| Researched & written by John Telford Contact email: johnt@1earth.net June 14th 2016 AUSTRALIAN REGULATORY GOVERNANCE AND THE ASTARRA STRATEGIC FRAUD INTRODUCTION ----------------------------------------------------------------------- page 1 a) APRA’s interactions with the people operating Trio Capital. a1 - a4 -----page 2 Prudential reviews. b) APRA’s GOVERANCE. b1- b2 --------------------------------------------------- page 3 APRA’s governance d) ASIC in COURT. d1- d2 ------------------------------------------------------------ page 4-5 Two court hearings involving ASIC with information surrounding the trials that have links to the people operating Trio. c) ASIC’s REGISTRATION DATABASE c1-c3 ----------------------------------- page 5-8 The information that the regulator collected holds details that lead to further information about the people operating Trio. d) ASIC ACCEPTS CREDENTIALS. d1 – d2 -------------------------------------- page 8 Shawn Richard lied about his qualifications. e) INTERNATIONAL. e1- e5 ---------------------------------------------------------page 8-10 Significant global events directly relating to the people operating Trio. ASIC is connected globally to financial and law enforcement regulatory issues. 1 Australian regulatory governance and the Astarra Strategic fraud. The Australian Securities and Investments Commission (ASIC) held registration information in 2001 on its database of the company (Wright Global Asset Management) that went on to purchase Tolhurst Funds Management in November 2003. The 2001 document has names of some of the people behind the Astarra Strategic / Trio Capital funds. From 2001 new information was added over the next 5 or 6 years, information concerning the the principals behind Trio and the companies they operated. Had ASIC carried out a basic check anywhere along the timeline, ASIC would have discovered that everything was not as it seemed. The reader can decide if the connections presented here are tenuous or reasonable and whether the regulator adequately regulated the market. The research behind this document was done through google search. ASIC have powerful tools at its disposal to investigate fraudulent crime but to date ASIC have not provided an accurate accounted of what happened or what were its actions / inactions surrounding Trio while the money was disappearing. The Commonwealth of Australia encouraged people to save for their retirement. The High Court of Australia noted, ‘Because of the potentially lengthy time periods over which superannuation savings are accumulated, it was natural, and it is now in many instances mandatory, for a trust mechanism to be employed. These funds have increasingly come under detailed statutory regulation. The government considers that the taxation advantages of superannuation should not be enjoyed unless superannuation funds are operating efficiently and lawfully’.1 The Australian Prudential Regulatory Authority (APRA) and ASIC allowed a gang of international brokers to purchase and operate Trio Capital without undergoing any background checks. Even the international broker’s employment credentials were accepted without question. Consequently, the regulators allowed $176m to disappear out of a managed investment fund, and after the fraud was discovered, ASIC have not shown that they carried out a proper investigation nor try to claw back the money. ASIC and APRA’s involvement in Trio is very secretive. Information showing what they did or didn’t do is not publicly available. The Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the collapse of Trio Capital in their May 2012 Report provide the only documented evidence about APRA’s role in Trio. The committee note it, ‘has been unable to obtain clear answers or evidence from ASIC, APRA or the Australian Federal Police (AFP) as to whether any attempts have been made to bring charges against Jack Flader and others, to have them extradited to Australia, or even as to whether their names are on a watch list for people passing through Australian airports. There have been no examinations on oath of Mr Flader or any person other than Mr Richard and Mr Eugene Liu’. 