Waikato Times 2/3/13  aaron.leaman@waikatotimes.co.nz

A Te Awamutu accountant's pursuit of entrepreneurial success saw him funnel clients' money into a speculative cigarette importing business, costing his victims hundreds of thousands of dollars.

Judge Arthur Tompkins noted the "corrosive effect" of Gary Hobbs' offending as he sentenced the 46-year-old yesterday to three years and seven months' jail.

Hobbs was convicted of 14 counts of theft by a person in a special relationship after a trial in Hamilton District Court last year. Hobbs' offending dates from between May 2008 and July 2009 when he worked as the principal in a Te Awamutu accountancy firm.

During this time, Hobbs made or directed 14 unauthorised withdrawals from two clients' farm banking accounts, using up to $320,000 to prop up a variety of failing business and speculative investments. Hobbs has since repaid just under $41,000.

One of the speculative ventures was Hobbs' cigarette company South American Tobacco Group (SATG) Ltd.

Judge Tompkins said Hobbs had come through the ranks of the accountancy profession and was viewed by his victims as a trusted advisor and friend.  Although Hobbs did not have any previous convictions, his professional career was marred by "rough patches", the judge said.

The New Zealand Institute of Chartered Accountants found Hobbs guilty of misconduct and subsequently suspended him in August 2010. He was later struck off by the institute. The misconduct findings did not relate to Hobbs' offending, but Todd Simmonds, on behalf of the Serious Fraud Office, said they pointed to Hobbs' chequered professional history.

Mr Simmonds said there was no realistic prospect of Hobbs repaying the outstanding $280,000. He said Hobbs' offending was calculated and represented a "truly gross" breach of trust.  In reply, defence counsel Ron Mansfield said Hobbs was genuinely remorseful for his clients' financial losses and had tried to minimise theirs and other investors' losses.

Prior to his involvement with SATG, Hobbs was an upstanding member of his profession and still enjoyed the support of a number of clients, Mr Mansfield said. However Hobbs' efforts to make SATG a financial success saw "his eyes come off his professional practice".  Although it was "big ask" for Hobbs to try and make SATG a success in the current economic climate, Hobbs' intention was to keep the company afloat and trade through the difficult times.  "There was always the hope that the funds would be repaid, along with promised profits," Mr Mansfield said.

But Judge Tompkins said Hobbs was in a unique position to know his victims couldn't sustain such loss of funds.  "Mr Hobbs was taking money from Peter to pay Paul when Peter couldn't afford it."  Judge Tompkins said Hobbs' offending had had a "corrosive effect" on his victims' farms with any financial recovery taking years.

Hobbs had tried to explain the unauthorised withdrawals with bluster and blatantly absurd reasons, the judge said.