Blue Chip founder Mark Bryers pleads guilty

In the middle of 2007 it offloaded the New Zealand Blue Chip businesses to a series of franchise companies run by former Blue Chip people. The New Zealand franchise group of companies began to experience cash flow problems in October. More and more clients reported problems receiving rental income. People who had committed large sums to buy apartments were left waiting for news on their investments.

http://www.stuff.co.nz
August 21, 2009

Blue Chip founder Mark Bryers pleads guilty
Adrian Chang

BlueChipMarkBryers.jpg

Blue Chip founder Mark Bryers in the dock at the Auckland District Court. JOHN SELKIRK/Dominion Post

Blue Chip founder Mark Bryers has pleaded guilty to three charges in court today.

At least 3000 Kiwi investors are fighting to recover around $84 million from Blue Chip, which collapsed a year ago.

Appearing at the Auckland District Court today without his usual contingent of minders, Bryers pleaded guilty to three charges relating to failed investments.

The first is for failure to attend a creditors meeting in regards to the company Bribanc and carries a maximum jail term of two years.

The other two are in relation to Swordfish Lodge Management Ltd.

One was for failure to attend watershed meetings and the other was failure to keep adequate accounting records.

Blue Chip was a complex property investment business with various subsidiaries and associate companies - which have been painstaking unravelled by liquidators.

Earlier on in proceedings Bryers was facing 120 charges, which through various hearings have been whittled down to the three guilty pleas and the 69 still pending.

The charges all relate to allegations of no-shows at creditors' meetings and failure to keep books and records.

Bribanc was the main property management company within the Blue Chip group. Its ownership was transferred from the main Blue Chip company to the franchise operation in 2007.

Part of his dealings also saw him act as management of Swordfish Lodge.

Swordfish Lodge is an exclusive Gulf Harbour retreat on the Whangaparaoa peninsula, north of Auckland. It is unrelated to the collapse of the core Blue Chip companies. There were seven charges originally laid by the Companies Office around Swordfish stemming from complaints made by Bernard Montgomerie, whose firm is overseeing the liquidation of Swordfish Lodge Management.

In return for his three guilty pleas, the Ministry of Economic Development, which brought the charges agreed to drop the four other charges.

That leaves 69 other charges to which Bryers pleaded not guilty.

Sentencing for the three guilty charges and on going hearings for the charges he is still fighting will happen in two months time.

Bryers main company Blue Chip collapsed 12 months ago owing thousands of Kiwis more than $84 million.

Bryers, who lives in a luxury waterfront apartment in downtown Sydney, flew to New Zealand to attend today's court hearing.

Judge John Hole continued Bryers' bail conditions which allow him to continue to fly to and from Sydney.

Blue Chip emerged as a listed company on the New Zealand sharemarket in the middle of the decade. It offered clients tax-efficient investment in properties on which they then received guaranteed rental streams.

However, Blue Chip began to struggle when the guaranteed rentals it needed to pay started exceeding its income. In the middle of 2007 it offloaded the New Zealand Blue Chip businesses to a series of franchise companies run by former Blue Chip people.

The New Zealand franchise group of companies began to experience cash flow problems in October. More and more clients reported problems receiving rental income. People who had committed large sums to buy apartments were left waiting for news on their investments.

Ultimately over 20 Blue Chip-related businesses crashed in early 2008.

The Serious Fraud Office and Commerce Commission began inquiries.

Bribanc was then transferred from the main Blue Chip company to the franchise operation in 2007.

http://www.stuff.co.nz/business/industries/2776017/Blue-Chip-founder-Mark-Bryers-pleads-guilty


Risks: Franchisor corporation created to fail, Ponzi (pyramid) scheme, Predatory actions, Bankruptcies, Predatory franchising makes more money selling than operating system, Multiple corporations protect majority shareholders' interests, New Zealand, 20090821 Blue Chip

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