Prominent Marlborough racing personality Michael (Mike) Joseph O’Brien has been jailed for four and a half years for pokie machine frauds.
The Crown said O’Brien’s offending had been selfish and greedy, deceiving the Department of Internal Affairs gambling regulator so he could earn more than $1 million a year “lobbying” for grants to racing clubs.
But O’Brien’s lawyer, Bruce Squire, QC, said O’Brien’s true earnings were lower and he was a legitimate lobbyist, earning an income by successfully persuading gambling trusts to make grants to racing clubs.
O’Brien, 58, was deemed unsuitable for involvement in the gambling industry but at the High Court in Wellington on Thursday, Squire said O’Brien was unable to challenge that view so resorted to the deception.
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The Crown said it would withdraw charges against O’Brien’s father, Pat O’Brien, 83. Pat O’Brien’s ill-health had stalled the case against him in February. He was a retired accountant and former chairman of Harness Racing New Zealand.
Imprisoning Mike O’Brien would affect his father, who he helped daily, and his Indonesian-born wife whose immigration status could be at risk. His two school-age children from a previous marriage also lived with him, Squire said.
O’Brien now admitted he had gambling addiction and resolved to give away his long involvement with horse training and gambling.
He was found guilty of five charges relating to hiding his involvement in the operation of gambling machines through Blenheim-based Bluegrass Trust, and venues hosting the machines.
Justice Robert Dobson said the industry needed to be regulated and O’Brien’s offending struck at the heart of that.
Both the bars and clubs where gambling machines operate, and the organisations that own the machines and distribute the profits, have to be licensed. People cannot be “key” in both roles, but O’Brien hid the fact that he was.
The charges related to dates between 2009 and 2013, when Bluegrass made grants to various organisations, including racing clubs, of $11.8m.
O’Brien invoiced racing clubs for his lobbying services at the start of the season, and the Crown alleged he would then influence or control the grants process so that clubs received about three times the amount they paid him.
The Crown alleged that, during the period the charges covered, O’Brien and related entities received $6.8m, and in a longer period from 2007 to 2013, $11.57m was received for lobbying.
Some clubs were reluctant to pay for O’Brien’s lobbying. It went too far to call the Bluegrass Trust a bank, but O’Brien used it like a float to make up the difference when a club missed out on a grant from another trust, the judge said.
He thought that through O’Brien effectively owning bars where other trusts could put gambling machines, he had links that formed a “mutuality of favours”, in a kind of, “You scratch my back and I will scratch yours”, kind of way, so he was able to influence grants from another trust.
Kevin Martin Coffey, 60, formerly of Masterton, but now of Hawke’s Bay, was sentenced to 12 months’ home detention.
He was a former police officer, former corrections officer, and also a former Internal Affairs gambling inspector who was found guilty of one charge of making false representations to deceive Internal Affairs.
Paul Anthony Max, 60, a bar owner and operator of Nelson, was found guilty of three charges. He will be sentenced in late July.