Fraud, theft and dodgy investment schemes keep ASIC busy in the last month of the year

An alleged theft from a listed iron ore company, numerous insolvencies and falsified loan documents landed people on ASIC’s naughty list for December.

ASIC finalised matters including frauds, thefts and barred a number of people from acting as directors during December.

A number of Australian directors were banned from managing corporations in the past month, while a long-running matter related to a proposed IPO back in 2012 has been finalised. Here are matters the corporate regulator, the Australian Securities and Investments Commission, has brought to a close recently.

NSW finance broker convicted of making false statements to ASIC

Mr Guodong Liu, a mortgage broker and director of Wealth Investment Milestone Pty Ltd (WIM) and Aus Mortgage Pty Ltd (AUS), from Rhodes, New South Wales, was convicted in the Downing Centre Local Court of three counts of knowingly making a false statement in documents lodged with ASIC.

ASIC said that Mr Liu falsely certified that none of AUS’s nominated fit and proper people had their accreditation cancelled or suspended by a lender. Mr Liu had his lender accreditation with the ANZ bank suspended in April 2016.

Mr Liu was fined $9,000 and ordered to attend the Ryde Police Station for fingerprints and photographs to be taken.

Allegra Financial Services refused an AFSL

ASIC’s decision to refuse Allegra Financial Services Pty Ltd (Allegra) an Australian financial services licence (AFSL) to provide personal financial product advice to retail and wholesale clients has been affirmed by the Administrative Appeals Tribunal (AAT).

On 30 November 2020, the AAT found that Allegra’s controller, sole director and proposed responsible manager, Lachlan Schonfelder, engaged in conduct such that it could not be satisfied that Allegra would provide financial services efficiently, honestly and fairly. The lack of candour in Mr Schonfelder’s dealings with ASIC also raised serious doubts in the AAT’s mind as to whether Allegra would be able to deal honestly.

Former finance broker pleads guilty to fraud

On 1 December 2020, at the Dandenong Magistrates Court, Mr Adam Edward Greene was sentenced after pleading guilty to four counts of fraud involving approximately $85,300.

The charges arose from an investigation by ASIC into Mr Greene’s conduct between 2014 and 2015, while he was a finance broker of a Cranbourne used-car dealership, Combined Motor Traders. Mr Greene wrote and submitted four loans for customers who had applied for a car loan. These loans contained false documents that had not been provided to him by the customers. The loans were approved by Esanda, a division of ANZ, and totalled $85,300.

Magistrate Halse imposed a fine of $3,000 without conviction.

ASIC succeeds in application to wind up Chris Marco’s unregistered managed investment scheme

The Federal Court has ordered the winding up of an unregistered managed investment scheme (the scheme) operated by Mr Chris Marco and AMS Holdings (WA) Pty Ltd (AMS).

The Court also ordered that Mr Marco be permanently restrained from carrying on a financial services business without an Australian Financial Services (AFS) licence or operating an unregistered managed investment scheme.

ASIC’s investigation into the conduct of Mr Marco is ongoing.

ASIC disqualifies Queanbeyan director from managing companies for five years

Noel Ryan of Queanbeyan, NSW, has been disqualified from managing companies for the maximum period of five years.

Mr Ryan was disqualified for his role in the failure of three companies:

- The Three Ryan Brothers Pty Ltd ACN 143 747 997 (Three Ryan Brothers);

- To The Top Scaffolding Pty Ltd ACN 144 884 659 (To The Top); and

- Rhino Scaffolding Pty Ltd Pty Ltd ACN 627 940 792 (Rhino).

The companies were involved in labour hire services for scaffolding businesses in the building and construction industry between 2010 and 2019.

The companies collapsed owing creditors $925,729. Mr Ryan is disqualified until 30 November 2025.

Queensland director Kevin Humphries disqualified from managing corporations for five years

Kevin Humphries of Thornlands, Queensland, has been disqualified from managing corporations for the maximum period of five years.

Between 20 July 2017 and 11 December 2020, Mr Humphries was a director of three companies involved in the recruitment and labour hire industries. The three companies failed within the last three years:

- TMS National Pty Ltd ACN 620 569 940 (TMS);

- Engineering Staffing Solutions Pty Ltd ACN 620 577 095 (ESS); and

- National Workforce Solutions Pty Ltd ACN 620 573 006 (NWS).

ASIC found that Mr Humphries’ conduct fell significantly below the standard expected of a director. It also found his conduct was of particular concern because it shows a pattern of misuse of the corporate structure and a lack of understanding or disregard of statutory obligations.

Once the outstanding ATO lodgements were lodged by the liquidators, the three companies ultimately owed creditors approximately $6.5 million.

Mr Humphries’ disqualification extends until December 10, 2025.

Former director Guy Powis disqualified from managing companies for five years

Guy Powis of West Perth, WA, has been disqualified from managing companies for five years for his involvement in failed companies.

