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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



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