Former accountant sentenced for defrauding SMSF investors
A former accountant has been sentenced to six years’ imprisonment for defrauding investors, including SMSF clients, of approximately $815,000.
Following a two-week trial in the County Court of Victoria, Douglas Johnston was sentenced to six years of imprisonment for defrauding investors of approximately $815,000.
In a public statement, ASIC said that Mr Johnston acted with his wife Maureen Johnston to secure funds from investors, lying about how the money would be used.
During the period January 2010 to November 2013, investors deposited money into a bank account of Small Business Management Pty Ltd on the basis that they would make returns on their investments.
In some cases, Mr Johnston set up SMSFs for investors, with the promise of managing the money on their behalf.
“The funds were then withdrawn as cash by the Johnstons, used to repay the Johnstons’ credit card debts, transferred to another account in the name of Maureen Johnston, used to pay new investor deposits in a Ponzi-style operation,” ASIC said.
In sentencing, her Honour Judge Wilmoth stated that Mr Johnston’s actions were “entrenched in dishonesty” and “showed a callous disregard for the trust placed in [Mr Johnson]”.
ASIC deputy chair Daniel Crennan said Mr Johnston, and his wife Maureen, gained the trust of, and deliberately misled, their investors, many of which they met through the Collingwood Football Club.
“The couple went on to use investor funds for their own benefit. The sentences imposed on Maureen, and today on Douglas, demonstrate the types of outcomes ASIC, with the Commonwealth Director of Public Prosecutions, can achieve,” Mr Crennan said.
“This type of behaviour will not be tolerated by ASIC and will be pursued through the courts.”
The court set Mr Johnston a non-parole period of three years.
ASIC said that Maureen and Douglas Johnston were originally charged together on 20 December 2017. Mrs Johnston pleaded guilty in the County Court of Victoria and was sentenced to five years and six months of imprisonment.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.