Q.D. CASE

Hawera Star, Volume XLIX, 16 November 1929, Page 5

Q.D. CASE

CHARGE AGAINST PROMOTER.

JURY DISAGREE. NEWI TRIAL ORDERED. (By Telegraph—Press Association.) INVERCARGILL, Nov. 15. The hearing of charges of false pretences against David Neilson Johnston was resumed in the Supreme Court today. Johnston, who pleaded not guilty and who was represented by. Mr C. J. L White, wus. representative in New Zealand for Quarterly Dividends, Ltd., audi National House Purchase, Ltd., and it was in connection Avifcli money accepted on behalf of these organisations that the charges Avere laid. The jury failed to agree on any ot the six charges and a new trial, to commence on Monday, Avas ordered. Johnston gave evidence that he was. a married man with tAVO children Jiving at Dunedin. He had served in both the Boer War and the Great War, and as a result of ill-health had had to give up his Avorlc as a trained masseur and take up the occupation of selling Bibles. H© said the scheme had been brought to his notice by a member, .but he had waited until the visit of the promoter, William Taverner, to New Zealand. He had attended a meeting addressed by Taverner, over which the previous witness (Moil-) had presided. Moir, as chairman, had said thei scheme had great possibilities, and after hearing Taverner’s -address Johnston hod joined • the organisation. He had become secretary for New Zealand after 20 other men had been suggested for the post, hut had refused it. _ . Ho himself had had implicit iaitli in the scheme until the hearing in the lower court, Avhen he had heard the evidence of the Government actuary. He still believed in the scheme, but would like to hear the evidence of an actuary of equal calibre to the Government actuary, as he had been assured that the 'scheme had .been submitted to actuaries of the highest standing. In fact he had been assured that the company would send out an actuary to testily. The Crown Prosecutor objected to that evidence as being subsequent to the charges laid against Johnston, and the obje-ctior* xrres. npneld. HIMSELF A CONTRIBUTOR. Proceeding, Johnston said his wife and his two daughters \yer© subscribers to the scheme, one of his daughters paying her contribution out of her salary. They Avere still paying and still believed in the scheme. When addressing meetings he had said that 2)- years Ava® a fair average computation for the waiting periods for loans. The scheme had been in operation since September, 1920, and until 1925 a reward had .been offered to anyone Avho could show that the scheme was fraudulent. The companies had been registered in NeAv Zealand in 1928. He himself received no salary lor his serA'ices, but Avas on the same footing as any other member of the organisations, who received £1 for eA'ery four members enrolled. Cross-examined by the Crown Prosecutor, Johnston said he had told people Avhom he had canvassed that they Avould •reach the £SOOO class in about 7£ years, but he certainly had not told them that they would draAv dividends on the £SOOO. The highest man in New Zealand Avas in the £3OOO class, but Avas drawing dividends on £4OO. Johnston did not know Taverner was the controlling force of the organisation.! He repeated that he simply implicitly believed in the scheme. Although this Avas so he Avould not continue t G enrol members until he had received actuarial support of hi® belief. He had read a. leading article in a Dunedin paper in Avliioh Avas quoted an extract from a London paper severely criticising Taverner. Still he had believed in the scheme. He had also read in another Ncav Zealand paper strictures passed on Taverner by English judges, but had .still retained his belief. Johnston had been Avith. Taverner ill Wellington. Taverner had been questioned by a detective in the police station there, and on the conclusion of the interview the detective had shaken hands with Taverner and had Avished him Avell. Under these circumstances Johnston felt he could be excused for ignoring the neAVspaper articles, i, it Avas a fact that he had received, a loan of £3OO from Taverner's, companies to pay for a shipment of Bibles which had gone astray and for which Johnston had accepted responsibility. Johnston had enrolled 1000 members in the organisation. He had received a commission of 5s a member. Apart from his communications Avith Taverner, Johnston said he had not taken any step® in New Zealand to make inquiries concerning the soundness of the scheme. After the proceedings in the lower court he had shown the Government actuary’s report to an accountant in Dunedin, Avho had .stated that he could not set himself up as an authority; against a man possessing such high qualifications as the Government actuary. Since the prosecution had been commenced Johnston had accepted; money posted to- him, but had not solicited any deposits. At a meeting he had: held at W aim at© the scheme had been condemned by the mayor and the president of the- retailers.’ association. He considered he knew a® much about the financial aspect of the scheme as did- these men, whom he did not consider as experts. Further evidence Avas called for the defence, after which Mr. White, in ad-i dressing the court, said be Avould emphasise the fact that this scheme had been in operation since 1920 undea- the very noses of the financial experts of the Avorld, and yet this Avas the first criminal proceeding in connection with it. , QUESTION FOR, THE JURY. The question before the jury, said Mr. White, Avas not as to the soundness or otherwise of the companies, but whether Johnston Avn.s a criminal. Before the jury could find that it had to be satisfied on the four points : (1) That Johnston had made definite ail'd unequiA’ocal representations a® to an existing or past statement of fact, the future promise not being sufficient. (2) That the representations if made AA’ere false.

