David Sipina avoids jail over his role in massive fraud

David Sipina, who promoted the fraudulent Courtenay House Ponzi scheme which left creditors owed more than $50m, has avoided jail time after pleading guilty.

Ponzi scheme promoter David Sipina.

A Ponzi scheme promoter who once falsely claimed former prime minister Malcolm Turnbull had invested in the $180m Bondi-based scheme has avoided jail, with David Sipina sentenced to three years’ imprisonment, to be served by way of an intensive correction order.

The Australian Securities & Investments Commission said on Monday, Sipina had pleaded guilty to two charges relating to his involvement in the Courtenay House Ponzi scheme, which left hundreds of creditors more than $50m out of pocket in total.

The first charge related to him aiding and abetting Tony Iervasi to carry on an unlicensed financial services business, with the second charge relating to dealing with money that he believed to be the proceeds of crime worth $1m or more.

“In May 2017, liquidators were appointed to the Courtenay House companies and the director, Mr Iervasi, was restricted from leaving Australia,’’ ASIC said in a statement on Monday.

“On November 8, 2022, Mr Iervasi pleaded guilty to five criminal charges. Four of those charges included engaging in dishonest conduct between December 13, 2010, and April 21, 2017, in running a Ponzi scheme through the Courtenay House companies, in relation to $180m raised by the Courtenay House companies from around 585 investors.

“Mr Sipina’s role in the scheme was to recruit and manage 215 investors, and market the scheme both online and in person between June 2015 and April 2017.

“For his participation, Mr Sipina received approximately $3.9m in commissions, which were proceeds of crime.’’

Ponzi scheme operator Tony Iervasi and former girlfriend Nina at a Crown event.

ASIC said Sipina was not aware that the Courtenay House businesses were a Ponzi scheme, but he knew they were providing unlicensed financial services advice since at least June 2015.

He is the third person to be sentenced for criminal offences relating to Courtenay House.

News Corp Australia reported in late 2017 that several creditors confirmed that Sipina had displayed a picture on his Facebook page of him shaking hands with Mr Turnbull.

A creditor, who had invested $400,000 with the scheme, said Sipina told him Mr Turnbull had invested in the scheme.

A spokesman for Mr Turnbull said at the time that he did not know Sipina and had never invested in any scheme promoted by him

Sipina was a former Bondi and Districts Chamber of Commerce assistant treasurer, and his social media accounts showed pictures of him with a Bentley and smoking cigars.

The liquidators of the Courtenay House scheme said in late 2017 that almost 90 per cent of the funds raised were used to pay off existing investor interest and capital returns, with just 1 per cent actually invested as promised in foreign exchange markets.

Iervasi, the scheme’s liquidator said at the time, was telling angry creditors he had $100m stashed offshore and was waiting for the liquidator to hand back control of the companies so he could pay them back.

“In an number of instances, he has been telling people he has $100m stashed away in a bank account in the US. My personal view is that’s not the case,’’ liquidator Said Jahani said at the time.

Iervasi was in September sentenced to 11 years’ imprisonment with a non-parole period of seven years relating to the operation of the scheme.

Justice Deborah Sweeney said in her sentencing remarks that Iervasi was “dishonest on an egregious scale’’, “establishing the veneer of a successful wealth-creating business … which sought to reassure and persuade victims to invest’’.

Justice Sweeney said the estimated net loss suffered by the victims was $54m, with the total amount of dishonestly obtained funds about $12m.

Iervasi pleaded guilty to several charges, including carrying on an unlicensed financial services business.

News Corp Australia reported in 2017 that Iervasi used the savings of his own family and close friends to prop up the fake investment fund.

He even used $50,000 from the estate of the late Josephine Iervasi – believed to be his mother – to keep the necessary new money rolling in so he could pay returns to investors.

Iervasi for eight years told investors he was trading their money on foreign currency exchange markets, promising monthly interest earnings of 1.5 per cent and up to 25 per cent.

The liquidation of Courtenay House, which collapsed in May 2017, is ongoing, with liquidators having distributed dividends of 28c on the dollar to date.

Originally published as David Sipina avoids jail over his role in massive fraud