FINANCE FRAUDS.

Auckland Star, Volume LXVI, Issue 57, 8 March 1935, Page 11

FINANCE FRAUDS.

PURCHASE OF CARS.

DUMMY DEALS ADMITTED

FIVE MEN FOR SENTENCE

Over 50 charges involving conspiracy by deceit in connection with alleged false hire purchase agreements againet seven men and a woman were tabled in the Police Court yesterday afternoqjji before Mr. F. K. Hunt, S.M. W When the Court adjourned at 4.30 p.m. five men had been dealt with on 13 chargee.. All pleaded guilty and wore committed to the Supreme Court for sentence. The charges against all the accused total 59, and a sum of £2500 is alleged to be involved. It is alleged that of this sum £2219 was obtained by conspiracy to defraud, £170 by false pretences, and £117 by theft. -*•'>■ Alfred Ernest Hay, motor dealer, aged 30, and Oscar Herbert Johnson, clerk, aged 44, were charged on sovou counts with conspiring together to defraud the New Zealand Guarantee Corporation, Limited, of sums totalling £944 4/0. William Kenneth Daniels, Btoreman, ngetf 20, • was charged with conspiring with Hay and Johnson to defraud the same company of £100 and £95; Norman Henry Fraser, insurance assessor, aged 30, was charged with conspiring with Hay and Johnson to defraud the company of £130 and £100; and John Edward O'Donnull, fruiterer, aged 31, wae charged with similar conspiracv to defraud the company of £110 and £05. Hay and Johnson wore al«o charged with the other three on the joint informations mentioned. The dates of the alleged offences were between May, 1933, and April, 1934.

Detective-Sergeant A. G. McHugh prosecuted. Mr. < Dyson appeared for Hay, Mr. Aekins for Daiiiek and O'Donnell, Mr. Dickson for Fraser and Mr. Leary for Johnson.

Evidence concerning various transactions in financing the sales of motor cars was given by Basil Dlxon Buddie, accountant, whose firm was the Auckland agent for New Zealand National Guarantee Corporation, Limited, of Wellington. Witness said that on the representations of Hay he had paid Hay sums of £85, £150, £105, £145, £146 and £155 due on the sale of cars. Hay afterwards admitted to witness that these were "dummy" deals, and that he had signed some of the documents himself. Johnson's Explanation. Detective McWhirter produced statements made by Johnson, Hay and the other accused.

Johnson, in hie statement, said that in April, 1933, he told Hay that creditors were pressing the business for money. Hay said he would be able to pay them in a few weeks. On May 4 Hay said lie would have to find sonic money, and told Johnson to put through the hire purchase of a car in the name of "Gibson." "I put my signature on the document knowing the agreement was a, dummy one," said Johnson. "I complained at the time- to Hay, and I tried to persuado him tigainst it. If I lost my job I would have to go on relief work. I have a wife and three children.

Hay saitl ho was getting £1000 from his mother. 1 told him the time was coming when he would need £1000 to equaro things up. While he was waiting for the money three more transactions were put through, On August 24, 1934, I decided to leave, and I went on relief work. 1 never got any money as a result of the transactions. My salary was £4 per week. My wages were odßftsionally in arrears." ™ Hay's Downfall.

In his statement Hay said he started in business in Auckland when 2.3 years of age, without any business experience. He was in partnership with two other men for two years and then found that the firm was in (kbt. In order to .carry on and get nioney one of the partners, Hay alleged, arranged to sell him a car which he had and to borrow money on the hire purchase agreement. "At the time I thought this was quite all right, as I understood that by having a hire purchase agreement it enabled us to borrow money on the hire purchase agreement." The amount borrowed was £450, and his liability was guaranteed by a third party. One of the partners arranged for the guarantee and- for the whole matter. The partner wont bankrupt and accused aaid he had a liability of the car, odice furniture, machinery and plant totalling £000. This was later paid off and the car was sold for £80.

"I struggled on Tor some time exceedingly hampered by lack of money," continued Hay. "'ln 1932 I arranged with the New Zealand Guarantee Corporation to lend me money on a security for hire-purchase agreements over cars sold by mo in course of business, provided I guaranteed each purchaser by making myself personally liable. When a cai was sold I was to aseign the hire-pur-chase agreement to the corporation, and also endorse all promissory notes securing the various instalments. The corporation agreed to advance twothirds of the purchase price on each Hale. This, unfortunately, proved my downfall.

Many Sales Genuine. "The corporation did not inspect the cars at any time or call or interview any of the parties concerned. I finally got very short of money and because of the ease with which I obtained the loans from the finance company 1 finally resorted to the methods adopted by another person. I resorted to the same practice of repaying the previous loans out of the new one. I handled a large number of genuine car salee between 1932 and the end of 1934, and put over 100 through during that period with the Guarantee Corporation alone. Out of the total car sales I made when on my own, 95 per cent of the transactions were genuine." Finally, said Hay, he went to the Guarantee Corporation and made a clean breast of. the position. According to a statement made to Detective McWhirter, O'Donnell said he first met Hay about 12 months ago when he approached him and said he wanted to raise money to buy some new model cars. O'Donnell said he signed a hire purchase agreement at Hay's request. Hay said there would be "a few bob in it." *> O'Donnell said he had not received a pephy piece as the result of the transactions.