Shawny Cash and the $175m super fraud compo saga
Stuart Washington
April 13, 2011
Ads by Google
Fraud Trends White Paperwww.FirstData.com
Learn The Top Fraud Trends For The Next 12 Months. White Paper.
Shawn Richards ... known on Facebook as Shawny Cash, pleaded guilty to two charges of dishonest conduct. Photo: Nick Moir
THE stark difference between regulated super funds and self-managed super funds in the case of fraud was made clear yesterday when the first set received $55 million in government compensation.
The second set, suffering losses of about $120 million, will receive nothing.
The Assistant Treasurer, Bill Shorten, signalled a forthcoming review of a compensation scheme for all investors yesterday, which is due by June 30.
Advertisement: Story continues below Yesterday's outcome highlights wildly different compensation regimes for people caught up in the imbroglio of Trio Capital, an out-of-control Albury fund manager that allowed two hedge funds to rip off investors.
In September 2009 the whistle was first blown on Trio Capital when the Bronte Capital blogger John Hempton contacted authorities with suspicions prompted by magically even returns in a Trio hedge fund called Astarra Strategic.
By December both the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority had stepped in and the massive untangling job began.
What eventually emerged was a tale of global fraud involving a bunch of international penny stock scammers.
Using elaborate corporate structures in exotic Caribbean tax havens, Astarra Strategic spirited away about $125 million, with ASIC eventually finding a lawyer based in Hong Kong, Jack Flader, playing an instrumental role.
As the digging continued, 70 investors in a second Trio hedge fund, ARP Growth, were found to have suffered losses of more than $50 million.
Mr Flader's local henchman, Shawn Richard - known as Shawny Cash - faces sentencing on May 13 after pleading to two counts of dishonest conduct.
The effect on investors has been devastating. First, whether it was good money or bad, regulators locked up all money - more than $400 million - that was locked inside Trio Capital.
It was only gradually that funds were awarded to new managers and investors could start retrieving some money as ACT Super, for super fund investors, and the liquidator PPB, for regular investors, unpicked the mess.
ACT Super made the application for compensation for super fund investors to Mr Shorten last October. The compensation is available under part 23 of the Superannuation Industry (Supervision) Act, but only to those who invested in Trio through APRA-regulated funds.
It leaves superannuation investors who had been tipped into Trio through DIY funds, including all the investors in ARP Growth, without a cent. The theory is that trustees of DIY super funds should be skilled enough to look after themselves.
Mark McDonald of the lawyers Maguire & McInerney said 100 clients who went through the financial planning firm Tarrants were all in DIY funds that then invested in Astarra Strategic.
''I think it's incredibly exciting for the poor people who have suffered such a huge amount of loss through no fault of their own,'' he said.
''The problem is, only some of them are getting sorted out.''
It is a view that resonates with John Telford, 62, a Wollongong pensioner who was a client of Tarrants and lost a $600,000 disability payout.
''I'm one of those out in the cold because of the way the financial planner invested my money, that I wasn't savvy to,'' he said.
Ads by Google
Read more: smh.com.au |
