Thursday, December 18, 2014

Rise and fall of financial adviser fraudster Tony Mount


Nelson Mail/Fairfax Media 
http://www.stuff.co.nz/business/64270458/Rise-and-fall-of-financial-adviser-fraudster-Tony-Mount

Former high-flying Nelson financial adviser Tony Mount will spend Christmas behind bars after being convicted for defrauding clients. Stacey Knott investigates his downfall.



Tony Mount seemed to have it all.

He had risen from working class beginnings in northern England to become a prominent financial adviser in Nelson. He drove around town in an Aston Martin convertible, had a large house in the Maitai Valley, sponsored Nelson Opera in the Park, and started an eco-paint company.

But after a long-running fraud investigation, his world came crashing down this week when he was jailed for ripping off and stealing from clients who trusted him with their investments.


Mount was found guilty in October of 74 counts of fraud. At his sentencing in Nelson District Court yesterday he was jailed for six years and nine months and ordered to serve a minimum of half the sentence.

He has lodged an appeal against his convictions.

After two different cases against him, one criminal, the other civil, Mount was finally caught out. Over a decade, he stole $510,671 from the 18 complainants in the indictment by inflating the purchase price of investments bought on their behalf, and by deflating the sale price of investments sold or redeemed.

In the civil case, brought by 20 investors, Mount has been ordered to pay $2.84 million, plus interest, expected to be about $900,000.

Mount is still listed as a director for Independent Financial Consultants in Nelson and the sole director of paint company BioPaints. In 1999, he was a finalist in the Financial Planner of the Year awards.

Back then, he was a credible man about town.

He had taken in a child of a friend who had died, was a supporter of the arts and was used as a source of media comment on the financial world.
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However, 15 years later, sitting alone in a courtroom, his offending was laid bare, as well as what the judge, Crown prosecutor and others said was his arrogant and untrustworthy character.

Mount, who represented himself at the trial and sentencing , has shown no remorse and seemed almost uninterested in what was happening.

Judge Arthur Tompkins highlighted Mount's "arrogant and aggressive fashion" that he used to "deflect and endeavour to defeat" his clients when they questioned him. Clients had trusted their life savings to Mount, who betrayed their trust to support his "lavish lifestyle", he said.

And, it was "particularly galling to the number of clients living around Nelson, who see that manifestation of that lavish lifestyle in the region".

Mount had maintained his innocence by filing appeals against his convictions, and prison was clearly the only outcome, the judge said.

"In many respects he is a stranger to honesty. What he says disconnects to what he does."

Clients and others who had involvement or interest in the case, including those who had just been involved in the civil case, listened with bated breath as Tompkins delivered his verdict.

Lawyer for the clients represented in the civil case, Rick Farr, spoke to them afterwards. He congratulated them on their tenacity for sticking to bring him to justice, despite Mount's at times "lavish defence".

Crown lawyer Jackson Webber told the court Mount's "gross breaches of trust were obvious"; he was "belligerent when challenged" and his victims were elderly and vulnerable.

It was motivated offending "influenced by greed and the lifestyle Mount was living".

He had not shown a "shred of remorse"

and lacked good character, Webber said. Mount's dishonest and manipulative actions from the first trial showed this, he said.

Mount's downfall has been attributed to one of his clients, Douglas Gregory. He had invested $300,000 from the sale of his mother's house with Mount in 2002. He said Mount was initially "so helpful" with his investments.

Gregory started to look into his investments, which he expected to get a lot more back from. He said calculations showed he should have made $100,000 in profit with his investment.

He had to work hard to convince others Mount was not to be trusted. "He was an icon around town," he recalled.

Gregory first went to lawyer Rick Farr in 2010. Farr visited Mount to relay the concerns.

"What struck me when I first went into his office was how large it was and he was the only person in it. That started to ring alarm bells for me because of what Mr Gregory had explained to us."

Farr recalled Mount refusing to entertain any suggestion of "rather dubious accounting. After that meeting he sent me an email demanding an apology from Mr Gregory".

At that point, they decided to get the police involved, but after realising this was not going to be immediate, and Farr finding he had a number of clients who had invested with Mount who had similar concerns, he put out a public notice to get investors to meet. About 30 came along.

