Auckland accountant sentenced to three years imprisonment for bankruptcy offences

An Auckland accountant has been sentenced to three years imprisonment for seven bankruptcy offences, including hiding assets from the Official Assignee through the use of circular shareholding.

Stuart Clarke has been sentenced at the Auckland District Court for offending under the Insolvency Act going back to 2013. These charges included concealing and fraudulently removing property, materially increasing the extent of insolvency by extravagance in living, and managing a business without the consent of the Official Assignee.

On the day he was adjudicated bankrupt in March 2014, Mr Clarke authorised several changes to his shareholdings on the Companies Register, thereby attempting to put them out of the reach of the Official Assignee. He subsequently listed other people as the directors of the companies through which he operated his business, despite retaining exclusive underlying control.

Mr Clarke also concealed a bank account from the Official Assignee, into which nearly $80,000 had been deposited.

Between the time he was notified of the bankruptcy application in December 2013 and May 2014, Mr Clarke spent a total of $40,775 in restaurant and bars, and withdrew $43,385 in cash.

Prior to bankruptcy, Mr Clarke ran an accounting practice in Ponsonby under various names, including CK Accountants Ltd and Wellpark Financial Limited. After being made bankrupt, he continued to operate this business, despite repeated warnings from the Official Assignee that it was illegal to do so without the Official Assignee’s approval.

Mr Clarke also failed to complete a Statement of Affairs, and persistently failed to answer questions put to him by the Official Assignee, or provide documents requested by the Official Assignee.

In sentencing, Judge Kevin Glubb described the offending as involving a high level of premeditation and planning. He found that Mr Clarke had embarked on a deliberate course of conduct intended to frustrate the Official Assignee and prevent the distribution of assets to creditors.

Judge Glubb noted that Mr Clarke has never shown any remorse for his offending. He continues to refuse to co-operate with the Official Assignee and blames the Official Assignee for failing to understand his situation.

“This individual offended in a serious way and breached acceptable commercial standards, both before and during his bankruptcy. He would have been well aware, as an experienced accountant, that his actions were unlawful. His actions have caused real harm in the community,” says ITS National Manager Robyn Cox.

“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 Official Assignee’s reach.”

Until he is discharged, Mr Clarke cannot take part in the management of business or be self-employed without first obtaining the consent of the Official Assignee. This prohibition extends to all forms of business (including sole traders). He is also prohibited from promoting or taking part in the management of a company, under s382 of the Companies Act, for five years.