A 79-year-old lawyer described in court as “a consummate thief and liar” has been jailed for eight years one month after his Ponzi scheme led to losses of $2 million for the people who invested their money.
Serious Fraud Office prosecutor Rachael Reed said Milne had stolen from clients and lied to them over 21 years. The Crown described John David Milne’s actions as “predatory offending” against his 32 victims.
She told Judge Jane Farish at the Christchurch District Court sentencing: “There is no doubt he is a consummate thief and liar.” He had stolen clients’ funds and recycled them between investments, and the money had never been invested. He had repeatedly promised clients that their money was safe.
A 69-year-old retired Dunedin man’s victim impact statement said he and his wife had been “financially crippled” and could not visit their grandchildren overseas, after losing $1.14 million through Milne’s frauds. They were now surviving on their pensions and selling some property and were not able to fund private hospital treatment. “I now have a huge distrust of lawyers,” he said.
The Crown said the loss was just over $2 million. Ms Reed said $2.8 million was stolen from the capital of investors and some of that was recycled to investors.
She said the impact on the lives of the victims, detailed in their statements, made sad reading.
It had been a concerted plan by Milne to obtain money from investors to continue the scheme. “It must have been carefully managed to continue the scheme for 21 years,” she said.
There was evidence the money had been used to pay credit card bills and business and personal expenses, indicating the Milne was living beyond his means over those years.
Defence counsel Karen Feltham said Milne had difficulties coming to term with his offending. He had always borrowed and repaid money during his business and personal affairs. He had thought he was borrowing from people and repaying them – and many people had been repaid. But his business acumen had fallen and sour deals had cost him money which was what much of these “borrowings” had been used for. He had not lived an extravagant lifestyle.
There was little chance of any significant reparation, she said.
Milne pleaded guilty on the first day of his trial in October to 11 charges of theft by misappropriation and 23 charges of theft by a person in a special relationship.
Judge Farish said the losses had caused financial, physical, and emotional harm to his victims. He had worked as a lawyer from 1960 to 2012. The offending had taken place from 1991 to 2012. He had promised to invest money but none of the money had been invested or put through any lawyer’s trust accounts. She believed he had not used the trust accounts because it would have meant his thefts would have been discovered quickly.
Most clients had lost money they had saved hard for. They were hardworking, decent, honest New Zealanders who had saved for their retirement. It was their life savings that he had stolen.
The victim impact reports made very sad and distressing reading. Many of them had been his friends, and he had maintained that friendship while he was stealing their money. Many victims now lived in frugal ways. They were now going without because of his thefts. Some were anxious that they would not be able to pay for their own funeral expenses, or pay university fees for their grandchildren.
She told him lawyers had to promise and trade upon their honesty and integrity, and he had abused that in a very serious way. He had brought the profession into disrepute.
She accepted Milne had led a modest lifestyle. He had five children – one of them had died – and his marriage had come to an end in 1986. He had now been declared bankrupt, had no assets, and was resigned to being sent to prison.
She said it was premeditated offending, as a Ponzi scheme, and Milne had even charged commission on the money he was stealing rather than investing. It was an abuse of his authority, and his position as a trusted friend.
She refused any sentence reduction for remorse or co-operation, or for his age, but she allowed a small reduction for his good character before the offending began, and for his guilty pleas. That had saved older and vulnerable victims from giving evidence.
She jailed him for eight years one month, with no minimum non-parole term.
Milne thanked the judge as he was led to the cells.