HANOVER FINANCE & WATSON AND HOTCHIN WILL

COLLAPSE

KIWI FINANCE COMPANY HANOVER

A $35-million case against Hanover Finance directors in March 2012 could see the high flyers & others getting charged. The proceedings relate to statements made in the December 2007 prospectuses & is a start.Action by the FMA under the Securities Act was being taken against Hotchin, Watson, Greg Muir, Sir Tipene O'Regan, Bruce Gordon and Dennis Broit the characters involved in Hanover.

HANOVER:Mark Hotchin lost $224,766 in a Ponzi scheme

Mark Hotchin lost $224,766 in a Ponzi scheme promising to return him 160 per cent over two months.He invested $561,066 (US$250,000) into the scheme in March 2002 and received three "profit payments" totaling $336,600. His capital was never repaid as the three involved in the scheme were recently jailed.

In evidence in 2004 Hotchin said he did not fully understand the scheme but was told his money would be held in a secure account in the United States and Bill Papple would be the sole signatory but when the money never came through even Papple could not say what happened and many lost their money to the scam. Bill and Lee Papple and Tina West started this Ponzi scam between 2000 and 2002.

Papples and West were convicted of conspiracy to defraud in Rotorua District Court in 2004 after fleecing the public of at least $8.3m of the $14.3m they invested. West and Margarite Huia Lee Papple, were sentenced to five years in prison. Bill Papple received a  term of two years. The fraudsters solicited money by promising returns of 3-10 per cent a month, even much higher, using investor money to pay returns to previous investors in a scheme similar to a classic 'Ponzi' fraud. The worst was Hotchin was granted name suppression & if it wasn't then investors would have realized what he was like with Hanover??? bad move by the District Court Judge James Weir who cited the reputation of the Hotchin, the financial and professional consequences and the possible consequences for their company and employees but not the investors who would lose all their money????

SO WHATS THE ANSWER BONDS??

NZ Bonds are a fixed interest investment wher one lends money but does not have shares in the company itself unlike buying shares. They can be liquid and usually for a set term at a set rate but this can change. Liquid allows you to sell bonds via an exchange like shares. You can sell before maturity and if the bonds interest rate has dropped then you make more money but if they rise then you lose. Usually amount of interest doesn't change unless its a floating or pertpetual rate bond. If you hold till maturity the your initial capital value has no impact at all. However never buy from newspapers as all good bonds are snapped up by Brokers who on sell. Interest is paid on a semi annual compounding & better than Bank term deposits. A bond is a certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date. Basically one is making a loan to the government or corporation and gets paid a sum of money in the future for letting the government or corporation borrow the money. Bonds are one way the government raises money besides taxes.

OR BANK TERM DEPOSITS:

Well no to this as interest rates are lower than anywhere else & if you quit earkly then the Bank may levy fees as well as a lower interest rate but if you dont mind the interest rate you can allow some funds to be placed in term deposits. But be sure of the timeframe over which you wish to invest your money as you might need it early. The more often interest is both calculated and credited, the more you will earn. For example, $10,000 invested for five years with interest calculated daily then credited monthly will earn significantly more interest than if interest were calculated quarterly and credited annually. The best investment you can make is to pay off your debts. Why pay 9 per cent on your home loan or 18 per cent on your credit card and earn just 3 or 4 per cent on bank savings. Every $100 you use to pay off your debts is another $100 you are not paying 9 or 18 per cent interest on. Remember, a dollar saved is a dollar earned.

OR STOCKS:

Stock shares are traded, bought and sold at a stock exchange. They allow the stock owner to share in the profits of a company. These profits come in the form of dividends, which are allocated according to how much stock one holds in the company. Of course one of the disadvantages is that one can lose money if a stock's price goes down.

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