AUCKLAND, New Zealand -- Two directors of Nathans Finance, the financial arm of failed vending technology company VTL, have appealed their prison sentences.
Mervyn Doolan and Roger Moses were convicted for breaching New Zealand's Security Act by lying to investors in a three-month trial here earlier this year. The directors were found guilty of publishing untrue statements in the company's prospectus and in letters to investors between 2006 and 2007. | SEE STORY
They received their sentences earlier this month. Moses was jailed for two years and two months, and ordered to pay $425,000 restitution. Doolan was sentenced to two years and four months behind bars and ordered to pay $150,000.
Their lawyers had sought home detention, the same penalty handed down to the other two former Nathans' directors.
Donald Young, who was tried alongside Moses and Doolan, was sentenced to nine months home detention, 300 hours' community work and $310,000 in restitution to investors.
The fourth director, John Hotchin, had earlier entered a guilty plea to similar charges and testified against his former colleagues. He received 11 months on home detention and 200 hours community service and was ordered to pay $200,000 in restitution.
Nathans Finance collapsed in 2007, owing about $174 million to some 7,000 investors. Most of its lending was to parent company VTL, which sold vending machines, franchises and technology in the U.S., Australia, New Zealand, UK and Europe.
The three directors denied Securities Act charges that they distributed an advertisement and prospectus that contained untrue statements regarding related party lending, bad debts and liquidity and sought $100 million from investors. The directors argued during the criminal trial that they relied on the information their management team and professional advisers had provided them.
At a hearing in the Court of Appeal at Wellington this week, Moses's lawyer argued that his client was honest in his dealings as a director, and disputed sentencing judge Paul Heath's charges of "gross negligence.''
Doolan's lawyer said his client may have fallen short as a director, but was not "dishonest" or "reckless," as alleged by Heath. He also denied that his client had shown no remorse.
The lawyers argued that Moses and Doolen already had suffered the hardships of their prison sentences, while they should have had home detention like their two fellow former directors.
Representing the prosecution, Brian Dickey insisted the prison sentences were appropriate. Addressing the sentencing disparity, he said the trial judge found Young was the least involved in the business, and was the only defendant who expressed remorse for the victims.
Hotchin, who pleaded guilty, was sentenced on the information that was before the judge and not what evolved at trial, added Dickey. That made him eligible for a lighter sentence.
Court of Appeal Justices Mark O'Regan, Tony Randerson and Lynton Stevens reserved their decision.