Opes Prime verdict a blow for regulator
On Friday afternoon, a Supreme Court jury acquitted the former director of failed securities lender Opes Prime of dishonesty and using his position to gain advantage.
The verdict was a big blow to the Australian Securities and Investments Commission. ASIC initiated the case, which argued that as Opes teetered on the edge of collapse, Mr Smith wrongly pledged assets to secure a $95 million loan from ANZ, to Leveraged Capital, a company to which he and Opes chief executive Lirim "Laurie" Emini had links.
In a statement, ASIC acknowledged the verdict, and highlighted that while Mr Smith was found not guilty, Mr Emini and another Opes director, Anthony Blumberg, were jailed in 2011 for two years and one year respectively for their role in the collapse.
As he left the court, Mr Smith, 51, said he was grateful to the jury and hoped to get on with his life.
His lawyer, Mark Regan, said that although the case "was a massive task, it was fairly easy for me to undertake".
"Mr Smith had steadfastly asserted that he had not been dishonest. Those were his basic instructions unwavering," Mr Regan said.
"When I got the brief, I combed through it and I just could not see that a crime was evident anyway, even if you set aside Mr Smith's instructions.
"From that point on, we held a firm line. We just held the line against ASIC and the prosecution. We were confident that a jury would see the circumstances in the way we did and of course our position has been vindicated."
Mr Regan said Mr Smith would return to his home in Wentworth Falls this weekend.
He has also had his passport returned, which was seized while he had been on bail. Mr Regan said it was a big relief for his client, who is originally from Britain.
"Not that he is going to travel imminently. It's just his elderly father is not of good health and it's a great relief for him to have that passport back."
Twenty-two witnesses were called during the trial, including John Lindholm, a partner of Opes' voluntary administrator and liquidator Ferrier Hodgson, who told the court that Opes Prime was "clearly insolvent" before signing the $95 million deal with ANZ.
The prosecution alleged Mr Smith knew that Opes faced a $200 million shortfall when he negotiated the ANZ lifeline. That figure was derived from problems in an account of a key Opes client, Sydney lawyer Chris Murphy, plus problems with Riqueza Holdings, a private company associated with Opes that had dozens of cash and share transactions to its sub-accounts until Opes' collapsed.
Two witnesses from ANZ, Felicity McKinnon and Ben Steinberg, said they were not aware of the existence of Riqueza until after the loan documents had been signed. Mr Emini told the court he did not tell Mr Smith and other colleagues that he was double-counting securities before Opes collapsed.
Opes had more than 650 clients when it collapsed owing creditors $631 million. Mr Lindholm told the court last month that creditors had recovered 40¢ in the dollar, with the prospect of 1¢ more this year, pending court action.
Frequently Asked Questions about this Article…
After a six-week trial, a Supreme Court jury acquitted Julian Smith of dishonesty and of using his position to gain advantage, and he walked free after a five-year legal process following the collapse of Opes Prime.
ASIC initiated the prosecution alleging that, as Opes Prime was close to collapse, Julian Smith wrongly pledged assets to secure a $95 million loan from ANZ to Leveraged Capital. The verdict against Smith was seen as a big blow to ASIC.
The prosecution said Smith negotiated a $95 million lifeline loan from ANZ to Leveraged Capital, and that assets were pledged in connection with that deal. ANZ witnesses said they were not aware of Riqueza Holdings until after the loan documents were signed.
Yes. Lirim 'Laurie' Emini and another Opes director, Anthony Blumberg, were jailed in 2011 for their roles in the collapse—Emini for two years and Blumberg for one year, according to ASIC's statement after the verdict.
Opes Prime collapsed owing more than $630 million to creditors and had over 650 clients. Creditors had recovered about 40 cents in the dollar, with the prospect of an additional 1 cent this year pending court action.
The trial heard that Riqueza Holdings, a private company associated with Opes, had dozens of cash and share transactions to sub-accounts before the collapse. Mr Emini told the court he did not tell colleagues he was double‑counting securities, and ANZ witnesses said they learned about Riqueza only after loan documents were signed.
Twenty-two witnesses were called during the trial. John Lindholm, a partner at Opes’ voluntary administrator and liquidator Ferrier Hodgson, told the court Opes Prime was 'clearly insolvent' before signing the $95 million deal with ANZ.
Julian Smith said he was grateful to the jury and hoped to move on with his life. His passport, which had been seized while he was on bail, was returned; his lawyer said Smith would return to his home in Wentworth Falls and that the passport return was a big relief, though not an immediate plan to travel.
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