Ponzi scheme operator jailed for 13 years
Former director of Chartwell Enterprises and one of Australia’s largest Ponzi scheme operators, Graeme Hoy, has been sentenced to 13 years and nine months in jail owing investors more than $82 million.
Hoy’s sentencing followed an investigation by the Australian Securities and Investments Commission (ASIC), which revealed the collapse of the Geelong-based company was a direct result of his failed scheme.
A Ponzi scheme pays returns to separate investors, not from any actual profit earned by the organisation, but from their own money or money paid by subsequent investors.
Hoy pleaded guilty in December 2010 to 44 deception charges totalling almost $22 million.
He was convicted of 34 charges of dishonestly obtaining $13.3 million by deception from investors, 10 charges of obtaining property by deception from investors that totalled $2.5 million and one charge of dishonestly obtaining property in excess of $5.8 million by deception on behalf of Black Swan Holdings from the Commonwealth Bank of Australia.
Hoy was also convicted for dishonestly using his position as a director, carrying on a financial services business without a licence, and giving false information to investors about how their investments were performing.
Justice Terry Forrest, who sentenced Hoy in the Supreme Court of Victoria, condemned his conduct and said that the fraud had caused incalculable damage to vulnerable people.
Justice Forrest also said the licensing law existed to protect the public from unscrupulous and unskilled financial advisers, and that both labels applied to Hoy.
Hoy will have to serve a minimum of nine years in prison.
In August 2010, former Chartwell secretary Ian Rau was sentenced to two years and seven months imprisonment after pleading guilty to charges arising from ASIC’s investigation.
Recommended for you
Insignia Financial has reached a major milestone in completing the separation of MLC Wealth from NAB, having acquired the firm back in 2021.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
Proper recordkeeping has been described as the “mortar between the bricks” of the advice process and critical to an FSCP decision as an adviser is suspended for failures in this area.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
