Recover Financial Losses

Gold Coast director and property developer sentenced to eight years’ imprisonment

Gold Coast director and property developer sentenced to eight years’ imprisonment

“Owing investors approximately $9 million (17-246MR). Many of the investors were pensioners and were approached by telemarketing or word of mouth. Investors were convinced to borrow against their homes and were told that their money would be used to develop property in Tasmania. Instead, the money paid by investors was used to pay back interest owed to other investors, payments to employees, cash withdrawals and transfers to personal bank accounts.”

ASIC bans Queensland financial adviser Travis Byron McLean

ASIC bans Queensland financial adviser Travis Byron McLean

The Australian Securities and Investment Commission (ASIC) has banned financial adviser Travis Byron McLean from providing financial services for a period of five years.

Former Westpac Home Finance Manager sentenced to 3 years imprisonment after pleading guilty to dishonest use of his position

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Following an ASIC investigation, Mr. David St Pierre, a former Westpac Home Finance Manager, has been sentenced in the Southport District Court to 3 years imprisonment, to be released after 6 months on a recognisance order.

On 2 November 2016, Mr St Pierre pleaded guilty to three counts of dishonest use of his position, with the intention of directly or indirectly gaining an advantage for himself or others.

ASIC alleged that between July 2008 and June 2010, Mr St Pierre dishonestly used his position and submitted loan applications for approval when he knew they contained false information and false documents. 

Mr St Pierre obtained over $2.5 million for Westpac customers, that they invested with a now failed Tasmanian property development scheme, operated by Capital Growth International Club Pty Ltd (CGIC) and All About Property Developments Pty Ltd (AAPD) (refer: 15-137MR).

In delivering the sentence, Judge Kent QC remarked that Mr St Pierre's behaviour was described accurately in his opinion by the Crown as calculated, elaborate, determined and not a fleeting mistake.

ASIC Commissioner Peter Kell said: "Mr St Pierre's actions betrayed the trust of his clients and caused them significant financial harm. This sentence showed such behaviour will not be tolerated.'

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Mr St Pierre's recognisance is in the sum of $1000, conditioned that he be of good behaviour for a period of 3 years.

Background

ASIC's investigation found that the customers to whom the loan applications related were elderly and vulnerable and with limited financial means, yet in spite of this, Mr St Pierre encouraged them to borrow against their homes, some of which were unencumbered, to invest with CGIC and AAPD, which promised returns of 12–20% per annum.  

The customers received monthly interest payments from CGIC and AAPD after they invested, however the interest payments stopped shortly before a liquidator was appointed on 28 February 2011.  This left customers without sufficient income with which to repay their loans to Westpac.

Westpac has compensated customers who obtained loans from Westpac through Mr St Pierre in relation to amounts they invested in CGIC.  Westpac has also compensated investors who did not borrow funds from Westpac but claimed to have had some direct contact with Mr St Pierre before making their investment in CGIC. ASIC acknowledges Westpac's commitment to achieving a resolution for the benefit of CGIC investors. (refer: 14-264MR).

In March 2014, ASIC permanently banned Mr St Pierre from engaging in credit activities and providing financial services (refer: 14-043MR).

ASIC'S investigations into CGIC, AAPD and its officers are ongoing.

 

16-139MR ASIC bans former employee of financial services business

ASIC has permanently banned former AFS licensee employee Mr Nicolai D'Lamartin, of Rosebery NSW, from providing financial services.

In 2014 Mr D'Lamartin was convicted of numerous counts of fraud and related offences under the Crimes Act 1900 (NSW), including impersonating persons and creating and using false documents to gain a financial advantage, larceny and using and possessing other people's identification information.

ASIC Deputy Chair Peter Kell said: 'Banning unscrupulous operators like Mr D'Lamartin will ensure consumers can have trust and confidence in the financial services industry.'

Mr D'Lamartin's convictions came to ASIC's attention in the course of investigating the conduct of an AFSL holder in late 2015. He has the right to appeal to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision.

Background

On 27 February 2014 Mr D'Lamartin was convicted of the following:

  • 3 charges of fraud under s192E(1)(a) of the Crimes Act whereby he impersonated another person to dishonestly obtain property belonging to another;
  • 17 charges of fraud under s192E(1)(b) of the Crimes Act which included conduct where he impersonated another person to dishonestly obtain a financial advantage, or engaged in the unauthorised use of cheques, online bank accounts or credit cards to obtain a financial advantage;
  • 2 charges of forgery under s253 of the Crimes Act whereby he falsified bank document and other documents in the names of others, with the intention of having someone else accept them as genuine;
  • 1 charge of forgery under s254 of the Crimes Act whereby he used false documents to obtain bank cheques from bank accounts of others;
  • 3 charges of larceny under s117 of the Crimes Act whereby he stole cash and property, including drivers licenses and credit cards, from others;
  • 2 charges of dealing with identification information under s192J of the Crimes Act whereby he used identification information belonging to two people with the intention of committing fraud;
  • 2 charges of possession of identification information under s192K of the Crimes Act whereby he possessed identification information such as drivers licences, credit cards and Medicare cards with the intention of committing fraud; and
  • 1 charge of dealing with property suspected of being proceeds of crime under s193C of the Crimes Act.

Mr D'Lamartin was sentenced to an aggregate term of imprisonment of 3 years which commenced on 21 November 2012 with a non-parole period of 20 months.

16-377MR ASIC permanently bans Brisbane financial adviser

ASIC has permanently banned Mr George Karakatsanis, of Yeronga, Queensland from providing any financial services.  ASIC found that he engaged in conduct that was misleading and deceptive whilst recommending clients invest in unsecured fixed interest notes in Protect Ensure. ASIC also found he failed to comply with financial services laws.

Mr Karakatsanis has been an authorised representative of various Australian Financial Services Licencees since 2003.  Between 16 July 2012 to 22 May 2014 Mr Karkatsanis was an Authorised Representative of Protect Ensure Pty Ltd.  

ASIC found that Mr Karakatsanis:

  • engaged in conduct that was false and misleading by making false statements about the features of financial products that were likely to induce clients to acquire the products;
  • deliberately misled clients so that they did not understand the basic features of the financial products he was recommending they invest in;
  • engaged in misleading and deceptive conduct by failing to properly disclose that investor funds were being invested in Protect Ensure and thus constituting a direct conflict of interest;
  • failed to act in his clients' best interests by failing to disclosure this conflict of interest;
  • failed to act in his clients' best interests by ignoring their circumstances, objectives, financial situations and needs when recommending they invest in Protect Ensure;
  • failed to give provide appropriate advice; and
  • failed to provide Statements of Advice.

Subsequently, partly due to Mr Karakatsanis' conduct, clients' funds were used improperly, such as to pay Protect Ensure's business related expenses. As a result, some investors lost their invested funds entirely.

ASIC has determined that Mr Karakatsanis is not of good fame and character, making him an unsuitable person to provide financial services. 

'Mr Karakatsanis's conduct falls far short of the high standards expected of those in the financial services industry. ASIC will continue to protect consumers from advisors who engage in misleading conduct and place their interests above those of their client.'  ASIC Deputy Chairman Peter Kell said.

Mr Karakatsanis has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

On 15 December 2014, ASIC cancelled the AFS Licence of Protect Ensure as a result of Protect Ensure not having adequate financial resources to provide the services covered by the Licence and to carry out supervisory arrangements as required by s912A(1)(d) of the Corporations Act. (refer: 14-338MR).

Protect Ensure was placed into liquidation on 12 June 2015.

On 30 June 2015, ASIC permanently banned Mr Lee Robert Robin, of Camp Hill, Queensland from providing any financial services.  ASIC found that he engaged in conduct that was misleading or deceptive whilst issuing unsecured fixed interest notes in Protect Ensure. (refer: 15-161MR).

 
Financial Planner
 

16-327MR Former financial adviser charged over fraud

Former financial adviser, Gabriel Nakhl, appeared in the Local Court of New South Wales yesterday on 19 charges brought by ASIC of engaging in dishonest conduct with investor funds.

ASIC alleges that Mr Nakhl, of Illawong, NSW knowingly engaged in dishonest conduct in relation to twelve investors by:

  • misleading them about the investments he would make on their behalf and on behalf of their self-managed superannuation funds, including how he would invest their money and the risks and returns of the investments he recommended;
  • using money provided to him by investors, including money from investors' self-managed superannuation funds, for purposes other than those he said he would use it for;
  • telling investors that their investments were performing well when this was not the case; and
  • attempting to cover-up and conceal his wrongdoing.

The alleged conduct occurred between March 2009 and March 2011 while Mr Nakhl was an authorised representative of Australian Financial Services Limited (in liquidation) and from about March 2011 to about September 2013 while he was the sole director of SydFA Pty Ltd (in liquidation).

The charges were brought against Mr Nakhl following an ASIC investigation.

Mr Nakhl did not enter a plea but asked for an adjournment to obtain legal advice.

The matter was stood over until 11 October 2016.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

Background

Mr Nakhl has been charged with 19 counts under section 1041G of theCorporations Act 2001 (Cth).

In February 2013, ASIC obtained court orders against Mr Nakhl preventing him from disposing of, dealing with or otherwise diminishing certain assets. See 13-023MR for more details.

In September 2013, Mr Nakhl became a bankrupt and placed SydFA Pty Ltd into liquidation.

In November 2013, ASIC accepted an enforceable undertaking from Mr Nakhl that permanently restricts him from providing financial services and restricts him from managing a corporation for 15 years. See 13-313MR for more details.

16-326MR ASIC acts to freeze sale of land proceeds in excess of $100 million pending disclosure to investors

Following an application made by ASIC on 19 August 2016, the Federal Court of Australia has made orders limiting the ability of Aviation 3030 Pty Ltd (Aviation) to deal with the proceeds of sale of property it owns in Victoria.

The Aviation property was purchased in 2011 by Aviation, which raised funds for this purpose from around 70 shareholders and unitholders.

Aviation consented to the orders being made.

ASIC commenced its investigation into Aviation in May 2016. In the course of its investigation, ASIC became aware that: 

  • in March 2016, Aviation had issued shares to companies associated with a director and a former director of Aviation, purportedly pursuant to an Aviation letter dated 4 May 2011 and an option agreement dated 18 September 2012 entered into by the then directors of Aviation ('the 2016 share issue'); 
  • this resulted in a substantial dilution of the interests of investors, and an increase in the interests controlled by the directors of Aviation and their associates; 
  • neither the 4 May 2011 letter nor the 18 September 2012 option agreement had been disclosed to investors prior to their investments in Aviation and the 2016 share issue had also not been disclosed to all investors; and  
  • in May 2016, Aviation received an offer from a third party to purchase the Aviation property for more than $100 million and that this offer had not been disclosed to all investors. ASIC's understanding was that this property was expected to be sold within a short timeframe.

Based on these matters, ASIC was concerned that the proceeds of sale of the Aviation property would be distributed in accordance with the 2016 share issue. This was in circumstances where investors had not been provided with proper disclosure in relation to the dilution of their interests, either at the time of their investments or subsequently.   

ASIC obtained the orders to protect the interests of investors and specifically to enable them to be provided with:

  • information as to the 2016 share issue (and the documents purportedly relied upon by Aviation for that purpose);
  • details of the proposed sale of the Aviation property; and
  • an opportunity to decide whether to obtain independent advice concerning their investments. 

As part of an agreement reached with ASIC, Aviation undertook to provide disclosure to the Investors in relation to these matters, in a form agreed to by ASIC. Aviation has advised ASIC that it has completed this process.

Developments subsequent to the orders

Aviation has advised ASIC that the offer to purchase the Aviation property has been withdrawn.

The Orders will remain in place until further order of the Federal Court. The matter returns to the Federal Court on 25 November 2016.

ASIC's investigation into Aviation is ongoing.

16-323MR ASIC bans former Westpac financial adviser

ASIC has banned Adelaide financial adviser Michael Mahoney from providing financial services for a period of four years.

Mr Mahoney was employed by the BT Financial Group Pty Ltd (BTFG) in the Westpac Scaled Advice Insurance business from October 2013 to July 2014 to provide general advice only to retail clients on insurance products.

ASIC's investigation found that during the period Mr Mahoney was employed at BTFG, he engaged in conduct that was misleading and deceptive. Specifically, he entered false information regarding various clients' health or health-risk factors in telephone applications for insurance policies issued by Westpac Life Insurance Services Ltd (WLIS). This resulted in WLIS issuing policies to clients based on false information and assuming greater risks without having an opportunity to undertake an assessment of those risks.

WLIS has agreed to honour the affected client policies.

ASIC Deputy Chairman Peter Kell said, 'This outcome shows that ASIC expects employees who are providing financial services to maintain high standards and not engage in conduct that is misleading and deceptive.'

Mr Mahoney has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

This outcome is a result of ASIC's Wealth Management Project. The Wealth Management Project was established in October 2014 with the objective of lifting standards by major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, AMP and Macquarie).

ASIC's work in the Wealth Management Project covers a number of areas including:

  1. working with the largest financial advice firms to address the identification and remediation of non-compliant advice;
  2. seeking regulatory outcomes when appropriate against Licensees and advisers.

As part of its Wealth Management Project, ASIC has banned the following advisers from the financial services industry, in addition to Mr Mahoney:

16-320MR AAT affirms ASIC decision to disqualify SMSF auditor

 

On 9 September 2016, the Administrative Appeals Tribunal (AAT) upheld ASIC's decision to disqualify Mr Abe Samuel from being an approved self-managed superannuation fund (SMSF) auditor.  

The AAT found that Mr Samuel "plainly breached the auditor independence requirements in APES 110 (Code of Ethics for Professional Accountants). As a consequence, he contravened his professional obligations under s128F of the Superannuation Industry (Supervision) Act 1993."

The AAT was satisfied that Mr Samuel "failed to carry out or perform adequately and properly the duties of an auditor under the Act or the Regulations or as otherwise required by law; and, furthermore or alternatively, the Applicant (Mr Samuel) is not a fit and proper person to be an approved SMSF auditor for the purposes of the Act."

The AAT stated that it upheld ASIC's decision due to "the very serious and fundamental nature of the applicant’s (Mr Samuel's) deficiencies; his longstanding and ongoing failure to understand properly those deficiencies; and the clear need to uphold the integrity of the SMSF system."

ASIC Commissioner John Price noted the AAT finding, saying: "To safeguard the SMSF sector, ASIC will continue to use its power to disqualify approved SMSF auditors that don’t perform their role adequately and meet professional standards."

SMSF trustees and members can check whether their auditor is registered, or whether a person has been disqualified, by searching ASIC's SMSF auditor register at connectonline.asic.gov.au.

Background  

Information about Mr Samuel was referred to ASIC by the Australian Taxation Office (ATO).

On 7 October 2015, ASIC made an order disqualifying Mr Samuel from being an approved SMSF auditor. Mr Samuel requested that ASIC reconsider the disqualification decision. On 23 November 2015, a delegate of ASIC confirmed the decision.

ASIC found that Mr Samuel had breached auditor independence requirements of APES 110 where he was:

  • a member of a fund he audited and also the director of its corporate trustee; and
  • the power of attorney holder for, and a relative of, a member of a fund he audited.

On 18 December 2015, Mr Samuel applied to the AAT for a review of the disqualification decision.

From 1 July 2013, the SIS Act required all auditors of SMSFs to be registered with ASIC. This was to ensure that all SMSF auditors at least meet the base standards of competency and expertise.

ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration.

See also 15-362MR ASIC disqualifies Abe Samuel as SMSF auditor.

16-312MR ASIC permanently bans former company director in relation to fraudulent misappropriation

 

ASIC has permanently banned Mr Steven William Hill from engaging in credit activities and providing financial services.

An ASIC investigation found that between January 2006 and February 2007, Mr Hill, through Hill Stephens & Associates Pty Ltd and International Finance Consortium (Aust) Pty Ltd induced various investors to pay approximately $618,000 to acquire interests in a 'house and land' property development located in Queensland.

Mr Hill was found guilty of fraudulently misappropriating $281,000 of the invested funds, which were directed to company bank accounts to make payments to Mr Hill and other third parties.

On 18 April 2016, His Honour Acting Judge Garling sentenced Mr Hill to 2 years and 9 months jail for fraudulent misappropriation (refer: 16-118MR).

Following the sentencing, ASIC determined that Mr Hill should be permanently banned as he was convicted of offences involving dishonest and fraudulent conduct.

ASIC Commissioner Peter Kell said Mr Hill's misconduct was very serious.

'ASIC will ban people from the finance industry who act dishonestly and place personal interests ahead of those they service.  Mr Hill's actions exposed vulnerable members of the community to financial loss and hardship', Mr Kell said.

Mr Hill has the right to appeal to the Administrative Appeals Tribunal for review of ASIC’s decisions.

Background

ASIC investigations revealed that between January 2006 and February 2007, Mr Hill met with various investors based in New South Wales.  Describing himself as a 'financier/consultant', Mr Hill, through his company Hill Stephens & Associates Pty Ltd, told investors he would be able to provide them with investment opportunities to build their wealth towards retirement.

Mr Hill advised investors their funds would be used as 'seed capital' in a number of Queensland based property developments he was facilitating. Mr Hill advised investors that they would receive returns of between 10 - 30% per annum, however, unknown to the investors, funds paid were not invested in the property developments as originally advised by Mr Hill.

In June 2013 Mr Hill was charged with eight counts of fraudulent misappropriation (refer: 13-146MR).

In March 2015 Mr Hill was ordered to stand trial on seven counts of fraudulent misappropriation (refer: 15-050MR).

In March 2016 Mr Hill was convicted on 6 counts of fraudulent misappropriation by a Sydney District Court jury after a four-week trial. (refer: 16-072MR).

Mr Hill was found not guilty of one charge of fraudulently misappropriating $150,000.