2 The lack of transparency in the market helped the success of the fraud and continues to kept victims in the dark. This document looks at some of the key moments APRA had with Trio directors and Astarra. Also are some key moments where ASIC had the opportunity to learn something from the very information it had collected and had stored on its database. The information is considered vital because it only needed careful scrutiny and a can of worms would be discovered. However, both regulators failed to notice, failed to govern or provide adequate security and as a consequence the investors were sold out to unscrupulous people operating Trio. 1 Finch v Telstra Super Pty Ltd [2010] HCA 36 20 October 2010 M5/2010 2 Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the collapse of Trio Capital May 2012 (PJC Report) pagexxi 2 a) APRA’s interactions with the people operating Trio Capital. a1) 2004-9 Australian Prudential Regulatory Authority (APRA) "conducted five prudential reviews between 2004 and 2009. APRA took no enforcement action as a consequence of any of these reviews" with the Trio Capital directors:3 April 2004; November 2005; November 2006 and December 2006; August 2008 and June 2009.’ 4 & 5 The information about what transpired during these reviews is not publicly available. The public (particularly the investors who lost their savings) deserve to see the regulator’s actions / inactions documented in the prudential reviews. a2) 2006 APRA's Ross Jones said APRA reached the conclusion in 2006 that the directors of Trio Capital were a "bunch of incompetents". When asked why APRA did not inform the market, Mr Jones said APRA had no obligation to inform the market or warn investors.6 Mr Jones informed the PJC hearing about the Trio director's "gross incompetence". 7 APRA missed an opportunity as it could have asked why the Trio directors were incompetent and checked their qualification documents. The prudential reviews should be released. a3) 2008-9 ‘APRA had conducted several prudential reviews of Trio between 2004 and 2009. From late 2008 to mid 2009, APRA was unable to obtain from Trio a valuation of certain Trio funds' assets. In mid-2009, when information requested from Trio was not forthcoming, it conducted a further prudential review to ascertain the existence of overseas assets. When this information was not provided, APRA commenced an investigation in October 2009.’ 8 APRA appear to have responded very slowly over the extremely important issue of valuation. The market deserve to see the communication between regulator and Trio directors to see if APRA dealt with the issue adequately. a4) 2009 ‘On 2 December 2009, APRA issued a 'show cause' letter on Trio as to why it should not be suspended or removed as trustee. On 17 December, APRA suspended Trio's licence as the trustee of its four superannuation funds and one pooled superannuation trust. APRA suspended Trio's licence as a result of numerous breaches of Trio's licence conditions, including: ‘Failure to provide the auditors reports for 2009; failure to submit quarterly returns due 5 November 2009; failure to adhere to custodial requirements; failure to exercise care, skill and diligence and failure to act in the best interests of beneficiaries; and failure to demonstrate due diligence on the investment in the Exploration Fund Limited (EFL); and 3 Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the collapse of Trio Capital May 2012 (PJC Report) page xx. 4 Brunner, Greg APRA General Manager, Actuarial Market and Insurance Risk Services, Official Committee Hansard, Parliamentary Joint Committee On Corporations And Financial Services, Collapse of Trio Capital, 4 April 2012 Sydney, page 9. 5 Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the collapse of Trio Capital May 2012 (PJC Report) page xx. 6 July 5, 2012 meeting APRA's office in Market St. attendees VOFF delegation, the then Superannuation Minister, Bill Shorten, APRA's Ross Jones and ASIC's Greg Metcraft. 7 Hansard, Parliamentary Joint Committee on Corporations and Financial Services, Collapse of Trio Capital. (30.8.2011) - Sydney p 38 8 PJC Report page 36 3 not being unable to satisfy APRA's concerns regarding the valuation of superannuation assets.’ 