AUSTRAC information assisted authorities investigating an investment company suspected of running a Ponzi scheme. The investment company’s two directors (suspects A and B) accepted AUD70 million worth of funds from investors, promising returns on investment of up to 70 per cent.
The investment company told investors that their funds were being invested in high-risk shares, foreign exchange and commodity markets. However, investigations found that the investment company used newly invested funds to pay dividends to the company’s earlier investors.
Ultimately, the investment company collapsed, owing investors more than AUD82 million. Investigations found that both former directors spent a proportion of invested funds on personal expenses, including home renovations, cars, yachts and an adviser, who assisted the directors in deciding which stocks to invest in.
AUSTRAC information included suspect transaction reports (SUSTRs) submitted with regard to fraudulent loan applications undertaken by one of the former directors (suspect A). AUSTRAC received an additional SUSTR reporting that an associate of suspect A had opened an account, over which suspect A held the power of attorney. Subsequently, suspect A began undertaking transactions via the account as if it were his own.
Further investigation revealed that the investment company had received more than AUD1.2 million worth of incoming international funds transfers from the accounts of investment companies based in New Zealand and Vanuatu.
Typically, investors transferred funds into the investment fund via internet banking or through direct deposits into accounts linked to the company. Over 250 people, from Australia and overseas, invested amounts ranging from AUD10,000 to AUD5 million.
The directors of the collapsed investment company faced 243 criminal charges between them, including carrying on a financial services business without a license, engaging in dishonest conduct, using false documents and obtaining property by deception and dishonest use of a corporate position.
Suspect A was sentenced to jail for 13 years and nine months, while suspect B was sentenced to two years and seven months imprisonment.
International – New Zealand, Vanuatu
|Designated service||Account and deposit-taking services|
|Indicators||A large number of individuals conducting domestic transfers, and direct deposits, to linked company bank accounts
Incoming international funds transfers from offshore company bank accounts to Australian accounts
Customer attempts to fraudulently obtain loans with inconsistent or missing customer identification
Customer opens bank accounts and arranges for third parties to operate the bank accounts