(3) That Johiuston, by making such statements, intended to permanently deprive people of their money, really in the end that- he was practically stealing their money. (4) That the statements, if made, were false.

Air White said he had already stated that one would have thought the Grown would stamp out companies' if false to prevent their continuing to delude the public, but he would go further: Not ■only had the Grown not thought fit to act in this way but it had actually encouraged the continuation of the scheme by allowing the companies ±o register in New Zealand. Then again, the Police Department, although it had had the promoter of the scheme, Taverner, in New Zealand, and, in fact, had interviewed him, it

had allowed him to return to England without prosecution. As to the soundness of the company, it had 'been shown that the company was prepared to send out one ot the world’s financial to assist eounsel for the defence. This had been denied Johnston, said Mr White, on account of the manner in which the case had been precipitated by the Crown. Counsel referred to the facts that John- . ston was a depositor, that his wife and daughters were depositors, also, and that they were all: paying into the scheme. . In addressing the jury, the Grown Prosecutor affirmed that his learned friend’s exposition of the law as to the crime of “false pretences” was substantially correct. There was, however, one matter to which he desired to refer. Mr White had stated that in order to establish the offence the statement made must relate to the .past or present not to the future. That was so, but' with certain qualifications; _ a promise might be made which, of itself, implied that the man making it had] power to carry l , it out. “COMPLIO ATED EXPLANATION.’ ’ Johnston had made a. very complicatter explanation of the workings of the company, and his promise was suen that it was clearly a representation which involved the power of the company to carry out what he said it could do. The explanation given by Johnston was aj most specious one, said the prosecutor. He had said it was possible to reach the £SOOO class in 7-J- years. In the box that day, however, he had denied representing that tile depositor would draw dividends ini 7J years. vestors could reach the class, but not receive the full benefits until all loans had been repaid. The prosecutor emphasised that- the root and branch of the defence rested upon the assertion that Johnston was not aware his representations were false' The crux of the matter was reduced to this question: “Did or did not the jury believe that Johnston was honest when making the representations ?” A man. of the education such as Johnston undoubtedly was could not from the bottom of his heart have believed the representations to be true. The judge’s summing up, which occupied an hour and a half, was a masterful and lucid' recital of the law and. facts in the issue. He exhorted the jurymen to banish from their minds anything they might have heard prior to' the hearing. Johnston was entitled to a verdict upon the evidence heard in that court, and they should arrive at that verdict upon such evidence. Before a verdict* of guilty could be. brought in it was requisite that the following three essenial ingredients of the crime must be proved beyond all reasonable doubt: (1) That there was an intention to defraud ; (2) that there was, in fact, false pixitence; (3) that the money was. obtained by means of such false pretence. That was the law. The jurymen, were the judges of fact. His Honour traversed the evidence at some length. The jury retired at 4.55 and returned at 9.10 p.m. The foreman announced that they were: unable to agree on any of the six counts. A new trial was ordered for Monday.