9 It is evident that APRA sprung into action only after ASIC were informed that the Trio Capital fund was potentially a Ponzi scheme. This is another issue that needs transparency to see whether the regulator provided the best protection to the market as would be reasonably expected. b) APRA’s GOVERANCE b1) 2010 Justice Palmer in the Supreme Court of New South Wales in 2010 said, ‘A scheme which solicits money from the public, including money from individuals’ superannuation schemes, and invests those funds in “assets” which are not immediately and transparently identifiable and which cannot be valued by readily ascertainable and generally accepted measures is one which, in the public interest, ought to be wound up even if it is not demonstrably insolvent. Such a scheme is inherently improvident; it is an invitation to dishonesty by its promoters. The Court should not sanction its continuation.’ 10 The critical remark by the court about the Trio Capital scheme raises the question, Why did APRA nurtured the fund for many years without recognising the dishonesty? what did APRA miss? The public deserve answers. Why are Australian citizens left in the dark? Why the secrecy? b2) 2009 The PJC Report notes, 'It seems that APRA had not communicated to ASIC its requests for Trio to provide information. As a result, when ASIC commenced its active surveillance of hedge funds in June 2009, it did not seem aware that Trio was not providing the prudential regulator with basic facts about the existence of assets and their value. This information should have been communicated.' 11 Investors were expected to have trust and confidence in a financial system governed by ASIC and APRA, only to discover after their savings were exposed to fraud that the regulators did not communicate to each other. The level of governance each of the regulators brought independently did nothing to prevent or uncover the fraud. Had each shared their own independent concerns they may have reached a different conclusion. The public deserve to know what their concerns were and when did they come to the regulator’s attention? 9 PJC Report page 36 & 37 10 Trio Capital Limited (Admin App) v ACT Superannuation Management Pty Ltd & Ors [2010] NSWSC 286 (16 April 2010) at 27 per Palmer J 11 PJC Report page xx 4 d) ASIC in COURT. d1) ASIC in COURT: September 2001 ASIC joined law enforcers and financial regulators from Canada, Hong Kong, Japan, New Zealand, Philippines, Thailand, the Netherlands, Singapore, South Africa, and USA to assist the Royal Thai Police arrest 84 foreigners in Bangkok that operated cold calling firms. ASIC had an extensive role in this joint international operation, closing down cold calling firms that operated from Bangkok, Thailand to Manila, Indonesia.12 Thai cold caller Paul Richard Bell visited Australia in October 2001 and ASIC obtained a court order that prevented him from leaving Australia.13 ASIC’s November 2001 Media Release said, ‘… Paul Richard Bell today pleaded guilty in the Brisbane Magistrates Court to 21 charges laid by ASIC in relation to his activities as a cold-caller operating out of Thailand and the Philippines.…He was employed by Thailand-based International Asset Management (IAM), and Philippines-based Trident International, companies that sold overseas shares through cold calling.’14 Had ASIC checked International Asset Management (IAM), Trident International and Paul Richard Bell they would have discovered the criminal complaint by the Security Exchange Commission (SEC) Thailand against IAM and 2 executives of IAM, Dan Sterk and Stephen Robert Casciola for conspiring to conduct unlicensed securities businesses in Thailand and engaged in fraudulent activities against foreign investors.15 A further check would have led ASIC to discover that Sterk had been convicted of fraud in the United States before he launched the Bangkok-based IAM. 16 In ASIC’s own ‘2002 REPORT’ about international cold calling investment scams ASIC warn about IAM.17 A check of Dan Sterk’s background shows several trials from 1994 to 1996 where Sterk was found to be conducting unregistered fraudulent offerings of securities to build and/or operate wireless cable television systems.18 Also related to IAM is the Canadian financier Bryant Cragun who figured prominently in the creation and ownership interest in Oxford International Management and PT Dolok Permai. PT Dolok Permai did business under the name International Asset Management.19 ASIC’s 2002 ‘REPORT 14’ also warns against ‘PT Dolok Permai’.20 ASIC publish warnings but did not heed those warnings itself. ASIC fail to provide security or instil confidence when it demonstrates that it does not cross-reference the information on its own database. 