Three New South Wales men accused of running a $36 million Ponzi scheme linked in court to Nelson businessman David Hobbs have been jailed.
In a separate civil trial last year Hobbs was found to be the mastermind behind the scheme and others with a combined total of $60m. His penalty is to be imposed this week.
Brian Wood, of Davistown, Jimmy Truong of St John's Park, and Con Koutsoukos of Wiley Park, all pleaded guilty to various offences related to operating the scheme called the Integrity Plus Fund, including making false statements to investors. Wood was also convicted of fraudulently misappropriating investors' funds. About 270 investors were caught up in the scheme.
In the Sydney District Court last week, Wood was sentenced to three years 11 months imprisonment, to serve a minimum term of two years six months. Truong and Koutsoukos were both sentenced to two years eight months imprisonment, to serve minimum terms of two years.
In handing down her decision, Judge Syme remarked on the progression of the men's conduct.
‘The motive for the actions of each offender is clearly greed . . . the offences occurred over an extended period. Significant planning was involved to present the business as a legitimate and profitable one and to entice investors into the scheme via seminars," Judge Syme said.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
Before their jailing all three men entered into separate enforceable undertakings with the Australian Securities and Investment Commission (ASIC) not to provide financial services or manage companies for a combined total of 45 years.
ASIC commissioner Greg Tanzer said the outcome sent a clear message that those who misused funds entrusted to them by others faced serious consequences.
Between December 2004 and December 2007 the Integrity Plus scheme raised more than $30m. ASIC obtained injunctions from the Supreme Court of NSW against Wood in December 2007, and Truong and Koutsoukos and others in February 2008, preventing the operation of Integrity Plus and securing funds for investors.
In June 2008 the Integrity Plus Fund was wound up.
ASIC initiated related civil penalty proceedings against Hobbs and the other operators of more than a dozen offshore managed investment funds including the Integrity Plus Fund, with penalties to be handed down in the NSW Supreme Court this Thursday.
More than $50m was invested in the scheme, which consisted of 14 individual investment funds in countries including New Zealand, the United States, Hong Kong, Vanuatu, the Bahamas, Anguilla, and the Turks and Caicos Islands.
In October, the Supreme Court of NSW found Hobbs either "personally chose" or "implicitly approved" of each of the individual scheme administrators including his wife, Jacqueline, knowing they were not sophisticated financial advisers and that most of the other administrators also lacked financial sophistication or expertise.
The court found Hobbs had "effective control" over all of the scheme funds. It said there was ample evidence of improper payments out of fund monies including Ponzi payments, the payment of Hobbs' private expenses and payments to his family and also to some scheme administrators.
ASIC began an investigation into unregistered offshore fund operators targeting Australian investors and self managed superannuation funds in 2007. It is seeking orders of disqualification from managing corporations, disqualification from providing financial service, and hefty fines.
The scheme involved Australian investors subscribing to so-called investment education packages and setting up personal offshore companies which they would then stream their investments through.
Hobbs, who has had business premises in the Stoke industrial area and in recent years sold Holden cars through a Nelson dealership, has maintained his innocence from the beginning.
He continued to do so after the Supreme Court's judgment, saying he did not even know of the existence of some of the companies named in the hearing.
"The ones that I did know of, I had nothing to do with."
- © Fairfax NZ News
Should the Nelson City Council spend up to $500,000 to fix the modellers' pond at Tahunanui?Related story: (See story)