit card. Mr Robertson’s text message exchange with Ms Lawson continued, and at 11.24 am she reported that the balance of the PTT account was $2,079 but that we “haven’t done wages yet”.
[774] Mr Slack’s evidence was that he noticed that an extra $5,000 had been taken out of his credit card two or three weeks later. He said that he got in touch with Mr Robertson to tell him about the unauthorised payment. He said that Mr Robertson apologised and said it was a mistake or “clerical error” and that the money would be refunded to his credit card. He received a refund on 25 May 2015.
[775] The fact that use of Mr Slack’s credit card coincided with Mr Robertson discovering that one of his accounts was in overdraft is suspicious, particularly given that I have found that Mr Robertson had previously made unauthorised deductions from client credit cards as times when his companies were experiencing cash flow issues. Nevertheless, I am not satisfied that this charge has been proved beyond reasonable doubt. Two deductions of exactly the same amount ($5,000) were made three days apart, and at about the time that Mr Slack had apparently authorised (presumably verbally) a deduction of $5,000 for a Commodities programme. The possibility that there was an inadvertent “double up” in deducting the payment for this programme cannot reasonably be excluded.
I. CONCLUSION
[776]These are the reasons for the verdicts I have delivered today.
Katz J
- AGLC
- R v Robertson [2019] NZHC 2032
- Case
- [2019] NZHC 2032
- Decision Date
CaseChat Overview and Summary
The court's reasoning was based on the evidence presented during the trial, which included witness testimonies, documentary evidence, and expert forensic accountancy evidence. The Crown's case was that Robertson had devised and implemented three unlawful schemes to extract money from a select group of "VIP" clients. These schemes involved offering a "trading on behalf" service, selling fictitious shareholdings, and unauthorised use of client credit cards. The defence argued that the funds were either payments for trading software, loans, or genuine transactions.
The court found that Robertson had indeed carried out these unlawful schemes and had used the money for his own purposes, including funding a lavish lifestyle. The court also found that the Crown had proved the necessary elements of the charges beyond reasonable doubt, including Robertson's control over the relevant funds, his intent to deceive the victims, and the absence of any claim of right.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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