A company running several Mitre 10 stores has been found guilty of criminal charges after it defrauded one of its contract builders. TONY WALL reports.
For 12 years, Grant Lemon worked hard for Mitre 10, making pre-fabricated roof trusses for its Waihi branch.
It was a job the contract builder got through his brother, David Lemon, who was the firm’s truss detailer.
Grant Lemon was paid on a “piece rate” basis, where he was paid for each unit of production at a fixed hourly rate. The more work he completed in a certain time period, the more he got paid.
But in 2008, around the time of the Global Financial Crisis, he felt like he was working harder than ever but earning less.
He was suspicious that something had happened to his pay rates, but couldn’t raise it with his brother because they’d fallen out.
Unbeknown to Lemon, he was the victim of a scam by his employer to cut costs during the GFC – a fraud that would cost him somewhere in the vicinity of $100,000 over the next five years.
More than a decade later the same family company that runs Waihi Mitre 10 – as well as Mitre 10 Mega Tauranga and Mitre 10 Mega Rotorua – has finally been brought to justice.
Juted Holdings was found guilty of two representative charges of defrauding Lemon after a defended hearing in the Waihi District Court.
Judge Paul Mabey, QC, ordered the company to pay reparation of $80,000 to Lemon and also fined it $15,000. A senior manager who was also charged with fraud was acquitted and his name suppressed.
Lemon, of Waihi Beach, says the victory is bitter sweet – he believes the company got off lightly considering the impact the fraud had on his health and finances.
“It was a dirty little secret that that company held from 2008 right through to 2013,” he says.
He also claims he was sacked in 2015 because he wouldn’t drop the case – an allegation Juted Holdings denies.
Lemon only found out that he was being ripped off when his brother finally told him.
David Lemon told the court he’d been instructed by his then-boss in 2008 to go into the computer software programme which calculated Grant Lemon’s time allocation for each job, and reduce it by about 25 per cent.
David Lemon was instructed to build in a $5 per hour charge to the customer, meaning his brother was paid less and Mitre 10 Waihi received the financial benefit.
David Lemon told Stuff the deception ate away at him.
“I was a pawn. Because I was on a salary I couldn’t say anything, and we weren’t talking at the time because we’d had a family dispute.
“I kept saying to [my boss] ‘when are you going to tell Grant what you’ve done?’ He said ‘it’s up to Grant to find out’ – basically catch me if you can stuff.
“It brought my health down… I ended up with an ulcer… and then I just thought, ‘stuff it I’m going to blow the whistle’.”
In August, 2013 he emailed his brother, describing how he’d been ripped off.
“[My boss] got me to adjust the set up and pressing times in the programme by 25 per cent… which effectively means that you have been denied somewhere in the vicinity of $80,000 to $100,000,” he wrote.
“He told me… he was going to discuss this with you but I believe he he never did, which makes it totally illegal.”
David Lemon, who’d worked for the company for 30 years, was later disciplined for alleged breach of confidentiality. He continues to work for Waihi Mitre 10.
Grant Lemon kept working for the company, but began an investigation, hiring an accountant to go over the complicated pay system and determine his losses.
The accountant found that they totalled $100,000.
Lemon says he approached local police, but they said it was a civil matter.
He hired a private investigator, who prepared a report which found criminal deceit had occurred.
The report went to the Hamilton police corporate fraud office, but staffing and workload issues, as well as the complex nature of the case, meant it sat for two years before charges were laid.
It’s understood police could find no other case law where an employer had defrauded an employee in such a way.
Juted Holdings applied to the court for the charges to be dismissed on the grounds that it was essentially a civil dispute.
That application was dismissed by a different judge.
At trial, the company argued that Lemon was not employed under an over-arching contract – rather he was contracted for each job – so it had no obligation to tell him about the alteration to the pay rates.
Judge Mabey rejected that argument.
The senior manager who was acquitted of fraud told the court that he was told by the company owner, Ted Bold, to make the alterations to the software system and not to tell Lemon because it was “confidential to the company”.
He said the motivation for this was to ensure the company’s survival in a severe economic downturn and to save jobs.
Judge Mabey ruled that Lemon was under a single, overarching contract that was unilaterally changed, “and the company through its controlling mind Mr Bold gave orders that those changes were not to be disclosed to Grant Lemon.
“I have found that the company’s intention was to deceive Grant Lemon, that it caused him loss and the company has no valid claim of right.”
Ted Bold, who died in 2013, and his wife Judith, who died in 2016 while attending a Mitre 10 conference in China, were Mitre 10 royalty.
They operated stores in the Bay of Plenty since 1978, opened one of the first ‘Mega’ stores in the country in 2004, and were inducted into the Mitre 10 Hall of Fame just a week before Judith died.
Their son Greg, director of Juted Holdings (an amalgamation of the names Judith and Ted), says the company accepts the court’s findings and “regrets the sequence of events which led to these proceedings”.
“Our business practices have changed significantly in the 10 years since this matter arose and we are confident that we now have best practices in place.
“We acknowledge the seriousness of the matter and… continue to focus on operating in line with best practice.”
Greg Bold says the company is “committed to the doing the right thing by our customers and our people”.
Grant Lemon says he was told he would be sacked if he didn’t withdraw his police complaint and was told by a senior executive they would “fight him all the way through the courts”.
His contract was terminated in January, 2015.
Juted Holdings denies Lemon was sacked because of the fraud case, claiming it was because he would not enter a formal contract and comply with health and safety requirements.
Lemon says the contract was presented to him in late 2014 – the first time he’d been shown any kind of contract – and he wasn’t told he would lose his job if he didn’t sign it.
He is disappointed that when ordering reparation, the judge went with a lower figure of $75,000, calculated by an accountant engaged by police.
The judge also declined to cover Lemon’s costs for the private investigator, which came to $12,000, but ordered the company to pay $5000 for his accountant’s fees.
Lemon says the case has had an on-going impact on his health – he developed depression – and his finances.
“I’m out of pocket by a lot of money. It’s hard to get work again in a small town – all the builders contract through Mitre 10 – they’re not going to take someone on who’s taken them to the cleaners.
“I’ve had to do most of my work out of town.”
His wife, Cheryl, says it’s been tough on him.
“He worked so hard – he went in to do an honest day’s job… and they thought they could get away with doing what they did to him. His whole reputation’s been tarnished and it’s almost broken him.”
Juted Holdings applied for a discharge without conviction, claiming the bad publicity could lead to a drop in profitability and jeopardise jobs.
Lemon says that’s “crap”.
“What would have happened if I had started stealing off them? Do you think they would say ‘oh well, we don’t want to charge him’… I don’t think so.
“You go into their shop and all the faces of all the people who’ve been shoplifting are plastered up on the wall.”
He says the legal fight ended up costing Juted Holdings more than the amount he was defrauded of.
“Companies like this do it because they know they can get away with it. There’s not many guys like me that will take them on and fight it for so long.”