Jock Anderson

Dishonest lawyers who played key roles in the multi-million dollar Operation Allsorts home mortgage fraud masterminded by Hamilton mortgage broker Miles John McKelvy have been jailed.

In Hamilton High Court last week Justice Paul Heath jailed Aucklander Robert John Warburton for a total of one year and nine months on one charge of using a document to defraud and three charges of obtaining a document to defraud.

Warburton, represented by Charles Cato, of Vulcan Chambers, was ordered to pay $25,000 reparation by February 28 to victims Arnold and Mervyn Heta.

He also faces a $60,000 debt to an insurance company.

Justice Heath granted Warburton leave to apply for home detention, but gave him a taste of chokey by refusing to defer imprisonment pending a home detention application.

He is the twelfth person Justice Heath has sentenced for offending detected during Operation Allsorts.

Principal offender McKelvy was jailed last July for eight years for his part in what is said to be New Zealand’s biggest mortgage swindle.

Another Operation Allsorts offender, former Cambridge lawyer William Raymond Harris, represented by Peter Gorringe, was jailed last week for a total of one year and six months on one charge of making a document without lawful authority, five charges of using a document with intent to defraud, one charge of obtaining a document with intent to defraud and one charge of theft by failing to account.

In an unrelated prosecution Harris was sentenced early in 2006 to imprisonment for two years and three months for his part, along with co-offenders Ray Smitheram and another struck off former Cambridge lawyer Murray Athol Osmond, in conspiring to defraud Dorchester Finance.

That transaction, which had more than $1 million at stake, involved a price hydraulic scheme leading Dorchester to advance mortgage moneys well in excess of the true value of the security it was receiving.

Justice Heath, who noted that Harris was now serving the remainder of that jail term on home detention, made his one year and six months jail term cumulative on his early jail term meaning Harris lost home detention and returned to prison.

Having effectively sent Harris to jail for a total cumulative term of three years nine months Justice Heath said he could not grant him leave to apply for home detention or defer the jail term.

Last July Cambridge lawyer Margaret Elizabeth Carran was convicted of using a document with intent to defraud and sentenced to do 375 hours community work for her part in the scam.

A conveyancing lawyer who has since quit the law and faces disciplinary action by the New Zealand Law Practitioners’ Disciplinary Tribunal, Mrs Carran processed an application for bank finance when she knew the value of the asset on which the bank was being asked to rely to lend money was grossly inflated.

In December, John Fong, another lawyer caught up in the swindle, was convicted of altering a Land Transfer document with intent to deceive and was sentenced to do 300 hours of community work.

Former Waikato accountant John Slavich, convicted on fraud charges arising from two transactions, was last year jailed for two years and three months and ordered to pay $60,000 reparation.

Warburton was complicit in a scam designed to defraud owners and sometimes financiers of their interests in land. The consequence was that benefits would be conferred on associated parties when they acquired the land without any need to repay existing mortgages or to account to the owner for any surplus.

Warburton knew that relevant sales were being completed at an under-value in contravention of the mortgagee’s legal duty to obtain the best price reasonably possible and as the solicitor acting on the transactions he knowingly facilitated the frauds.

Justice Heath said Warburton’s trial “highlighted a sophisticated mechanism by which members of the community might easily be defrauded of their homes.”

“The frauds could only be effected with the assistance of a compliant solicitor who could certify transactions for the purposes of the Land Transfer Act. That was your role in the scheme.”

As Justice Heath put it: “You were the respectable face needed to complete the transactions…”

In Harris’ case Justice Heath accepted the prosecution’s view that he was used to meet the victims and complete the frauds and that “imprisonment is the only appropriate penalty.”

Justice Heath said Harris’ offending was of a “slightly higher level of culpability” than Warburton’s.

Harris, the judge said, was another “respectable solicitor” needed to front the transactions.

Christchurch-based Provincial Finance, which was involved in some of the mortgage finance deals, went into receivership last year.

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