A Christchurch businessman has appeared in court today charged with orchestrating a $103 million fraud.
Former Datasouth Group director Gavin Clifford Bennett, 53, has been charged by the Serious Fraud Office (SFO) for being behind the massive fraud which involved a Ponzi-style scheme and false accounting over the last six years.
Bennett is facing six representative charges under the Crimes Act relating to approximately 900 separate incidents of alleged misuse of a document, and a further two charges of false accounting.
The Datasouth Group offered IT services, including consultancy and the lease of IT equipment, to business customers in Christchurch.
The group was made up of a number of companies, including Datasouth Finance Limited (Datasouth Finance), on which the SFO investigation focused.
The SFO alleges that between April 2005 and March 2011, Mr Bennett created false documents relating to the lease of IT equipment to fraudulently obtain funds from South Canterbury Finance totalling $65.5m.
He is also accused of falsifying entries in Datasouth Finance financial statements by an estimated $38m in order to retain the ongoing finance facility.
The SFO alleges that Bennett used the dishonestly obtained funds to repay earlier false lease agreements in a manner similar to a Ponzi scheme and to meet business expenses.
He also allegedly used a significant amount of money for his own personal benefit. Ultimately, the resulting financial loss to South Canterbury Finance was an estimated $26m.
As a direct result of the alleged offending, the Datasouth Group went into liquidation in March 2011, leaving all 42 staff without employment.
Bennett appeared from custody at a Christchurch District Court session at Rangiora courthouse today wearing a dark blue suit and open-necked white shirt.
He was remanded on bail without plea until his next hearing on December 8.
Bail was granted bail by Judge Raoul Neave on conditions that he reside at a Christchurch address, surrender his passport, and not contact former Datasouth staff or customers.
SFO Chief Executive Adam Feeley said: "The findings of our investigation allege a very sustained and large-scale fraud that not only had a very significant financial impact on South Canterbury Finance, but also, ultimately, on the staff of Datasouth.''
The SFO opened its investigation into Datasouth Finance Limited on March 21, 2011.
The SFO investigation into Datasouth is entirely independent from its investigation into South Canterbury Finance, which is ongoing.
