A man who sold a plane of Sir Peter Jackon's without his knowledge, and did not pass on the money paid for it, is on trial in the High Court in Wellington.
Eugene DeMarco is facing six charges relating to fraud during 2016 and 2017 while working for The Vintage Aviator, a company owned by Sir Peter Jackson which sells restored and replica vintage WWI planes.
He's pleaded not guilty to all charges.
Crown lawyer Sally Carter told the jury Mr DeMarco's alleged offending started when he found his own finances in a precarious position.
He had become chair of the Airtight Trust, which borrowed $1 million to buy valuable vintage planes.
In 2011, when the finance company came calling for the debt, Sir Peter agreed to buy a hangar owned by the trust and to lend Mr DeMarco $607,000 via his Film Property Trust.
By early 2016 the debt still had not been paid, and the interest had accrued so it was worth more than $1m.
Ms Carter said it was about this time that the NZ Warbirds Association became involved.
They had come to Mr DeMarco at The Vintage Aviator Limited (TVAL) as he was known for dealing with vintage WWI planes. After a trial flight and some discussion it's alleged Mr DeMarco offered to sell the Warbirds Association two planes for a higher price than they were worth.
Mr DeMarco told TVAL he had been offered a higher price by the association because they wanted to help him pay off his debts - but, Ms Carter said, this was a lie.
In order to avoid any extra tax on the inflated price it was agreed the money would go through Mr DeMarco's company called The Old Stick and Rudder, then to TVAL.
The Warbirds Association and its benefactor believed their money was going straight to TVAL.
They paid 85 percent of the price in mid-2016, with the remainder due upon delivery.
The Crown said Mr DeMarco used $720,000 to pay off his debt and let another $1m sit in his bank account, and used it for everyday bills.
At the end of October 2016, the defendant arranged the delivery of one of the planes to a hangar in Auckland, without the knowledge of Sir Peter or his company - or with the company receiving any money for the aircraft.
The "first inkling" the plane had been sold came when the Civil Aviation Authority asked for a fee to change the ownership of the plane.
Sir Peter Jackson then saw a photo of his plane on a Facebook page, dated November 2016, in the Warbirds' hangar.
"And that was the first that he became aware the plane was no longer where it should be, and was with Warbirds," Ms Carter said.
A complaint was made to the Serious Fraud Office over Mr DeMarco's behaviour in August 2017.
Ms Carter said the defendant did return some of the money back to Warbirds, that he had in his bank account for about a year.
"In reality, he helped himself to an interest-free loan, but that doesn't lessen the dishonesty of what was happening at that earlier stage," Ms Carter told the jury.
Mr DeMarco was also accused of getting a loan for $250,000 from BNZ in May or June of 2016 using another vintage plane as security, despite being part of a shareholder's agreement that no charges or loans would be made against assets without the consent of all the shareholders.
Sir Peter Jackson is expected to give evidence during the trial, which has been set down for three weeks.