Court dismisses appeal in fraud case

The defendant submitted that before his trial, his previous legal representatives indicated that if he did not plead guilty, they would no longer act for him in the three-week trial, which was originally due to commence on 19 July 2021.

He submitted that given his numerous health issues, he would have not been able to adequately represent himself and feared being remanded in custody if unrepresented. He claimed that he was left with no option but to plead guilty.

He claimed that there was a “miscarriage of justice” that occurred as he was unfairly induced into entering his pleas of guilty.

ASIC began investigating the defendant back in 2008 concerning his receipt of funds from around 70 investors through an Australian registered company R G Munro Futures (RGMF) and a company registered in the State of Delaware in the United States of America, the Starport Futures Trading Corporation (Starport), and the use of those funds to undertake share trading activities in Australia and overseas.

RGMF went into liquidation in October 2008. Starport went into liquidation in Australia in May 2009. In reports filed with ASIC, the liquidator of RGMF reported that the funds owed to investors by the defendant, Starport and/or RGMF were between $90 million and $100 million.

While ASIC closed that investigation in June 2011 and no charges were laid, on 30 May 2014, ASIC commenced another investigation following the receipt of information that the defendant was continuing to raise funds purportedly to release US$62,000,000 of Starport and RGMF investor funds he claimed were held in the USA.

Based on submissions by the prosecution, during the course of the investigation, an analysis of bank accounts held by the defendant and his wife revealed that the accused appeared to be raising funds for a new trading scheme. In various emails and documents to investors, the defendant referred to this scheme as the TradeStation Futures Trading Fund.

On 24 July 2015, ASIC brought civil proceedings against the defendant in relation to its investigation into TradeStation. ASIC sought declarations and other orders in relation to his conduct, alleging that he had breached s911A of the Corporations Act by carrying on a financial services business in Australia without an Australian Financial Services Licence.

On 3 February 2016, the Supreme Court of Queensland found that he had breached s911A of the Corporations Act and permanently restrained him from carrying on a financial services business in Australia without holding an Australian Financial Services Licence.

A statement issued by ASIC on 20 July 2021, alleged that the defendant received funds from investors for the TradeStation trading fund but did not invest these funds into TradeStation as promised.

The prosecution alleged that he dishonestly applied these funds to his own use of the use of another.

It alleged that investors were not aware that their money was being used by the defendant in this way and that he continued to make representations to investors that their money was being invested in TradeStation by falsely reporting on the profits and losses being made by TradeStation.

At the time the defendant entered pleas of guilty on 19 July 2021, he stood charged with four counts of fraud.

On the morning of trial, the defendant entered pleas of guilty to the three counts on the indictment, and the Crown undertook to nolle the first count.

The first count, which the defendant did not plead guilty to and the prosecution will not be pursuing, involved an allegation that two directors of a corporate SMSF trustee were contacted by the defendant and advised of the TradeStation Future Trading Fund. The defendant told them that the funds would be transferred into trading accounts in the United States.

Following this, between the period 22 September 2011 and 7 April 2014, the investors deposited a total of $480,000.00 into the defendant’s National Australia Bank account.

It was alleged that between 27 September 2011 and 27 May 2014, the defendant dishonestly applied to his own use or to the use of any other person, $411,500.00 that belonged to the SMSF investors.

The other three counts related to investor monies that were allegedly not invested in the TradeStation Futures Trading Fund as promised.

Judge Paul Smith said it was his opinion that the scheme “clearly had the hallmarks of a Ponzi scheme”.

“Additionally contrary to the defendant’s evidence, I could see no evidence that overseas traders paid money into this account. Even the defendant conceded that in his evidence. Additionally, it was clear that some of the money was also used for his personal benefit. A number of amounts seemed to have been spent on personal items,” said Judge Smith. 

He also stated that the defendant pleaded on the basis of legitimate considerations, which had the real potential to advance his interests; namely, the significant reduction in quantum and the effect on the ultimate sentence.

“The negotiated outcome will lead to a significant reduction in the sentence the defendant was facing if convicted after a trial,” stated Judge Smith.

“In those circumstances, I refuse leave to set aside the plea of guilty.”