A former accountant who recommended the use of an SMSF for some clients has won a partial appeal against three of nine counts of obtaining financial advantage by deception, after being sentenced to six years’ imprisonment.
Douglas Gordon Johnston was initially found guilty in the County Court of Victoria on 8 May 2019 and during the trial was found to have defrauded investors of about $815,000. He was sentenced to a six-year term, with a non-parole period of three years.
On 10 February 2021, Johnston was partially successful in appealing his conviction when the Victorian Court of Criminal Appeal overturned three counts of obtaining financial advantage by deception, but upheld six counts on the same charge.
The Australian Securities and Investments Commission (ASIC), which brought the case against Johnston in 2015 after an investigation into his activities, said the appeal was based on evidence used in Johnston’s 2019 trial.
“The appeal court held that the depositional evidence of two witnesses should not have been admitted in Mr Johnston’s trial,” ASIC said.
“It held that the medical evidence relied on by the prosecution was inadequate to establish that the witnesses were unable to give evidence at the trial.”
The court ordered a retrial for the three charges on a date yet to be fixed and will also re-sentence Johnston on the remaining six charges at a later date.
Johnston was originally charged with his wife, Maureen Gael Johnston, on 20 December 2017, and the latter pleaded guilty in the County Court of Victoria to three counts of obtaining financial advantage by deception totalling $1,027,000 and was sentenced to five years and six months’ imprisonment in December 2018.
During Douglas Johnston’s initial trial, the court heard that during the period from January 2010 to November 2013, investors deposited money into the bank account of Small Business Management Pty Ltd, operated by the Johnstons, with the expectation they would receive returns on their investments, and in some cases SMSFs were established to manage the funds.
The funds were, however, withdrawn as cash by the Johnstons, used to repay their credit card debts, transferred to another account in the name of Maureen Johnston, and used to pay new investor deposits in a Ponzi-style operation.
During Maureen Johnston’s case, the court heard she deceived people into investing money in property developments in the United States and Australia when the funds were actually spent gambling at Melbourne Crown Casino and paying personal credit card debts.