12 ASIC - Report 14. International cold calling investment scams. June 2002. Pages 47 & 48. download.asic.gov.au 13 ASIC MR 01/361 4 October 2001 asic.gov.au 14 ASIC MR 01/396 9 November 2001 asic.gov.au 15 Securities and Exchange Commission, Thailand (SEC Thailand) 16 www.time.com/time/asia/biz/magazine/ 17 op. cit., REPORT 14 June 2002 18 [SEC v. TransAmerica Wireless systems, Inc. et al., USDC, SDFL, Case No. 94-6805-CIV-GONZALEZ] (LR14663). 19 Carey, Christopher Article from St Louis Post-Dispatch ’Failed company provides a glimpse into the world of penny stocks.’ June 22, 2004 business.highbeam.com 20 op. cit., REPORT 14 June 2002 5 d2) ASIC in COURT: In 2002 the trial Commonwealth Director of Public Prosecutions (CDPP) v. Steven Irvine Hart, ASIC joined forces with the AFP and the Australian Tax Office (ATO) as part of a tax minimization investigation that took the regulator to James Sutherland’s Zetland office based in Hong Kong to secure 100,000 documents that enabled the court to charge Hart with nine offences of defrauding the Commonwealth. Sutherland is mentioned in two trials 2001-2003 trials21 & 22 and the case lasted for about 10 trials. Sutherland and Jack Flader were business partners 2001-6 working from the Hong Kong Zetland office. ASIC already held Sutherland’s name and the Zetland office address on its registration database. The CDPP v Hart was an investigation into tax fraud and it was public knowledge that Sutherland’s business partner Jack Flader was a tax expert. Did ASIC lean this? Did ASIC recognise Flader’s name on its 2004 registration database? c) ASIC’s REGISTRATION DATABASE c1) ASIC’s DATABASE: 2001 ASIC’s registration database held the registration documents of Wright Global Investments Pty Limited, (WGI) that lists officeholders Shawn Richard, Eugene Liu, Frank Richard Bell and Matthew Littauer. Had ASIC carried out a ‘fit and proper person test’ of Matthew Littauer in 2001 they would have found, • 1997 He was President of Styx Group Inc and the company was permanently revoked.23 • 1999 NASD Disputes, Littauer and Richard Bell were part of the respondents for Pacific Continental Securities Corporation (PCS). Claimant asserted the following causes of action: improper business conduct and trading practices; fraud; misrepresentations and deceit; unauthorized transactions; unsuitability; failure to supervise; breach of fiduciary duties; breach of the implied covenants of good faith and fair dealing; negligence; violations of the Exchange Act and the Securities Act of 1933; and violations of the NASD Rules of Fair Practice. 24 • 2001 Littauer’s company New World Financial Group was forced by the Philippine authorities to Cease and Desist.25 • 2001 NASD Dispute Resolution, Littauer was one of the Respondents for PCS and World Financial Group, Inc. (NWF). Some of the points in the Case Summary are: Fraud; Negligence; Breach of Contract; Breach of Fiduciary Duty; Respondent Superior; Violation of NASD Conduct Rules; Violation of California Corporate Securities Law; Violation of California Consumer Legal Remedies Act; and Punitive Damages.26 Had ASIC carried out a ‘fit and proper person test’ of Shawn Richard in 2001 they would have found he was named by the New Zealand Securities Commission in 2001 as being an associate of the unlicensed broker Millennium Financial operating in Manila, Philippines.27 Had ASIC checked the WGI’s parent company ‘Astral Investments Limited’ (mentioned on WGI registration document) they would have found the name James Sutherland, Director of Gemini Reality Limited of Zetland office based in Hong Kong. Sutherland and the Zetland address (including the other names mentioned above) will resurface during 2001-3 and offer indicators pointing to a potential scam being highly eminent. 