They formed a plaintiffs' group, and had Mount's assets frozen in November 2010. Farr took on 20 plaintiffs in the case. Their's was a civil case, going on at the same time police were investigating the criminal case.

Farr says Mount's records were sparse and difficult to get hold of.

Through the process, it was discovered Mount had advanced $3.5 million personally to his company, BioPaints, with his income being a tiny fraction of that.

During the civil case, almost every preliminary order that was made was appealed or a review was sought, Farr said. It was expensive, and it was delaying the civil case.

Farr said they had to be careful to keep the two cases separate. Mount wanted the criminal case to be finished before the civil could start.

And, when it came to Mount's wealth, there were clear indicators of it.

"An indication of his wealth was his assets - one of them was his Aston Martin motor car, he bought for some $300,000 and sold it for what we were told was $120,000."

He doesn't know where that car went. Mount also had a property in St Arnaud that was sold around the same time. This was Mount dispersing his assets, says Farr.

Mount's house, valued in 2012, is worth $830,000.

There is freezing order on it so Mount cannot sell it, but the court is in the process of selling it.

There was $1.4m in cash that was frozen, though of that $800,000 was "released to him on application to the court to fund his lifestyle and his legal defences".

It was the plaintiffs' money being used against them.

Farr calls Mount a bully. He bullied his clients "into accepting what he was saying as gospel".

To keep the civil case going, they got a litigation funder on-board, LPF Group. Farr believes this was the first time this has happened in Nelson.

"The expense of the case and their [clients'] exposure to adverse costs was a real concern to a lot of people who had already lost a lot of money; a lot were older people."

If LPF had not got involved, Farr wonders if the case would have proceeded.

Farr is reluctant to comment on searching out Mount's other assets.

"Suffice to say we have some work still. The matter is not over yet."

Detective Paul Heathcote took on the criminal case in 2010, when he was approached by Gregory. Due to resources and other priorities, police were unable to look into his complaint until September 2010. When they did, Heathcote soon saw it was a case worth looking into.

Police executed a search warrant to get Gregory's documents. "From what we found there, that gave me the belief there may be other clients affected."

They got a second search warrant to recover other clients' files. "That's when the investigation commenced in earnest."

Police sent a letter to all known clients, past and present, explaining what they were doing, and what the allegation was.

There was about 100 of them, and about 80 responded, making official statements and providing documents.

Heathcote focused on a method he likened to "'clipping the ticket both when he sold and purchased", where Mount purchased and sold investments but misreported the values to his clients.

He put it to the clients there was "maybe some misappropriation of funds" from their portfolios.

Police needed to make a deeper examination to see the amounts, so called in expert help.

Investigators from Inland Revenue and the Serious Fraud Office were recruited. Initially, all they had was the paper evidence. Police seized Mount's computers and cloned them, but were unable to make sense of the programs and data on them.

Heathcote said he had to cut off offending before 2000.

"That was as far back as we could obtain banking records. It is my belief this was going on before then."

It was a challenge, he said. "It was always going to be complex and difficult, based on the evidence we had."

In an ideal world, the Serious Fraud Office would have taken it, he said.

However, their resources were stretched.

The Mount case was supervised and managed from the Nelson District, with additional national funding. It took about 12 months to investigate and bring to court.

And, in that first trial in July 2013, Mount handed over a laptop with printed documents. Mount intended it to confirm he was telling the truth and his figures were correct. It proved to do the opposite. It allowed police access to the figures provided to police by Mount's broker. Mount also lied to police, telling them it was the same laptop police had seized earlier.

The first trial was aborted, and the second trial began in October this year.

Mount's activities had been the focus of Heathcote's work for the past four years.

It's also been the most resourced investigation, in time and money, the district had undertaken.

It was of "huge" public interest, he believed. "More to the point, this man needed to be brought to account. He has put a lot of people in financial difficultly in their elderly and retirement life."

There was huge breaches of trust between Mount and his clients. "Some he was on personal terms with, and knowing he was stealing from them has had a lot of the clients distraught."

The Crown, police and courts are still working out if there will be additional charges.