ASIC says between 2013 and 2018, Mr Powis was a director of four construction and labour hire companies that failed:

- Australian Recruiting Labour Force Pty Ltd (ACN 600 568 590) (ARLF);

- ACN 613 069 392 382 Pty Ltd (ACN 613 069 382 – previously Podium Technology Services Pty Ltd (PTS);

- ARLF Labour Pty Ltd (ACN 603 049 770) (ALBR); and

- Blue Pacific Realty Pty Ltd (ACN 24 612 755) (BPR).

In addition to ARLF, PTS, ALBR and BPR, Mr Powis was involved in a further seven failed companies operating in Perth, Brisbane and Sydney between 2009 and 2014.

At the time of ASIC’s decision, the 11 companies owed creditors more than $4.6 million.

Mr Powis is disqualified from managing corporations until 10 December 2025.

Three NSW directors disqualified from managing corporations

John Georges (also known as John Geoges) of Hinchinbrook, NSW and Sam Youkhana of Middleton Grange, NSW have been disqualified from managing corporations for five years for their involvement in four failed companies and Zia Yalda of Fairfield Heights, NSW has been disqualified for four years after his involvement in the failure of two of the companies.

The disqualifications follow the appointment of liquidators to four companies operating in the cleaning industry between October 2013 and June 2017:

- Top Cleaning Group Pty Ltd (ACN 158 523 427) (Top Cleaning);

- Magic Fresh Property Services Pty Ltd (ACN 169 343 435) (Magic Fresh);

- Spotcleaning Group Pty Ltd (ACN 162 633 230); and

- Total Carpet Cleaning Pty Ltd (ACN 138 487 706).

The total deficiency of all four companies was $108,863, however the liquidator of Top Cleaning and Magic Fresh acknowledged that the liability would increase significantly if all outstanding lodgments were made to the ATO.

Mr Georges and Mr Youkhana are disqualified from managing corporations until 30 November 2025 and Mr Yalda is disqualified until 9 December 2024.

Former Sydney financial adviser pleads guilty to theft and director duties offences

Former financial adviser, Keith James Flowers, has pleaded guilty to one charge of acting dishonestly as a company director and one charge of theft, relating to the use of clients’ funds, ASIC says.

The corporate regulator said in a statement that Keith James Flowers, formerly known as Nigel Flowers, of Bathurst, New South Wales, appeared before Downing Street District Court Sydney, on Tuesday.

Mr Flowers was the director of Flowers Financial Group Pty Ltd (in liquidation) and Flowers Financial Management Pty Ltd (in liquidation), which specialised in providing financial advice to the medical profession, ASIC said.

“During 2011, Mr Flowers was a registered financial adviser and engaged in a scheme to raise money to fund a proposed IPO by Avior Australia Ltd (Avior),’’ ASIC said in a statement.

“The scheme raised approximately $1.48 million. Mr Flowers raised funds from long-term clients of Flowers Financial Management, establishing a trust account called 1Source Wholesale Investments Pty Ltd ITF Avior Pre-IPO Trust (trust account), to which he was the sole signatory, to collect his clients’ funds.

“Mr Flowers pleaded guilty to a charge that, between June 2011 and April 2012, he used his position as a director dishonestly, with the intention of gaining advantage for either himself or Flowers Financial Management, by causing the transfer/withdrawal of $179,500 of seed capital.’’

Mr Flowers is scheduled to be sentenced on April 30, 2021 in the Sydney District Court.

Former mortgage broker convicted for falsifying loan applications

Former mortgage broker Jia Ge of Sydney, NSW has been convicted of giving misleading information in five home loan applications.

Mr Ge is a former mortgage broker and former director of Dollars R Us Pty Ltd ACN 165 438 595 (Deregistered) (Dollars R Us). Mr Ge previously held an Australian credit licence and Dollars R Us operated as a credit representative of Mr Ge.

Mr Ge appeared in the Downing Centre Local Court on 22 December 2020 and was sentenced to eight months imprisonment and directed to be released upon giving security of $500.00 and to be of good behaviour for a period of two years.

As a consequence of the conviction, Mr Ge is automatically disqualified from managing corporations for five years.

Former director convicted of breaching directors’ duties

Mr Andre Kunz of Kenthurst, NSW has been convicted of breaching his directors’ duties.

Mr Kunz is the former director of Total Hoarding Supplies Pty Ltd ACN 107 987 271 (Deregistered) (Total Hoarding Supplies) and Sybab Pty Ltd ACN 144 935 311 (Deregistered) (Sybab) which later became Abbar Pty Ltd. The companies supplied components for hoardings and overhead protection structures for construction sites.

ASIC’s investigation found Mr Kunz dishonestly and recklessly transferred $2,017,299.12 in assets from Total Hoarding Supplies to Sybab between 1 July 2010 and 13 July 2011.

Mr Kunz appeared in the Downing Centre Local Court on 22 December 2020. He was sentenced to a community corrections order for a period of two years, to complete 200 hours of community service work and ordered to pay a fine of $2000.00.

As a consequence of the conviction, Mr Kunz is automatically disqualified from managing corporations for five years.