21 Commonwealth Director of Public Prosecutions v Hart [2010] QDC 457 (30 November 2010) 22 CDPP v Hart & Ors; Yak 3 Investments P/L as t/tee for Yak 3 Discretionary Trust & Ors v Commonwealth of Australia [2013] QDC 60 (2 April 2013) 23 corporationwiki.com 24 Statement of Claim filed: August 20, 1999 Case Number: 99-03856 25 Republic of the Philippines Department of Finance, Security and Exchange Commission Compliance and Enforcement Department (April 10 2001) 26 NASD Dispute Resolution Statement of Claim filed: October 26, 2001 Case Number: 01-05745 27 The information is no longer available on New Zealand Commission web site, but can be found here, Message 16875210 6 c2) ASIC’s DATABASE: The 2003 ASIC’s registration report of Wright Global Asset Management Pty Ltd., lists the officeholders Eugene Liu, Shawn Darrell Richard, Jack Flader and Matthew Littauer. Had ASIC carried out a ‘fit and proper person test’ in 2003 of Littauer they would have discovered: • 2002 Littauer’s company New World Financial Inc., was fined $12,500.00 by NASD and was suspended from serving as a financial and operations principal for 60 business days beginning January 6, 2003.28 • 2003 World Financial Capital Market (WFCM) was fined $100,000.00 for reports prepared by an unregistered person that contained exaggerated, unwarranted, or misleading statements and failed to disclose material facts.29 • 2003 NASD fined Littauer $20,000 for breaches of US Security law and suspended from association with any NASD member in any capacity for 30 days.30 Had ASIC carried out a ‘fit and proper person test’ in 2003 of Jack Flader they would have discovered that he owned and was director between 1990s to 2000 of about 9 firms such as Friendship International, Inc., Momentum Campaigns, The Gemini Financial Group (Gemini), Zetland Financial Group, Pacific Continental Securities (PCS) UK, Pacific Capital Group Ltd. (PCG) and Optech. • March 20th 2000 eSat sold to Jack Flader, based in Hong Kong 65,828 shares. “Form 144” document of the sale of securities pursuant to rule 144 under the Securities Act of 1933’ and the broker acquiring the securities was Pacific Continental Securities based in New York.31 • The 2003 Wright Global Asset Management (WGAM) registration document lists the company Bella Donna Limited. The Security and Exchange Commission document ‘10QSB’ for 9/30/01 confirms that Flader is the authorized signatory for Belladonna (Bella Donna) and Accesspoint.32 In 2002 siliconinvestor Jeffrey S. Mitchell replying to StockDung wrote, ‘Michael Horne fugitive from the Scorpion Technology criminal indictments as well as offshore boiler room operator Jack Flader Esq. Zetland is on the New Zealand Securities Exchange Commission web site. They have been busy little beavers pushing TBXR and ASAP. Madison and Wall World Wide is the IR Company for TBXR. Pacific Continental Securities Corp who's broker dealer licence was pulled was also active in both TBXR and ASAP.’ 33 An online posting at forums.moneysavingexpert dated 2004, shows information about boiler room scams from around 4 years earlier. The blogger ‘zetlandinquirer’ writing to ‘woody_56’ says, ‘The people behind Zetland used to be involved in a company called Momentum Campaigns in Hong Kong. One Zetland Director, Jack Flader, was a Director of Momentum Campaigns. This was an “Internet company”. They supported the web sites of other companies, including the early versions of Pacific Continental (PCS). Those early PCS sites touted such stocks as eSat and Accesspoint. Zetland used be called Gemini. They had a subsidiary called Pacific Capital Group ltd (PCG), also of Hong Kong, same address as Zetland. PCG was an early shareholder in the predecessor to eSat. Other figures behind eSat include Regis Possino …’. ‘PCG was also involved with Accesspoint. So is Reid Breitman of GCH Capital.’ ‘…Jack Flader filed form 144 to sell more than 60,000 eSat shares in 2000 for more than $300k. The same year, 2000, another boiler room, Steinmorgan, was touting eSat share. 28 FINRA BrokerCheck Report NWF INC. Docket C10020113 29 FINRA BrokerCheck Report New World Financial, Inc. Owner Matthew Littauer Docket No CAF030057 30 brokercheck.finra.org 31 Security and Exchange Commission File No. 0-26039, No. 950344604. 32 secinfo.com. 33 Message 17393001 7 Those who bought in 2000 saw their investment worthless by 2001. 34 ‘Momentum was taken over by a company called ZiaSun. Somebody called Bryant Cragun was behind ZiaSun. He ran a manila boiler room called Oxford International Management. He was touting stocks he was involved in like Titan Motorcycles and Chequemate, all duds. Accupoll staff include Chett Noblett and Andreea Porcelli. Chett was in charge of eSat. Andreea was involved in Junum. David Coulter, used to be CEO of eSat’. 35 ‘In 2001 Jack Flader was director of Momentum, PCG, Gemini and Zetland in 2004. Sutherland was a director Zetland. Zetland owned PCS. The Spanish version of the SEC warned of the association between Sutherland and PT Dolok Permai, an Indonesian boiler room, and another name for International Asset Management. IAM was run by Cragun.’36 It is significant that Flader’s name is mentioned alongside Regis Michael Possino. Possino was convicted of a crime involving moral turpitude 37 and in 2000 Bryant Cragun was involved in a suit by ZiaSun to silence a group of investors who raised questions concerning the operational and valuation issues associated with the company. The trial was called the "cyberexpose" lawsuits.38 As mentioned earlier, in 2002 ASIC had published warnings against International Asset Management and PT Dolok Permai in ‘REPORT 14’. From the above information ASIC would have discovered, and realised that it held documentation with Jack Flader’s name. Internet pages linked Flader with boiler rooms and dud stock. Jack Flader’s name was linked to the Trio Capital scheme. However it appears that ASIC rather than carry out a ‘fit and proper person test’ on people handling superannuation savings, ASIC built a trap to catch the gullible in their April 1st 1999, fake investment scheme scam. ASIC set up the scam to highlight the willingness of people to invest in companies about which they know nothing. Exposed a month later, ASIC’s April Fools Day Joke had succeeded in convincing more than 1400 people to seek out further investment information and 233 people pledged over $4 million.’39 c3) ASIC’s DATABASE: 2004 – 2006 Breach of the Corporations Act. Well before Astarra was exposed as a fraud, ASIC permanently banned Mr. Ronald Jeffery Caines from providing financial services after his breach of the Corporations Act. ASIC’s investigation found that between October 2004 and October 2006, Caines advised eight of his clients to invest in financial products issued by Astarra Capital Limited. Caines failed to disclose to his clients that a director of Astarra Capital Limited (and associated companies of the director) made loans totalling over $500,000 to his wife, and a company of which Mr Caines was a director.40 ASIC aware of the loan offers made by Trio directors should have watched that Astarra did not offer further loans or incentives, particularly in view that once it was discovered that indeed this did occur, ASIC took the matter very seriously. Had ASIC discovered that inappropriate loans and incentives were being offered by Trio directors, ASIC may have discovered sooner that much beneath the surface was inappropriate. 34 forums.moneysavingexpert.com 35 Ibid. 36 Ibid. 37 Supreme Court of California. In re Possino (1984) law.justia.com 38 news_3.tripod.com 39 Hughes, Sean Enforcement and compliance seminar 27 – 28 March 2001 Melbourne ASIC Regulatory compliance in the borderless community of 2001 40 08-185 ASIC permanently bans Sydney financial adviser August 13th 2008 asic.gov.au 8 Also a permanent ban by ASIC of a financial advisor who placed his clients in Astarra but not a word mentioned of this in the PJC report, suggesting ASIC did not inform the Committee about this event. d) ASIC ACCEPTS CREDENTIALS d1) ACCEPTS CREDENTIALS: 2003-4 ASIC accepts Shawn Richard’s application to become an Australian financial services licensee (AFSL) falsely stating he had a bachelor of finance degree and claimed he was ''senior portfolio manager'' when in reality he was better described in his Taiwan days as office boy.41 ASIC could have discovered the lies by carrying out a background check. An AFSL license, issued by ASIC, enabled Trio to operate a financial services business. ASIC say on its website, ‘ASIC’s licensing requirements mainly focus on consumer protection and market integrity. ASIC assesses whether an applicant for an AFS licence will provide financial services in an efficient, honest and fair manner, including an assessment of the applicant’s competence to provide financial services (such as providing advice about interests in a superannuation fund). In order to conduct this assessment, ASIC usually needs the applicant to provide information about the qualifications of its ‘responsible managers’ and whether they are of good fame and character. ASIC may also ask the applicant to provide information relevant to the assessment of matters such as its compliance measures and its processes for handling complaints from retail clients.’ 