Bublitz out of jail after court ruling
Businessman Paul Bublitz has successfully appealed his three-year prison sentence for misleading investors of Viaduct Capital and Mutual Finance in the aftermath of the global financial crash in 2010.
The Court of Appeal ordered that Bublitz be released from jail and substituted his sentence with 11 months of home detention to begin immediately.
His colleague, Richard Blackwood, was successful in overturning his conviction for different offences but the third appellant, Bruce McKay, was unsuccessful in overturning his conviction.
The men had been involved in various property developments using funds from Viaduct Capital and Mutual Finance.
Viaduct Capital and Mutual Finance went into receivership in 2010 owing investors $17 million, sparking investigations by Treasury, the Serious Fraud Office and the Financial Markets Authority. The trio’s charges related to deals involving Viaduct and Mutual, and the Hunter group of property companies, which they controlled. These ‘‘related party transactions’’ breached the trust deed that governed the finance companies after they obtained a Crown guarantee made available at the time to prevent widespread collapse of the sector and losses to thousands of investors. However, a 2010 Mutual prospectus seeking new funds failed to disclose the Crown guarantee could be withdrawn if there were breaches of the trust deed. ‘‘Whether the appellants understood the breadth of the restrictions on related party lending in the Mutual Crown guarantee arising out of the extended definition of ‘control’, and whether they participated in the transactions knowing they breached those restrictions, are issues lying at the heart of these appeals against their convictions,’’ the Court of Appeal said. Bublitz’s lawyer argued that statements in the Mutual prospectus were not materially misleading because the investors’ funds remained secured by the Mutual Crown guarantee regardless of whether Mutual was in breach of it when the prospectus was issued.
‘‘In our view, this is plainly correct. Unless and until the guarantee was withdrawn, all investments made in response to the prospectus, both principal and interest, were unconditionally guaranteed by the Crown. In these circumstances, we cannot see how the alleged nondisclosure was in any way material,’’ the Court of Appeal ruled. It overturned the convictions against Bublitz on the most significant charges 14 and 15 but upheld several other charges over efforts to conceal his financial interests from the trustee of Viaduct and thefts of money for property deals. Bublitz was sentenced in February.