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ASIC busts two SMSF property operators

Two separate Australian Securities and Investments Commission (ASIC) investigations have resulted in one man pleading guilty to six different charges and another being charged with 31 counts of deception and one count of dishonest dealings with documents.

In the first matter, Barry Patrick pleaded guilty to six charges in relation to fraudulently obtaining $600,000 worth of funds from 14 investors.

The corporate regulator’s investigation found Patrick nominated a number of investors to be directors of several companies in order to purchase a series of properties.

The companies involved were Wrestway Property Development, Exclusive Property Consultants, Compendium Holdings and Integrated Consolidated Holdings.

Patrick raised funds for the property purchases by persuading investors to set up SMSFs and use their retirement savings to invest in these properties. He also encouraged other investors to refinance their homes and invest the resulting proceeds into the property developments he was involved with.

The illegal activities in question took place between 2007 and 2010.

The funds raised were used on interest payments to other investors, for loan repayments and for personal use.

Patrick pleaded guilty in the County Court of Victoria to three charges of obtaining property by deception, two charges of obtaining a financial advantage by deception, and one charge of carrying on a financial services business without a licence.

The guilty plea resulted in five additional charges being withdrawn.

A plea hearing has been scheduled for 7 July in the County Court of Victoria with the case being prosecuted by the Commonwealth Director of Public Prosecutions.

The second investigation involved George Nowak, who appeared in the Adelaide Magistrates Court charged with 31 counts of deception and one count of dishonest dealings with documents.

The charges arose from Nowak’s activities in raising money from SMSFs for properties being purchased through companies of which he was a director. One of these organisations was EJ Property Developments.

ASIC’s investigation alleged Nowak procured $1.8 million from SMSF trustees and misappropriated that money by not applying those funds towards the intended property purchase and by not holding funds in a designated account.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions and is scheduled to be heard in the Adelaide Magistrates Court on 12 July.

Nowak was not required to enter a plea.

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