42 d2) ACCEPTS CREDENTIALS: ASIC held Frank Richard Bell’s details as being part of the Trio Capital operation yet it is unlikely Bell had a licence to work in the financial industry. Marc Boudreau, Shawn Richards childhood friend had no financial qualifications. ASIC could argue that Bell and Boudreau operated outside ASIC’s jurisdiction. But that is like saying its not Australian’s responsible if a flight from Australia to United Kingdom stops over in Singapore and changes pilots for non licensed operators. e) INTERNATIONAL: e1) INTERNATIONAL: In 2003 Littauer was fined $20,000 by the National Association of Securities Dealers (NASD) for breaches of US Security law and was given a three months suspension.43 ASIC already held documents dated 2001 and 2003 with Matthew Littauer’s details. Had it discovered the NASD fine and suspension, it should have responded accordingly. e2) INTERNATIONAL: November 2003 – January 2004 Frank Richard Bell was Permanently barred. ASIC held documents dated 2001 and 2003 with Frank Richard Bell’s name and address, what action would have ASIC taken had it discovered Bell was fined $40,000, jointly and severally, barred from association with any NASD member in a principal capacity and suspended from association with any NASD member in any capacity for eight 41 Washington, Stuart 'Another black mark against ASIC' July 19, 2010 watoday.com.au 42 asic.gov.au 43 Littauer’s suspension began August 18, 2003, and will conclude at the close of business September 17, 2003. (NASD Case #CAF030037). finra.org 9 months. Bar is effective November 24th 2003. Suspension effective January 5th 2004.44 Including another similar violation and fine.45 Armed with such information, what would ASIC have done considering Frank Richard Bell is named in ASIC registered companies database. e3) INTERNATIONAL: The period 2002 – 2004 saw Littauer, Bell, Flader and Sutherland linked to unlicensed firms that were operated globally with offices based in the United States, United Kingdom, Europe, the British Virgin Islands, Philippines, Australia, New Zealand, and Hong Kong. Before the group came to Australia, companies linked to them such as New World Financial (NWF) and Millennium Financial, Ltd. (Millennium) were know to have sold dud stock. Warnings were raised about NWF and Millennium by, • The Netherlands Authority for the Financial Markets (AFM); • The Financial Supervision Commission of the Isle of Man (FSC); • The Austrian Financial Market Authority (FMA); • The Comisio´n Nacional del Mercado de Valores (CNMV) Spain; • Financial Markets Authority (New Zealand) and • Securities & Futures Commission of Hong Kong. In 2002 New Zealand Securities Commission warned about Millennium and listed 17 employees.46 Four of those names are Artzt, Rullo, Lopresti (employees of NWF) and Shawn Richard (operated Trio Capital). ASIC in June 2002 published ‘Report 14’ and lists Millennium among other companies. It is alleged that the Millennium warning carried by Australia and New Zealand originated from the Philippines. New Zealand listed the 17 operatives but ASIC were cautious not to name names. Although ASIC echoed the international warnings it did not take notice of its own warning and did not take notice that one of the names on the list ‘Shawn Richard’ was already on its database. ASIC need to answer the question, what information did ASIC hold in 2002 about Millennium? Did ASIC have the list of names? Why did ASIC choose not to publish the list of names? Another question directed to the New Zealand Authority Commission, why did the commission remove the list the name from its web site after the Astarra fraud / Trio collapse become public? 44 NASD Docket Number CAF030057 Date Initiated 11/07//2003. 45 Maryland Division of Securities. Date initiated 11/26/2003. Docket number 2003-0840. 