New Zealand Law Society - Bankrupt accountant pleads guilty to Insolvency Act breaches

Bankrupt accountant pleads guilty to Insolvency Act breaches

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An accountant has pleaded guilty to seven charges under the Insolvency Act 2006 brought by the Official Assignee (OA) at the Auckland District Court.

“This individual offended in a serious way to breach acceptable commercial standards, both before and during his bankruptcy, which he would have been well aware of as an experienced accountant. His actions have caused real harm in the community,” says the OA, Ross van der Schyff.

The Ministry of Business, Innovation and Employment (MBIE) says Stuart Francis Clarke concealed property from the OA, a charge which carries up to three years in prison, and for managing a business while bankrupt without consent from the OA, which carries up to two years. Sentencing will take place on 23 March 2018.

Mr Clarke ran an accounting practice in Ponsonby under various names, including CK Accountants Ltd, and Wellpark Financial Ltd. After being adjudicated bankrupt, he continued to operate the practice, despite repeated warnings from the OA that he could not do so.

On the day of his adjudication in March 2014, Mr Clarke authorised several changes to his shareholdings on the Companies Register, and listed other people as the directors of the companies through which he operated his business, despite retaining the exclusive underlying control.

MBIE says by arranging for the transfers he attempted to put these shares out of the reach of the OA. The OA is now in the process of reversing these transfers. The prospect of returns for creditors is unclear.

“Mr Clarke could have acted to protect the interests of his creditors, but chose to maintain his lifestyle instead, acting with contempt for the law and seeking to put his property out of the OA’s reach,” says Mr van der Schyff.

Mr Clarke concealed a bank account from the OA, into which over $78,000 had been deposited, which he has since spent and is no longer available to be used to repay creditors.

It was also noted that between December 2013 (when he was served with the application to adjudicate him bankrupt) and May 2014, a period of 21 weeks, Mr Clarke spent $84,160 in restaurant and bars, and in cash withdrawals.

“It is concerning a bankrupt who managed their financial affairs in such a way has continued to offer accountancy services to the public, and we see this kind of behaviour as an affront to the wider community who conduct business honestly and meet all their obligations,” says Mr van der Schyff.