Invercargill-based Silberhorn (now Gateway Solutions Ltd) and sole director Ian Carline, whose deer-velvet products were promoted by Sir Bob Charles and the late Sir Colin Meads, are before the Dunedin District Court today for day two of a sentencing hearing.
Carline will apply for a discharge without conviction, which is likely to be determined by Judge Kevin Phillips tomorrow.
The company admitted 26 counts of misleading conduct under the Fair Trading Act and both parties pleaded guilty to one of failing to supply information to investigators.
Between 2011 and 2015 - spanning 22 batches of the product - the company labelled supplements as containing more deer velvet than they actually held.
That involved 11 million capsules with a retail value of $5 million.
The disparity, Commerce Commission prosecutor John Dixon QC said, could have resulted in a $1.2 million gain for the company.
This morning, defence counsel Judith Ablett-Kerr QC highlighted that the main issue was whether Carline's mislabelling was deliberate.
“[The prosecution] want you to say this company wilfully intended to have a product before the consumer that was liable to mislead it and they did so because they wanted to make an illegal profit,” she said.
Ms Ablett-Kerr vehemently denied that was the case.
Through a new manufacturing process, the deer-velvet powder had become more potent, thus less was used in the company's products, Carline previously told the court.
Ms Ablett-Kerr said there was no attempt to dupe consumers.
“He believed that the product the customer was getting was as good as they would have got before the new process... or even better,” she said.
“There's a mis-description but when it comes to saying the product has been wilfully mis-described with the intention of gaining an illegal profit. That's a different matter altogether.”
Carline, his lawyer said, believed passionately in the health benefits of the supplement.
At a disputed-facts hearing last year, colleagues gave evidence on that point, Ms Ablett-Kerr said.
He believed his product was the best in the country and was proud of what he had created.
“The customer base reads like a who's who of New Zealand sporting activity,” Carline said in evidence last year.
He admitted failing to supply documents to Commerce Commission investigators when their enquiry ramped up at the end of 2014.
Ms Ablett-Kerr, though, said her client was not trying to deceive anyone.
The court heard he met Sir Colin in Christchurch to explain after he had heard rumours Silberhorn would be targeted by the commission.
While his home and business had to be searched for evidence to be located, Ms Ablett-Kerr said nothing incriminating was destroyed.
She called Carline “a diamond in the rough” who had contributed hugely to the community.
And Ms Ablett-Kerr rejected the assertion by the prosecution that the defendant was remorseless.
Last year Carline told the court he wished he had adopted a different attitude when it came to dealing with the Commerce Commission's requests for information.
“We're all too soon old and too late smart,” he said.
The hearing continues.
