Two men have gone on trial in the Auckland District Court accused of sinking US$1 million of investors' funds into an overseas scam.
The money has vanished.
In his opening address, prosecutor Shane Walsh said it was ironic that the money went into an account of a company called El Dorado Mining International - named after the fabled lost city of gold.
Douglas John Potter, 65, of Gore, and Bryan Thomas Dolheguy, 67, of Remuera, face a joint charge of theft by misappropriation.
They are said to have received the money from investors on the basis that it remained in New Zealand, but transferred the funds to the El Dorado account at the Wells Fargo Bank in Arizona.
The dozens of investors, mostly from Dunedin and Gore, had been promised "extraordinary" returns of 500 per cent for a six- to eight-week term on so-called "offshore high-yield investments", or as the Serious Fraud Office called them, "prime bank instrument fraud".
Mr Walsh said the "investments" were simply about theft.
Investors' funds were supposed to be "blocked" in a New Zealand account and therefore risk-free. A letter from the bank was to be sent to an overseas trader who would somehow use the letter as evidence of the fund's existence to operate a trading programme.
When Potter and Dolheguy joined forces in Equity Solutions Group in October 1998, Dolheguy, who knew a "mysterious" trader in the US called Mr Partridge, offered to make 2400 per cent on the investors' US$1 million in eight weeks. In December that year, Mr Partridge, who at one point told Dolheguy that they could make up to 2000 per cent a week, phoned Potter from the States offering him a "lucrative" trade. But the US$1 million had to be transferred to the US immediately.
Though the money would be out of the country and out of the control of Potter and Dolheguy, Mr Walsh said the pair, though nervous, decided it was "too good an opportunity to miss".
The money was sent by telegraphic transfer and "has never been seen again".
Mr Walsh said none of the investors had been consulted about their money going abroad.
Instead of telling investors what had happened, Mr Walsh said Potter maintained that all was well and that the money was still in NZ.
One syndicate, concerned about not seeing the promised return when the investment fell due, was offered a further 250 per cent to hold on for another two or three months.
Mr Walsh said the pair acted in flagrant disregard for the wishes of the investors when Mr Partridge put them under pressure, telling them that no trader would be interested if the funds were "blocked" in a New Zealand bank.
They had to act quickly or miss out.
"Whether or not the offshore investment was a scam is irrelevant. The accused at this point acted blatantly, disregarding the basis on which they had been given the investors' funds," Mr Walsh told the jury.
The trial before Judge Roderick Joyce, QC, is expected to last three weeks.
Source: The New Zealand Herald
