Revamping our draconian defamation laws will help shield investors from fraudulent operators, writes Michael West.
WARNING: this is not a parody. Fraudsters have conferences too. We have a conference program here to prove it. The program is contained in a leaked email from Jack Flader, the criminal mastermind behind the biggest superannuation fraud this country has seen Trio Capital.
In the email, Flader invites his 25 "delegates" from around the world to the Marriott Hotel in Pattaya, Thailand.
Here are extracts:
SUNDAY, APRIL 3
Delegates arrive in Bangkok.
MONDAY, APRIL 4
You will be collected at the Marriott and taken to Jack's house for meetings.
10am. Opening remarks by Jack Flader.
10.15am. Lawyer Update on regulatory and other legal issues (lawyers please prepare topic of your choice that is relevant to our business).
1pm. Lunch Thai food.
2.30pm. Lawyer Update continued.
5pm. Transport back to Marriott.
8pm. Global Corporate Consultants dinner at Casa Pascal.
That was day one. We won't bore you with the whole program, just the choice bits:
Tuesday was the day for the "broker/dealer panel" with New World Financial, Huntleigh Securities and Research Capital all presenting.
In the afternoon was the "Annual Golf Tournament. Please advise if you will be bringing your own 'caddy'."
Wednesday afternoon, after the "funds updates", delegates were invited to relax around the pool and at the massage table.
Thursday was "beach day at outlying island. Please advise whether you will be carrying any additional 'luggage'."
Friday would be spent discussing strategy and future deals. In the evening, delegates were invited to join the "Gregory S. Rullo Bar Tour".
On the final day, Saturday, activities were scheduled to start at 1pm. "BBQ and Pool Day. Please advise if you will be bringing additional 'pool toys'."
DON'T let anybody tell you that conferences are a waste of time. That was 2005. Flader's Australian operations went on to rip $176 million out of the superannuation system.
Investors lost their life savings. The head of the operation in Sydney, Shawn Richard, was jailed. But the fun-loving Flader remains at large.
"Jack Flader is allegedly the ultimate controller of the Trio group," said the Australian Securities and Investments Commission. "Based on inquiries about Trio to date, ASIC believes there is insufficient evidence to prove a breach by him of Australian law."
Trio was a Ponzi scheme, a mini-Madoff if you like. Flader's operatives set up a fund, the Astarra Strategic Fund. Astarra would later become Trio.
The money poured in as Morningstar kindly bestowed its four-star product rating, and assorted financial planners dumped their clients' savings into Trio for hefty commissions.
Yet the touted returns were not real they were made up. And as the super flowed into the fund it was siphoned off via Hong Kong to "invest" in hedge funds in the Cayman Islands.
Financial planners, custodians, trustees, lawyers, asset consultants, auditors, regulators they all missed it. And while the regulators dithered, or in APRA's case were missing in action entirely, it should be said there is no way to quarantine entirely against fraudsters and reckless operators.
What could help is reform to the defamation laws. Australian defamation laws are among the most draconian in the world. Powerful vested interests persistently use their lawyers to threaten the mainstream press while bullying and shutting down small website activists trying to have their story heard.
It is no exaggeration to say that the greatest threat to freedom of speech in this country are lawyers.
It is time our defamation laws were brought into step with the rest of the world.
Frequently Asked Questions about this Article…
What was the leaked ‘fraudsters’ conference’ and who organised it?
The article describes a leaked email from Jack Flader — alleged mastermind behind the Trio Capital scandal — inviting about 25 delegates to a conference in Pattaya, Thailand (based at the Marriott). The program included opening remarks by Flader, lawyer briefings, broker/dealer panels (including New World Financial, Huntleigh Securities and Research Capital), social events like golf, pool and bar tours, and sessions billed as fund updates and strategy meetings.
What was Trio Capital / Astarra and how did the superannuation fraud operate?
Trio began as the Astarra Strategic Fund. According to the article, it operated as a Ponzi-style scheme: touted returns were fabricated, Morningstar had given the product a four‑star rating, and some financial planners recommended client money for commissions. Funds were then siphoned via Hong Kong and directed to hedge funds in the Cayman Islands. The operation ultimately extracted about $176 million from the superannuation system and many investors lost life savings.
Who is Jack Flader and what happened to Trio’s on‑shore operatives?
The article names Jack Flader as the alleged ultimate controller of the Trio group. Australian authorities said there was insufficient evidence to prove a breach of Australian law by him, and he reportedly remains at large. The head of Trio’s Sydney operation, Shawn Richard, was jailed in connection with the scheme.
How did regulators like ASIC and APRA respond to the Trio/Astarra collapse?
The article says regulators largely missed warning signs. ASIC reportedly stated there was insufficient evidence to prove a breach by Flader, while APRA is described as having been ‘missing in action’ during the build‑up. Overall the piece criticises regulatory dithering and failures to detect the fraud earlier.
What warning signs from the Trio case should everyday investors watch for to avoid similar investment scams?
Based on the article, red flags include: unusually high or consistently touted returns that can’t be independently verified, heavy promotion by financial planners motivated by commissions, opaque offshore flows (for example money routed through Hong Kong to Cayman Islands), and overreliance on a single product rating or marketing. The Trio story shows that ratings or glossy promotion alone don’t guarantee legitimacy.
How did industry professionals (planners, auditors, custodians) fail to spot the fraud?
The article lists financial planners, custodians, trustees, lawyers, asset consultants, auditors and regulators as having missed the fraud. It notes that despite multiple professional checks expected in the industry, those parties either overlooked or failed to expose the fabricated returns and offshore siphoning that fuelled Trio.
Why does the article argue reforming Australia’s defamation laws would protect investors?
The article argues Australia’s defamation laws are among the most draconian and that powerful interests use lawyers to threaten mainstream media and silence small websites and activists. Reforming those laws would, the author suggests, make it easier for journalists and independent investigators to publish allegations and warnings about suspect operators — which could help shield investors from fraudulent schemes sooner.
Do investment conferences or polished marketing prove a fund is legitimate?
No — the article warns that conferences, social events and polished marketing can be used as selling tools by fraudulent operators. The leaked Trio/Astarra conference programme is used as an example that fun‑looking events and professional presentations don’t guarantee a fund’s legitimacy; investors should still seek independent verification and transparency.
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