Proposed Dunedin Hilton developer Dan McEwan is further mired in court action after he was convicted on six Securities Act breaches in the Auckland District Court.
The breaches included not providing a registered prospectus or accompanying investment statement when offering investment in developments.
The Ministry of Economic Development took the case to court using the circumstances of Dunedin couple Peter and Susan Gale.
They invested $61,700 in two McEwan Group projects, Agnes Water in Queensland and Sovi Bay in Fiji.
Agnes Water did not go ahead, with some proceeds expected from land sales.
The Sovi Bay property was never secured, and $200,000-$300,000 was lost, according to the reserved judgement of Judge P. A. Cunningham, released on Tuesday.
Mr McEwan pleaded not guilty to all six charges.
A sentencing date is yet to be announced.
Reparation could also be sought at that time, and Mr McEwan could then launch an appeal.
The expansive McEwan Group has suffered several setbacks in recent months.
Its $700 million Auckland development was put on hold, with some land offered for sale, and there was the liquidation of four McEwan companies late last month over Inland Revenue claims, which Mr McEwan disputes.
The proposed Dunedin Hilton development, estimated to be worth $85 million when completed, requires a joint venture partner before it can proceed.
Also, primary lender for the Dunedin development, Otago Finance, which is owned by South Canterbury Finance, has enacted a Property Law Notice over the Princes St building.
The company's options to recover its $5 million loan could include the building's sale or bringing in a new developer.
Otago Finance is yet to make a decision on its options, while several Dunedin investors remain unhappy about the future of the project and their investment.
Tuesday's judgement found "all charges proved" in Judge Cunningham's 23-page decision, against Mr McEwan, Stakeholder Finance Ltd (SFL) and Agnes Water Acquisitions Ltd (AWAL).
Judge Cunningham said, "Having seen and heard Mr McEwan, it is my view that his knowledge on this issue is far greater than he is willing to admit."
The case revolved around the definition of "habitual investor".
The Securities Act 1978 requires that securities or investment opportunities offered to "the public" must be accompanied by a registered prospectus or investment statement.
"Habitual investors" are an exception to this rule.
"The defence was in essence that the securities were not offered to the public and therefore there was no breach . . ."
, Judge Cunningham said.
"Habitual investor" was defined by McEwan's solicitors as being an investor with seven property sales or more during 10 years.
The New Zealand Securities Commission had published that habitual investors were "persons who invest money in the course of their business" - which the Gales claimed they did not do.
The Securities Commission scrutinised McEwan Group habitual investor categories, deciding after March last year it was not satisfied its habitual investors fell within the statutory definition, and the Gale case ensued.
Judge Cunningham recounted that during Mr McEwan's evidence he "explained that generally money to cover the cost of construction of the development was borrowed, however, he conceded that this information was not in the letters that went to people inviting them to invest".
Also, Mr McEwan said when there was shortfall in a purchase price, made up by the developer borrowing money, investors were "not told about that in the letter either".
Judge Cunningham said: "Mr McEwan did not impress me as a witness. I found some of his answers to questions about what he had been told by his legal advisers, on this important issue, evasive and at other times unconvincing".
Mr McEwan told the Otago Daily Times last month that the four liquidations would have no effect on the Dunedin Hilton, saying a complex structure of unsubscribed shares, share transfers and shares with charges over them meant the hotel development was not affected.