46 Message 16875210 10 e4) INTERNATIONAL: December 3rd 2004 Matthew Littauer was murdered at his office in Tokyo, Japan.47 ASIC could have discovered that Littauer’s murder was suspected to have been business related and as the deceased businessman was registered with ASIC, it would be expected of ASIC to ask, “what kind of business warrants being stabbed to death? This line of inquiry would have led ASIC to discover Littauer’s previous breaches of securities law, fines and suspensions dating back to the 1990s. e5) INTERNATIONAL: 2007 United States tax fraud court case involved two of the people behind the Trio Capital scheme, i.e. Flader & Sutherland. Campbell v. Cathcart et al was filed in South Carolina District Court 2007 and presented ASIC with an opportunity to discover a potential scam by recognising that Flader & Sutherland were part of the Trio scheme. ASIC had the chance to discover the Astarra fraud two years earlier than when it was eventually discovered in September 2009. Tens of millions of Australian dollars would have been saved if Trio had been frozen in 2007. ASIC did not connect the links and it was 2010 when Stuart Washington wrote, ‘Flader and Sutherland have been named as defendants in a huge US court case about a stock lending scam that raised $US1 billion ($1.1 billion) and dudded the Internal Revenue Service of $US234 million’48 It is incumbent on ASIC to be aware of a quarter of billion dollar tax fraud underway in the courts. It is incumbent on ASIC to remember the CDPP v. Hart that led ASIC to Hong Kong to collect 100,000 documents from the Zetland office as it too was a tax fraud. It is incumbent that ASIC note that the names ASIC has on ASIC’s register database for the Trio Capital scheme are the same names and addresses listed in the United States Campbell v. Cathcart trial and were also mentioned in the CDPP v. Hart case. The recurrence of the names Flader & Sutherland beneath ASIC’s attention would have opened to further information about other significant suspensions and fines that occur around the world involving the same people. 47 Federal Bureau of Investigation (FBI) document sent to VOFF under the Freedom of Information Act October 16th 2014. The FBI provided a document they received from the Immigration and Customs Enforcement (ICE) that states Littauer is a subject of an ongoing investigation in the Philippines as he was identified as being involved in a telemarketing stock Boiler Room scam. Littauer was a US Citizen, 34 years of age, he had been in Japan since August 2004 just 4 months before his death on December 3rd 2004 at his office Katsura KR Bldg, 3rd Floor, 7-17-16 Roppongi, Minato-ku, Tokyo. Cause of Death is Homicide, shock and severe blood loss due to stab wounds. According to the Liaison Bureau, Interpol Hong Kong, (in the FBI dossier) Littauer was stabbed at least 11 times. The location where Littauer was murdered is populated by bars, restaurants and massage parlors, as well as a large number of illegal Chinese aliens. In the FBI document two heavily redacted pages p23 & p24 are dated January 1st 2001 but no text is made available. (This date suggests Littauer was under surveillance well before the date of his murder.) Pages 27 & 28 of the FBI document are also heavily redacted, but Littauer's name and September 12th 2000 is visible. The FBI dossier also raises issues with the possible link between Littauer’s murder to the American citizen Christopher Andrew Coppola who was stabbed to death in Manila. Coppola had reportedly been employed by a Pastrana boiler room in Manila. The Tokyo metropolitan Police and the Foreign Police Cooperation Homicide Investigation unit were interested in comparing the type of knife used in Coppola’s murder to that of Littauer. The FBI included a 5 pages article 'Laws and Raids Fail to Thwart Boiler Room Activities' by Sheila SamontePesayco. Samonte-Pesayco names some of the biggest global scammers such as Pangasinense Amador Apungan Pastrana, Regis Possino, Sherman Mazur and Adnan Khashoggi. The Tokyo Metropolitan Police Department (TMPD) contacted the Philippines for additional details regarding Coppola's murder and they also contacted New York to provide historical information regarding Littauer. 48 Washington, Stuart 'Three pennies in the fountain of Trio Capital losses' August 23, 2010 smh.com.au |
