Case closes on greedy adviser - Paper trail leads to prison for financial adviser

Last month, a former Perth financial adviser was sentenced to the second longest jail term of any financial adviser in Australia when he was sentenced to 10 years behind bars. Kate Kachor outlines the events that lead to his downfall and explores the les-sons that advisers and dealer groups can learn from his experience.

Last month, a former Perth financial adviser was sentenced to the second longest jail term of any financial adviser in Australia when he was sentenced to 10 years behind bars. Kate Kachor outlines the events that lead to his downfall and explores the les-sons that advisers and dealer groups can learn from his experience.

It is a tale of greed and deceit. It is a sad story of one man’s choice to swap his care-free existence for one that now finds him in the seclusion of a prison cell.

Anastasis Darcy Papas, a former Perth financial adviser with AMP and Acclaim Fi-nancial Planning was last month convicted of 66 charges of fraud and stealing, de-priving him of his freedom for the next 10 years.

Papas, a member of Perth’s Greek community, stole $703,000 from family, friends and trusted colleagues over a four year period, beginning in 1989 and ending late 1994.

Last month’s Western Australian District Court case, heard that Papas had deceived his family and friends by stealing money they had trusted to him as their financial ad-viser, first with AMP and then as a self-employed planner in North Perth.

His crimes included stealing from an elderly woman whose husband had recently died and stealing funds from a young man who invested a personal injury claim after los-ing his leg in a car accident.

Papas stole from his parents-in-law, his sister-in-law and close friends. He also mort-gaged an elderly Greek woman’s home without her knowledge.

The court heard Papas used the stolen money to pay personal bills and transferred a majority of the funds into his various bank accounts. He also used the money to lease a BMW.

In a desperate effort to cover his tracks, Papas created false documentation and false receipts to portray to his investors that their investments were legitimate,

safe and prospering. He further deceived former clients to reinvest with him when their original investments were non-existent.

According to court evidence, Papas’s former clients only agreed to invest with him because of his apparent professionalism and his association with AMP. The majority of complainants directed at Papas was when he was with AMP.

Papas left AMP on June 4 1993, and his corporate agent status ended on December 17 1993, however he did not cease his fraudulent actions until September 1994.

AMP Financial Planning managing director Steve Helmich says the events of this case should not put AMP Financial Planning in a bad light, as it all took place before the company was properly established.

“Since 1993/1994 AMP have made a lot of steps. We now don’t allow advisers to be-come a mail box for their clients [as was the case with Papas],” he says.

“At AMP Financial Planning, advisers and clients get the same copy of everything sent out. Papas was clearly acting out of his authority.”

Helmich says Papas’s tale should serve as a warning to advisers on their responsibility to their clients and their special position of trust.

“All advisers in the industry should understand that they are in a place of privilege and if they misuse their position they will be dealt with in the severest possible man-ner,” he says.

“If we ever found an adviser who was [stealing from] or deceiving his clients, there would be no second chances. There is little chance of what happened with Mr Papas could happen again with any of our planners. Sometimes our advisers think we are over the top, but I’ve stood very stern on compliance issues. When you see what hap-pens in the Papas case, you see the risk is not worth it.”

Helmich says AMP is now strict on compliance issues. Each adviser receives two compliance orders each year. Upon receiving the compliance order, the advisers must supply client files.

“The adviser has no prior knowledge of what files we will request,” he says.

Since discovering the extent of the damage done by Papas, AMP Society reim-bursed many of the victims of his stealing and fraud.

In 1994, Papas attempted to escape the public shame he had left his family and friends and fled to Greece. On his return to Perth in 1996, Papas had nothing. His family had left him, and his reputation was in tatters. At 43 years of age, he found himself facing a lonely future, forever shunned by the financial services industry - his ability to obtain full-time work forever tarnished by a jail sentence.

In June 1996, Papas’s trial was heard. But it wasn’t until February this year that his case was heard before a jury.

According to Judge Shauna Deane, who presided over the case, the trial lasted seven weeks and 50 witnesses were called by the crown.

On 23 March this year, after two and a half days deliberating on the case, the jury convicted Papas of 52 counts of fraud and two counts of fraudulently gaining a benefit.

On May 1, Papas was sentenced to 10 years imprisonment. He has never been con-victed of any other crimes apart from minor traffic offences.

In the four years that Papas was advising clients, he committed a number of frauds and stole from a huge number of people. Some of those acts include:

1. The fraud of Mr and Mrs Kailis involving a sum of $105,000. Papas took the money after knowing fully well it was for the couples financial security in their retirement.

2. The theft of $12,500 from a Mr Grainger. Grainger had been in a car accident and consequently lost a limb. The money he had invested with Papas was to enable him to purchase an artificial leg. However, as Papas had taken all of his money he could not afford his new limb.

3. The theft of $13,249.26 from a Mr Salotti. Salotti gave Papas the money be-lieving it was going to be used for a superannuation investment on his behalf.

4. The theft of $12,337.77 from his ex-mother-in-law Mrs Boyatzis. Boyatzis was investing her money with Papas for the purpose of her superannuation.

5. The theft of $24,000 from Mr and Mrs Nicholson - the parents of a close friend.

6. The fraud against Mr Gougoulis of $65,000 which Papas said was for an al-leged investment opportunity in property or development called Rainbow Farm.

7. The theft of $58,000 from Mr Weetman. About $28,000 was deposited the very next day into Papas’s own personal mortgage account.

8. The stealing from an elderly Greek lady, Mrs Andrikou, of $27,000 invested with the AMP, of which $7000 was then transferred to his own bank account.

9. Ms Horton’s money was robbed of a cheque for $15,700. The money was then filtered into Papas’s personal account.

The theft of $7000 from Mr Moshides, whose whole financial vulnerability was fully known to Papas.

The 10 year prison sentence served on Anastasis Darcy Papas is the second longest sentence in the history of the financial services industry. The highest, 17 years im-prisonment was served on fellow West Australian Robin Greenburg in 1992.

Greenburg, a former managing director of Western Women Management and Western Women Financial Services, was charged with embezzling $4,063,184.

Greenburg was charged with stealing the money from the West Australian College of Advanced Education Student Guild and members of the public who invested with her.

The charges laid against Greenburg followed an investigation by the Australian Secu-rities Commission into the affairs of Western Women Management and Western Women Financial Services.

The charges included stealing, destroying records and arson.