Former director of Hobbs Rose Limited (Hobbs Rose), Gary Malcolm Hobbs (45), has been found guilty by a jury in the Hamilton District Court on 14 criminal charges laid by the Serious Fraud Office (SFO) in November 2011.
The charges, of theft by a person in a special relationship, against Mr Hobbs, related to funds totalling over $320,000.
At the time of the theft, Mr Hobbs was a director of Hobbs Rose, an accountancy firm based in Te Awamutu. The SFO investigation concluded that Mr Hobbs stole funds from two of his clients’ bank accounts and used those funds in part for the benefit of his own accountancy firm and for another company of which Mr Hobbs was also a Director, South American Tobacco Group NZ Limited.
Following the verdict, Acting Chief Executive for the SFO, Simon McArley, explained the importance the Office placed on this prosecution, “As a trusted advisor, Mr Hobbs let his clients down. This not only impacted directly on them but at a local level it undermines the good faith that people should be able to place in professional services such as chartered accountants.”
Mr Hobbs was a qualified chartered accountant and a member of the New Zealand Institute of Chartered Accountants (NZICA). Following an NZICA investigation into Hobbs Rose and allegations of client funds being mismanaged, Mr Hobbs’ NZICA membership was cancelled in 2010 and his name removed permanently from the NZICA register of members.
A sentencing date has been set for 15 February 2013.
Note to editors
Background to investigation
In September 2010, the SFO received a referral relating to complaints made by clients of Hobbs Rose Limited alleging that Gary Malcolm Hobbs had misappropriated funds they had invested with South American Tobacco Group NZ Limited. Some clients also alleged that Mr Hobbs had withdrawn funds from their bank accounts without their knowledge or authorisation.
Crimes Act offences
Section 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.
Role of the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO operates three investigative teams:
• Evaluation & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.
The SFO operates under two sets of investigative powers.
Part I of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
Part II of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”
The SFO’s Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO’s three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz