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Former company director committed for trial on dishonest conduct charges

by Martha.Ware 17. August 2011 08:29

Former company director, Simon Finnigan, has been committed to stand trial on 14 criminal charges of dishonest conduct involving investor funds worth more than $2.2 million.

Mr Finnigan, 49, a former director of Financial Partners Pty Ltd, was committed for trial following a three day committal hearing in Sydney’s Downing Centre Local Court last week.

The charges relate to dishonest conduct in relation to the supply of a financial product or a financial service. Each charge carries a maximum penalty of five years imprisonment, a $220,000 fine or both.

ASIC alleges that Mr Finnigan raised funds through Financial Partners Pty Ltd, Venture Capital Management Pty Ltd and Biotech Solutions Pty Ltd by telling investors he would invest their money in shares, options, managed funds and property for returns of between 8 and 15 per cent.

According to ASIC, Mr Finnigan then deposited the money into bank accounts he controlled and used the funds for the three companies and his own personal use.

The charges follow an investigation, supporting ASIC’s priority of ensuring investors are confident and informed.

Mr Finnigan’s bail conditions are to continue with an additional requirement that he report to police weekly.

The matter returns to the District Court in Sydney on 2 September 2011.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

Tags:

ASIC | Offences - finance

ASIC permanently bans Sydney director

by Martha.Ware 3. August 2011 09:09

ASIC has permanently banned a Sydney director from providing financial services after an investigation found she had engaged in misleading and deceptive conduct.

Erin Watson, of Woolooware, New South Wales, was banned for operating a financial services business without holding an Australian financial services (AFS) licence.

Ms Watson was a director of Home Equity Pty Ltd and remains a director of a number of companies including, but not limited to, Home Mortgages Australia Pty Ltd and Credit Pty Ltd.

Between March 2007 and February 2008 neither Ms Watson nor the aforementioned companies held an AFS licence, nor was she an authorised representative of an AFS licensee. However during this period Ms Watson met with potential investors, dealt with clients and signed agreements entered into by Home Mortgages Australia.

ASIC’s investigation also found Ms Watson engaged in conduct that was misleading and deceptive or likely to mislead or deceive by:

  • representing to clients that they would be investing in a large experienced overseas company based in Hong Kong known as US Mortgage Giant
  • representing to clients that US Mortgage Giant invests in property and finance
  • representing to clients that investments were ‘watertight’, and
  • lodging documents with ASIC that US Mortgage Giant was a legal entity and a significant shareholder of Home Mortgages Australia and a number of associated companies.

In addition, ASIC found that from September 2006 to March 2008 Ms Watson used clients’ monies to pay her home loan, family members, clients of Home Equity and companies associated with Home Equity.

ASIC banned Ms Watson in order to protect the public, deter similar conduct and maintain investor and consumer confidence in the financial services industry.

Ms Watson has the right to apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Tags:

ASIC | Offences - finance

Former ABC director to stand trial

by Martha.Ware 1. August 2011 08:54

A former executive director of ABC Learning Centres Ltd (ABC) has been committed to stand trial on criminal charges of breaching his duties as a director.

Martin Kemp, the former chief executive of the Australian and New Zealand operations of ABC Learning, was committed for trial following the conclusion of a two week committal hearing in Brisbane Magistrates Court today.

He has been committed on two charges:

  • one count of breaching his duties as a director and using his position as an ABC director to dishonestly gain an advantage for himself whereby he sought to sell three childcare centres to ABC between 9 and 12 January 2008;
  • one count of failing to discharge his duties as a director of ABC in good faith and was dishonest on 1 February 2008 by not disclosing the transactions to ABC’s board members.

The charges are part of an ongoing ASIC investigation which commenced in November 2008 when ABC was placed into administration.

The charges relate to Mr Kemp's purported sale of three childcare centres owned by companies controlled by him to ABC. The childcare centres are: Hamilton House Early Childhood Centre, Queensland; Parklands Drive Early Childhood and Pre School Centre, Boronia Heights, Queensland; and Children’s Centre of Beenleigh, Queensland. In January 2008, ABC paid deposits of $3.082 million, which is approximately 75 per cent of the purchase prices, to companies associated with Mr Kemp (Volbane Pty Ltd and Silipo Pty Ltd). The board of ABC Learning was not informed of the transactions.

The criminal charges each carry a maximum penalty of five years imprisonment and/or a $200,000 fine.

Mr Kemp’s bail conditions are to continue.

This matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

Background


On 25 February 2011, Mr Edmund Groves, former chief executive of ABC Learning Centres, appeared in the Brisbane Magistrates Court for mention on the charge of breaching his duties as a director of ABC in relation to the sale of the aforementioned three childcare centres. He has confirmed his plea of not guilty. He consented to a full hand up committal and was committed for trial in the Brisbane District Court at a date to be fixed. Mr Groves’ bail conditions continue.

Tags:

ASIC | Offences - finance

Opes Prime directors jailed

by Martha.Ware 1. August 2011 08:12

Former directors of Opes Prime Stockbroking Ltd (OPSL), Lirim (Laurie) Emini and Anthony Blumberg, have been jailed following an ASIC investigation into the stockbroker’s 2008 collapse.

In the Victorian Supreme Court last Wednesday, Justice Beach sentenced Mr Emini, the company’s former CEO, to 24 months imprisonment and ordered him to serve 12 months before being released on a recognisance release order. Former director, Mr Blumberg, was sentenced to 12 months imprisonment. Mr Blumberg will serve six months before being released on a recognisance release order.

This sentencing follows the guilty pleas of both men at a hearing on 19 July 2011.

ASIC Chairman, Greg Medcraft, welcomed Justice Beach’s decision, noting that the regulator would continue to focus on deterring and dealing with illegal behaviour.
‘Building and enhancing confidence among investors is a key priority for ASIC. This includes taking action against directors who don’t fulfil their responsibilities.’

The sentences took into account the early guilty pleas of both men.

‘The law provides for significant discounts in cases where there is an early guilty plea. These discounts recognise an individual’s cooperation with authorities as well as facilitating the course of justice’ Mr Medcraft said.

Mr Emini, of Templestowe, Victoria, was convicted of two charges of dishonestly using his position as a director and one charge of recklessly using his position as a director of OPSL in order to secure bank finance.

Mr Emini’s dishonesty charges related to transfers in the course of June 2006 and January to February 2008 of securities deposited by a client of Leveraged Capital Pty Ltd (of which Mr Emini was a director and shareholder) to Riqueza Holdings Limited (a client of OPSL over which Mr Emini exercised control). ASIC’s investigation identified that the June 2006 transfer of client securities (then valued at around $65 million) was used to provide collateral for a loan from OPSL to Riqueza, in circumstances where Mr Emini was not certain of Leveraged Capital’s ability to return securities to its client. The transfers which occurred in January and February 2008 were used to provide collateral (then valued at around $45 million) for the accounts of an OPSL client, Christopher Murphy, in circumstances where, through Leveraged Capital, Mr Emini had a personal interest in one of those accounts.

Mr Emini’s charge of recklessly failing to exercise his powers and discharge his duties as a director related to a number of aspects including his signing of financial documentation on 20 March 2008 by which OPSL entered into a $95 million loan with ANZ to meet obligations of Leveraged Capital and altered other financial arrangements with the ANZ to the detriment of OPSL in circumstances where there was a conflict of interest in entering into those arrangements, OPSL was, or would have become, insolvent and where the financial position of those companies was not fully disclosed.

Mr Blumberg, of Moorabbin, Victoria, was convicted of one charge of dishonestly using his position as a director in relation to the signing of the same financial documentation on 20 March 2008 concerning the $95 million loan from ANZ Bank.

The case against Mr Julian Smith, of Blackheath, New South Wales, who was also a director of OPSL and Leveraged Capital, has been adjourned for trial in the Victorian Supreme Court on 11 April 2012.

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

Background



OPSL collapsed on 27 March 2008 when administrators Ferrier Hodgson were appointed. Ferrier Hodgson were appointed as liquidators on 15 October 2008. In addition to the criminal investigation undertaken by ASIC following the collapse of OPSL on 27 March 2008, ASIC’s investigation into OPSL has also considered how any return available to OPSL creditors might be maximised.

ASIC en
tered into a formal mediation process with the OPSL liquidators, ANZ Bank and Merrill Lynch to consider a commercial resolution to claims by ASIC and the administrators.

On 6 March 2009, ASIC announced that that it would provide the necessary releases to allow a settlement offer to be put to OPSL creditors. Following a meeting of creditors on 4 August 2009, the Federal Court approved the Schemes of Arrangement. These schemes are expected to deliver a sum of $253 million to creditors. Dividends exceeding 37 cents have been paid by the scheme administrators.

Tags:

ASIC | Offences - finance

Former Firepower chairman banned for 20 years

by Martha.Ware 25. July 2011 10:09

Former Firepower group chairman Timothy Francis Johnston and former financial adviser Quentin Ward have been banned from managing companies for a combined total of 26 years, following an application by ASIC.

The bannings were handed down by the Honourable Justice Gilmour in the Federal Court in Perth last week.

Mr Johnston has been disqualified from managing a corporation for 20 years while Mr Ward has been disqualified for 6 years.

Mr Johnston and Mr Ward were also ordered to pay ASIC’s costs.

ASIC Chairman Greg Medcraft welcomed the court’s decision and endorsed the statement by Justice Gilmour that Mr Johnston’s conduct ‘is the kind of conduct which diminishes investor and public confidence in commercial markets’.

Mr Medcraft said the case highlighted the importance of investors having all the information they need to reasonably make an informed decision about a company.

‘Where this does not occur as a result of the failings of gatekeepers like directors and advisers then ASIC will not hesitate to act,’ Mr Medcraft said.

‘We will continue to hold gatekeepers accountable – to ensure investors are confident and informed.’

ASIC’s application for the disqualification order, which was heard last month, followed proceedings ASIC brought against various parties associated with Firepower Holdings Group Ltd (Firepower BVI), a company registered in the British Virgin Islands.

The proceedings related to offers for the sale of shares and the distribution of application forms for offers for the sale of shares in Firepower BVI to Australian investors between September 2005 and June 2006 which were in breach of section 727(1) of the Corporations Act. No prospectus or disclosure document was lodged with ASIC and provided to investors.

Mr Johnston was an officer of two companies associated with Firepower BVI, Green Triton Ltd (Green Triton) and Firepower Investments Pty Ltd (Firepower Investments) at the time of the share offers. Mr Ward was a former financial adviser and the sole director of Axis International Pty Ltd (Axis).


Background


On 8 February 2011 the Federal Court declared that both Mr Ward and Axis on a number of occasions contravened section 727(1) of the Corporations Act by distributing application forms for an offer for the sale of shares in Firepower BVI.

The Federal Court also found that each of Green Triton and Firepower Investments contravened s 727(1) of the Corporations Act on a number of occasions in respect of the making of offers for the sale of shares in Firepower BVI.

On the basis of these findings ASIC sought disqualification orders against Mr Ward and Mr Johnston pursuant to s 206E of the Corporations Act.

Tags:

ASIC | Offences - finance

Opes Prime directors plead guilty

by Martha.Ware 20. July 2011 13:09

Former directors of Opes Prime Stockbroking Ltd (OPSL), Lirim (Laurie) Emini and Anthony Blumberg, pleaded guilty in the Supreme Court of Victoria on Monday to charges brought by ASIC.

Mr Emini, 48, of Templestowe, Victoria pleaded guilty to:

  • two charges of dishonestly using his position as a director of Leveraged Capital Pty Ltd with the intention of gaining an advantage for Riqueza Holdings Limited or himself contrary to s 184(2)(a) Corporations Act;
  • one charge of recklessly failing to exercise his powers and discharge his duties as a director of OPSL contrary to s 184(1)(a) Corporations Act.

Mr Blumberg, 44, of Moorabbin, Victoria pleaded guilty to:

  • one charge of using his position dishonestly with the intention of gaining an advantage for himself or someone else contrary to s 184(2)(a) Corporations Act.

The plea hearing for Mr Emini and Mr Blumberg continues today.

The case against Mr Julian Smith, 48, of Blackheath, New South Wales, who was also a director of OPSL and Leveraged Capital, has been adjourned for trial in the Supreme Court on 11 April 2012.


Background


OPSL collapsed on 27 March 2008 when administrators Ferrier Hodgson were appointed. Ferrier Hodgson were appointed as liquidators on 15 October 2008. In addition to the criminal investigation undertaken by ASIC following the collapse of OPSL on 27 March 2008, ASIC’s investigation into OPSL has also considered how any return available to OPSL creditors might be maximised.

ASIC entered into a formal mediation process with the OPSL liquidators, ANZ Bank and Merrill Lynch to consider a commercial resolution to claims by ASIC and the administrators.

On 6 March 2009, (see
09-37MR), ASIC announced that that it would provide the necessary releases to allow a settlement offer to be put to OPSL creditors. Following a meeting of creditors on 4 August 2009, (see 09-135AD) the Federal Court approved the Schemes of Arrangement. These schemes are expected to deliver a sum of $253 million to creditors. Dividends exceeding 37 cents have been paid by the scheme administrators.


Editor's note: At the conclusion of the hearing, Mr Emini's bail was extended until the date of his sentencing, which is yet to be fixed. Mr Blumberg did not apply for bail and was remanded in custody.

Tags:

ASIC | Offences - finance

Sydney executive pleads guilty to ASIC insider trading charges

by Martha.Ware 19. July 2011 14:24

Mr Justin O’Brien, a former Director of Business Development of the strategic shareholder consulting services company, Georgeson, has today pleaded guilty in the Downing Centre Local Court to four charges of insider trading.

The charges, brought by ASIC, relate to the purchase of shares by Mr O’Brien in four separate ASX-listed companies (North Queensland Metals Limited, Westfield Group, Crane Group Limited and RP Data Limited) between 30 June 2010 and 11 January 2011. ASIC alleges that at the time Mr O’Brien acquired the shares, he possessed inside information he obtained in the course of his employment concerning major corporate transactions relating to each of the companies that were subsequently announced to the market.

The matter has been committed for sentencing in the Supreme Court and listed for arraignment on 5 August 2011. Bail was granted on a number of conditions, including that Mr O’Brien surrender all passports to ASIC.

The charges arise out of an investigation commenced by ASIC in February 2011. The alleged trading was identified by ASIC’s Market Surveillance team in mid-January 2011.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

Tags:

ASIC | Offences - finance

Gabrial Neil Pennicott found guilty

by Martha.Ware 19. July 2011 09:04

Mr Gabrial Neil Pennicott, a former director of Sunset Capital Pty Ltd and property investment scheme promoter, has been found guilty in the County Court of Victoria of 23 criminal charges brought by ASIC.

Mr Pennicott, of Mermaid Waters, Queensland, was found guilty by a jury on 13 July 2011 of: 

  • six charges of dishonestly using his position as a director or officer of various companies contrary to section 184(2)(a) of the Corporations Act;
  • four charges of dishonestly obtaining property by deception contrary to section 81 of the Victorian Crimes Act;
  • six charges of dishonestly obtaining a financial advantage by deception contrary to section 82(1) of the Victorian Crimes Act; and
  • seven charges of attempting to dishonestly obtain a financial advantage by deception contrary to sections 321M and 82(1) of the Victorian Crimes Act.


The transactions relating to the above charges involved Mr Pennicott:

  • transferring shares owned by companies he controlled at artificially inflated prices so as to change the balances of inter-company loan accounts between the companies. The value of these transactions was $2,465,000;
  • transferring and attempting to transfer shares at artificially inflated prices to repay and attempt to repay amounts owed to lenders to a company he controlled in lieu of repaying the monies owed. The value of these transactions was $1,238,456.49;
  • transferring shares at artificially inflated prices to himself and another person in lieu of being repaid amounts owed to them and then transferring the same shares to another company controlled by him which resulted in cash being paid to Mr Pennicott and the other person. The value of these transactions was $125,000; and
  • selling shares to investors which were artificially inflated in price and then obtaining shares for a company that he controlled and to which the company was not entitled. The value of these transactions was $200,000.

Mr Pennicott was remanded in custody. A plea hearing will take place on 26 August 2011.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

Background


In late 2004, Mr Pennicott left Australia. On 26 April 2007, Mr Pennicott was arrested in British Columbia, Canada, following a request by the Australian Government to Canadian authorities to issue a provisional arrest warrant.

On 7 December 2007, Mr Pennicott consented to being extradited to Australia before the Supreme Court of British Columbia and was placed into custody pending his extradition to Australia. On 21 December 2007, Mr Pennicott appeared at the Melbourne Magistrates’ Court following his extradition from Canada.

On 30 April 2009, Mr Pennicott was permanently banned by ASIC from the financial securities industry.

The maximum penalty in relation to offences against section 184(2)(a) of the Corporations Act is 2,000 penalty units or imprisonment for five years or both.

The maximum penalties in relation to offences against the Victorian Crimes Act are as follows:

  • Offences contrary to section 81 and section 82(1): 10 years maximum
  • Offences of attempt contrary to section 82(1) and section 321M: 5 years maximum

Tags:

ASIC | Offences - finance

Jan Li pleads guilty to breaching directors' duties

by Martha.Ware 19. July 2011 09:01

Ms Jan Li, of Box Hill, Victoria has pleaded guilty to breaching directors' duties.

Ms Li, who is also known as Jane Lee, entered the plea in the County Court of Victoria to six charges of dishonestly using her position as a director or officer of a corporation contrary to section 184(2) of the Corporations Act.

Ms Li was a director or officer of IBP Venture Capital Reserve Ltd, Urban Investment Services Pty Ltd, IBP Property Holdings Pty Ltd and Sunset Capital Pty Ltd.

Ms Li transferred shares owned by companies she controlled at artificially inflated prices so as to change the balances of inter-company loan accounts between the companies. The value of these transactions was $2,465,000.

Ms Li transferred shares at artificially inflated prices to herself and one other person in lieu of being repaid amounts owed to them. Further, Ms Li and the other person then transferred the shares to another company controlled by Ms Li, which paid money for the shares to Ms Li and the other person. The value of these transactions was $125,000.

Ms Li was sentenced to a total effective sentence of 34 months imprisonment. Ms Li was ordered to be released forthwith upon entering into a recognisance in the sum of $5000 to be of good behaviour for a period of 36 months.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

Background


On 6 May 2009 ASIC banned Ms Li for 8 years from the financial securities industry.

See previous ASIC media release
09-23AD for further details of the above matter.

Tags:

ASIC | Offences - finance

ASIC permanently bans Victorian finance broker

by Martha.Ware 5. July 2011 12:16

ASIC has permanently banned a Victorian finance broker from engaging in credit activities after being convicted of serious fraud offences.

Ms Kristy Ann Lake, of Kew East, Victoria, was a former director and secretary of Clearwater Financial Systems Pty Ltd, and both she and the company had registered to engage in credit activities.

In March 2011, Ms Lake pleaded guilty in the Melbourne Magistrates Court to two charges of obtaining property by deception in breach of s 81 of the Crimes Act 1958 (Vic).

In May and July 2008, Ms Lake submitted loan applications to two financial institutions, falsely using another person’s name. Each of the applications was successful, resulting in Ms Lake obtaining a loan of $12,655 on the first occasion and $13,149 on the second occasion.

In late 2010 the frauds were discovered when the loan providers contacted the person in whose name the loans were, after Ms Lake had stopped making repayments. The matter was then reported to Victoria Police and ASIC.

Following Ms Lake’s guilty plea to the fraud charges, ASIC started the banning process.

Mrs Lake has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Tags:

ASIC | Offences - finance



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