An SMSF accountant based in NSW has been has been jailed for three years after being found guilty of making false and misleading statements in order to obtain money from clients and for misappropriating clients’ funds fraudulently.
An Australian Securities and Investments Commission (ASIC) investigation found Nicholas Ellis sent 10 letters to his clients encouraging them to invest in a company he ran called Tura Pty Limited, so it could buy a particular hotel, and that the letters contained misleading information about the property purchase.
Further, the regulator found the letter containing the misleading information resulted in $562,000 of client money being raised that Ellis subsequently misappropriated when he used it to acquire a house in Manly.
Ellis pleaded guilty to both charges on 4 August 2017.
In handing down the sentence, Judge Williams noted Ellis, “Provided information to investors that was untrue and caused those investors to act on that information. Had the true picture been disclosed, the investors may have been less forthcoming.”
Commenting on the case from the regulator’s perspective ASIC commissioner Danielle Press said: “Mr Ellis was a trusted financial adviser and accountant, who misled his clients and misused their funds for the benefit of his own business. Accountants and financial advisers are in a position of trust.”
“As demonstrated in this case, ASIC is prepared to take criminal action where trusted advisers misappropriate clients’ money.”
Ellis had previously received a six-year ban from providing financial services after the regulator found he had made dishonest statements as to where a client’s funds were to be invested, using $200,00 of client money to pay off personal credit cards and purchasing personal assets, and engaging in misleading or deceptive conduct in relation to client correspondence.
The offences occurred between 2 March 2009 and 29 June 2010 when Ellis was a director of 2020 Financial Solutions and 2020 Accounting Solutions both located in Newcastle.
At the time of the banning, ASIC commissioner Greg Tanzer said: “ASIC will take action to protect self-managed superannuation funds by ensuring they are not accessed and abused by unscrupulous operators like Mr Ellis.”
With regard to the jail term Ellis can serve 12 months in home detention, however it also means he has been banned from managing corporations for five years.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.