Victim feels for Mount

While Tony Mount has been called a stranger to honesty, the man who got the ball rolling on his downfall can't help but feel sorry for him.

Speaking to the Nelson Mail after convicted fraudster Tony Mount's sentencing, former client Douglas Gregory said he was after justice, and got it.

Gregory has been involved in both the civil and the criminal cases against Mount.

He has been credited for bringing Mount's dealings to police attention. He went to police with his concerns in 2010, after doing the sums himself.

The retired plumber modestly says: "I'm just like that, it's one of my things.

"I didn't do anything special. I only initially did it just for my own satisfaction really, it just happened it did steamroll a bit when we went to the police."

Gregory wasn't looking to make any money from the civil case. Both cases were about bringing Mount to justice.

"I feel sorry for him in a way, but he was particularly arrogant especially when I was trying to get paperwork from him to make some judgments. He wasn't clever, his figures weren't clever," he said.

Geoff Gudsell was involved in the civil case seeking investors' money back. He had invested with Mount, before the year 2000.

He attended an initial public meeting in 2010, called by lawyer Rick Farr who wanted to gauge how many clients Mount may have ripped off.

"I don't think at the time we realised what a tremendous fight and battle he was going to put up.

"All of us in the end felt, while we did not expect to return any of the money, we have at least obtained some justice."

Between the two cases, clients spoken to said they hoped it would put him behind bars, as well as take away his assets.

In the past, Mount had claimed to come from humble beginnings - a Yorkshire coal-miner's son.

Clients spoken to yesterday questioned how he could have stolen off the same sort of people as he had come from.

Timeline

1997: Tony Mount and wife Kaye become guardians of a friend's daughter after her parents die in a road accident in the Lewis Pass.

1999: Mount is a finalist in the inaugural Financial Planner of the Year awards.

2009: Mount's paint company, BioPaints, is the new principal sponsor for Opera in the Park, offering free tickets for 2010.

February 2010:: In a profile on Mount, he says his father worked in a Yorkshire coal mine for 30 years. In 1987 he set up his financial planning business, after reading an article that advised people to get a good financial planner.

September 2010: Mount is charged with fraud. He tells the Mail the "charge came out of the blue". After his first court appearance, at least 40 clients contact police. A further article says he faces a further 58 fraud charges, with more possible.

October 2010: Mount fires all BioPaints employees. A group of investors take civil action against Mount to try to freeze some of his assets until the police criminal investigation is complete. Mount later appeals the decision.

November 2010: Mount's BioPaints is no longer sponsoring Opera in the Park

March 2011: Mount committed to stand trial on 137 fraud charges.

April 2011: A group of former clients successfully apply to have Mount's assets refrozen.

October 2011: Police lay 390 new charges against Mount, bringing it to 527 fraud charges totalling $1.4 million.

June 2013: Stands trial in the Nelson District Court on 77 fraud charges. Mount represented by defence lawyer Jonathan Eaton. Crown alleges Mount skimmed money from his clients' investments by telling them investments cost more than they did and told them investments had sold for less than they actually realised. Clients testify they did not receive a lot of information on their investments.

July 2013: The trial is aborted as more information comes to light.

October 2014: A new trial held in the Nelson District Court. Expert witnesses called, including from the Serious Fraud Office, and Inland Revenue. It is revealed that Mount's trial in 2013 was aborted after he handed over a laptop that had a working copy of a program called IMS on it which Mount used for his business.

Police had cloned his computers when he was first charged in 2010, but were unable to make sense of data on them, because the IMS software used a specific operating system. With the laptop they can make sense of data and it backs up their findings.

Detective Paul Heathcote tells the court Mount had claimed it was the same laptop, seized and returned in 2011. Evidence proves otherwise.

Mount elects not to give evidence. Tompkins finds Mount guilty of all charges.

December 2014: Mount sentenced to six years nine months on criminal charges.

Mount wanted a High Court decision that he should pay clients in the civil case $2.9m, overturned. The Appeal Court dismisses his appeal. Mount ordered to pay $2.84m, plus interest expected to be about $900,000, bringing the total to about $3.7m.