Doolan, Moses and a third director, Don Young, were convicted in July of five criminal offences involving offer documents containing untrue statements.

Nathans went into receivership in August 2007 owing 7,082 “mums and dads” investors about $174 million. Investors have been repaid 3.7 cents in the dollar of their principal with the last distribution in December 2009.

Justice Paul Heath of the High Court sentenced Doolan to two years and four months in prison and ordered to pay $150,000 in reparation. Moses, who had been Nathans' chairman, was sentenced to two years and two months in prison and ordered to pay $425,000 in reparation.

Young was ordered to serve nine months home detention and to do 300 hours community work and to pay $310,000 in reparation.

The maximum penalty each director faced was five years in jail and a fine of up to $300,000 and “if the offence is a continuing one, to a further fine not exceeding $10,000 for every day or part of a day during which the offence is continued.”

According to the New Zealand Herald, Heath said on sentencing the three men's offending “did not involve any element of dishonesty, rather the performance of directors was inept. It was far below the standard any investor would expect.”

The Financial Markets Authority (FMA) welcomed the sentencing, chief executive Sean Hughes saying it sends a clear message the courts regard untrue statements in offer documents as a serious breach of the law.

“The guilty verdict in this case, and the penalties imposed, show financial markets participants can expect to be held accountable for their conduct,” Hughes says.

John Hotchin, who was also a director and who founded Nathans and its parent company VTL Group in partnership with Doolan, pleaded guilty to three of the same charges in March and was fined $200,000 and sentenced to 11 months home detention and 200 hours community service.

Stevens and Moses had charges of breaching securities law dismissed in 2001 although an employee was fined $12,000 in 2002 on similar charges.