Rainbow Beach Resort manager Ian Phillips loses appeal

A former manager of the collapsed Rainbow Beach Resort who took almost $220,000 off unit owners has tried to convince the Supreme Court that his sentence was too severe. Here’s what went down:

A 67-year-old former resort manager who took almost $220,000 of residents’ money while trying to keep the business afloat has lost his bid for a lighter jail sentence.

Ian Andrew Phillips was jailed for three years in July 2022 after pleading guilty to a charge of wrongful conversion or false accounts over the crimes, which occurred while he was managing the Rainbow Beach Resort.

The sentence was to be suspended after six months.

Phillips and a second man, 66-year-old Tony Charles Freeman, carried out the crimes over a two-year period after they bought the rights to manage the resort for $1.

In a published Supreme Court ruling, Justice Jean Dalton said Phillips obtained a real estate agent’s licence to allow him to run the resort, and created a new incorporated company of which he was the sole director.

As part of the management structure, Phillips was the account holder of a trust account into which money belonging to unit holders was initially paid.

Ian Andrew Phillips, 67, falsely took almost $220,000 of unit holders’ money while he was manager of the Rainbow Beach Resort.

Justice Dalton said shortly after the pair took over management they realised there was not enough money to pay its debts.

They then began a “sophisticated scheme” in which, across a two-year period, they took out $219,128.22 in small increments.

This was done by disabling a computer system which should have paid the unit holders the amounts due to them from the trust account, as well as manually creating false entries of unpresented cheques “so that the accounting system did not show that the unit holders’ money was being dispersed in breach of trust”.

They did this to keep the business afloat so it could be sold for a profit, Justice Dalton said, but eventually collapsed into liquidation.

A fidelity fund paid most of the unit holder’s claims arising from the crimes, but Justice Dalton said Phillips and Freeman “have paid nothing to repair the position either of the unit holders or the fidelity fund”.

Phillips had claimed he was unaware of any unlawful transactions as Freeman was in charge of the day-to-day accounts but when shown emails contradicting this he stopped co-operating with investigators from the Office of Fair Trading.

Ian Andrew Phillips and a second man took over management of the resort at Rainbow Beach after buying the rights for $1. Published Supreme Court documents say the money was falsely taken after they realised the business did not have enough money to cover what it owed.

Freeman was sentenced to two-and-a-half years jail suspended immediately.

Phillips had appealed, accepting the three year term was not manifestly excessive but claimed the actual time spent behind bars was.

In rejecting Phillips’ application for leave to appeal his own sentence, Justice Dalton said what he received was on par with Freeman’s sentence when the latter’s co-operation was taken into account.

In contrast, Justice Dalton said Phillips did not co-operate, having lied to police “at the outset”, and failing to plead guilty “for a considerable time while his proceeding was listed for a trial in the district court”.

She rejected claims the loss and more than $100,000 of his Phillips’ own money, taken as a loan invested in the failing company, meant his sentence was “disparate” to the one Freeman received.

“I cannot see this,” Justice Dalton said.

“ The loss of $100,000 was not some sort of extra-curial punishment.

“As the primary judge rightly recognised, it was the applicant’s decision to embark upon the business and invest in the business.

“Had he not committed the offences, he would have been more financially damaged by those bad business decisions than he was.”

As the loan was secured, Phillips and his wife ultimately lost their home.