Court tells Eaton where to live

Press, 22 June 1989, Page 33

Court tells Eaton where to live

PA Auckland The former director of Kinetic Investments Services, Michael James Eaton, has been ordered to live at an address directed by Auckland District Court while he waits to stand trial on 13 fraud charges. Eaton, who was extradited from Australia to face charges relating to the collapsed futures brokering firm, had his bail continued yesterday after a hearing found he had a case to answer.

Justices of the Peace J. H. Coulam and 0. R. Chaney ordered him to appear again on July 26 for a date to be set for a trial. The order for surrender of his passport was continued and Eaton must report daily to Takapuna Police Station. |.

The prosecution sought a residential requirement after discovering Eaton was not living at the house stated on his charge sheet. The prosecutor, Mr Mark Woolford, said Eaton had moved several times since his last appearance and was liquidating a number of personal assets including his life insurance. Eaton’s lawyer, Mr Roger Maclaren, said the assets were being liquidated to meet obligations to his creditors.

Mr Maclaren pleaded no contest to committing the case to trial, but give notice to the Crown that the charges would be “strenuously denied.” The prosecution laid 12 new charges yesterday and withdrew all but one of those previously laid. The new charges were five of theft

by failing to account, six relating to making false statements, and one of misappropriating proceeds held under direction.

Another charge of theft by misappropriation, carried over from Eaton’s last appearance, relates to the disappearance of £108,647.

The new charges bring the total amount of money involved down from $2 million to about $1.3 million. Mr Woolford produced statements from 13 witnesses and 273 exhibits in document form. A former Kinetic Investments director, Mr John Peach, said in written evidence that he totally trusted Eaton, who had been a client of his in a previous venture. "He approached me offering his financial expertise,” Mr Peach said. The pair formed a company to trade in commodities futures, with Eaton arranging the legal side of forming a company and Mr Peach finding premises in Fort Street. He said his job was to monitor the futures market and field telephone calls from clients. “Eaton’s side was to run the office, the futures market and money market. In reality, Eaton ran Kinetic Investments,” Mr Peach said. Eaton told him futures “was a good business to be in.” In the third week of October last year, Mr Peach noticed Eaton’s trading suddenly became heavy. "I approached him and he replied that the rise was the $l.l million which had been invested in September,” Mr Peach said.

He said Eaton dealt with all the pool allocations in one account of the company. “All the other orders were in the clients’ individual names, some of those making their own decisions and some having their money managed by Eaton. There were about 1000 current clients,” he said. “On Thursday, October 18, I went in to work as usual. I received a phone call from a Mr Lyal Kennedy, of the commercial affairs division of the Justice Department,” Mr Peach said. Mr Kennedy wanted an appointment to check various records, and Mr Peach told him Eaton would know about them. “Eaton told me that Kennedy just required some records. He further told me that he called his solicitor in to attend the meeting. He told me that I was not required to attend,” Mr Peach said. “When the meeting finished, I approached Eaton and asked if there were any problems. He said no. "He said that he believed the opposition was trying to cause trouble for us, and that was why the commercial affairs division called on us,” Mr Peach said. That day, Eaton asked for a lift to his car, which was up a side street near the bank. “On the way, he said: ‘The commercial affairs division is pushing us to be a member of the exchange, and I don’t really want that.’ "He said he had gone to the bank earlier and that was why the car was

“That was the last time I saw him,” Mr Peach said. The next time Mr Peach went to the office, on the Monday of Labour Week-end, he could not log into the firm’s computer by entering the code to gain access to Kinetic Investments’ records. On October 26, Mr Kennedy visited the offices and produced a letter under the Companies Act. Next day, the staff tried to find funds belonging to clients, but could find only $900,000 with Equiticorp. “We could not find a trace of the other monies, futures funds or foreign exchange," Mr Peach said. He said Eaton, who was aged 24 when the company started, had no degrees or professional qualifications. "He worked hard,” Mr Peach said. Under questioning from Mr Maclaren, he said Kinetic Investments did not have a registered prospectus. He initially believed Kinetic’s collapse was because of an unforseen climb in overheads, but he later discovered the figures given to him for overheads were false. Mr Peach said he did not understand the money market at all. “I was concerned about the funds and what they were doing in case any other company was in trouble.” The liquidator, Mr John Waller, told the court the company had assets of about $1 million and liabilities in the vicinity of $7.2 million. He said he had been asked by police to investigate a number of complaints.