Pair plead guilty to $30m super ponzi scheme

A LONG-RUNNING investigation of a ponzi operation in which more than $30 million in superannuation money was invested has resulted in two of the people involved pleading guilty in court.

By InvestSMART · 12 Jun 2012

By InvestSMART ·
12 Jun 2012

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A LONG-RUNNING investigation of a ponzi operation in which more than $30 million in superannuation money was invested has resulted in two of the people involved pleading guilty in court.

Last week's guilty pleas come nearly five years after the Australian Securities and Investments Commission obtained an injunction preventing the operation of the scheme, the Integrity Plus Fund, and securing investors' remaining funds. In mid-2008 the NSW Supreme Court ordered the winding up of the illegal, unregistered managed investments schemes, Integrity Plus Fund, and another related scheme, the Super Save Superannuation Fund. Some $22 million in investors' funds was recovered in Australian and overseas accounts from the two funds.

The liquidator, Barry Taylor of HLB Mann Judd, said in an affidavit in other court proceedings that the Integrity scheme operated between September 2004 and January 2008.

"During this period it accepted approximately $US29,399,627 from investors and paid total 'returns' of $US9,128,821. However the Integrity scheme was a ponzi scheme that is to say the 'returns' were not paid from profits on funds invested, but rather from capital contributed by other investors".

Mr Taylor said the Integrity scheme was administered by PJCB International, which was incorporated in the British West Indies.

Mr Taylor said some investors in the Integrity scheme attended seminars by a company called Future Trading Corporation, which described itself as an "innovative supplier of financial education material". Most of the 270 investors were from Sydney and the southern highlands, and were encouraged to set up self-managed superannuation funds, which then invested in Integrity.

Last week in the Downing Centre Local Court, Brian Wood, of Davistown, and Jimmy Truong, of St Johns Park, pleaded guilty to charges of making false statements to investors. Wood also pleaded guilty to charges of misappropriating investors' funds. In a statement ASIC said that both men had falsely stated to investors that they would earn returns of 4 per cent per month, and that their capital was guaranteed.

Wood and Truong were two of the "beneficial owners" of PJCB International.

ASIC said a third man, Con Koutsoukos, of Wiley Park, had not entered a plea to three charges of making false statements to investors. The matter returns to the District Court later this month.

ASIC has previously said it was assisted in the investigation by the Commodity Futures Trading Commission in the US.

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Frequently Asked Questions about this Article…

What was the Integrity Plus Fund Ponzi scheme and how did it affect superannuation investors?

The Integrity Plus Fund was an illegal, unregistered managed investment operation that ran between September 2004 and January 2008. It accepted about US$29.4 million from investors and paid roughly US$9.13 million in so‑called "returns," but those payments came from new investors' capital rather than genuine investment profits — the classic Ponzi structure. More than $30 million in superannuation money was tied up in the scheme.

How much of investors' money was recovered from the superannuation Ponzi scheme?

According to court proceedings, about $22 million in investors' funds was recovered from Australian and overseas accounts connected to the Integrity Plus Fund and the related Super Save Superannuation Fund after regulators and the liquidator intervened.

Which companies and organisations were named in the investigation of the scheme?

The scheme involved the Integrity Plus Fund and the Super Save Superannuation Fund, administered by PJCB International (incorporated in the British West Indies). The liquidator was Barry Taylor of HLB Mann Judd. Investor seminars were run by Future Trading Corporation. Regulators involved included the Australian Securities and Investments Commission (ASIC), with assistance from the US Commodity Futures Trading Commission (CFTC).

Who pleaded guilty in court over the superannuation Ponzi scheme and what were the charges?

In the Downing Centre Local Court, Brian Wood (of Davistown) and Jimmy Truong (of St Johns Park) pleaded guilty to charges of making false statements to investors; Brian Wood also pleaded guilty to misappropriating investors' funds. Both men were identified as two of the "beneficial owners" of PJCB International. A third man, Con Koutsoukos, had not yet entered a plea to related charges.

What false promises were made to investors in the Integrity Plus Fund scheme?

ASIC said the operators falsely told investors they would earn returns of 4% per month and that their capital was guaranteed — claims that were untrue given the scheme was a Ponzi operation paying returns from other investors' capital.

How were everyday investors recruited to invest their superannuation in the scheme?

The article says most of the roughly 270 investors, many from Sydney and the southern highlands, were encouraged to set up self‑managed superannuation funds (SMSFs) and then invest those SMSF assets into Integrity. Some investors also attended seminars run by a company called Future Trading Corporation.

What legal steps did regulators and courts take against the illegal managed investment schemes?

ASIC obtained an injunction that prevented the scheme from operating and secured remaining investor funds. In mid‑2008 the NSW Supreme Court ordered the winding up of the unregistered schemes (Integrity Plus Fund and Super Save Superannuation Fund). The liquidator recovered funds and criminal charges followed, with guilty pleas entered in local court.

What red flags for superannuation investors does this case highlight?

This case highlights key warning signs: promises of unusually high or guaranteed returns (for example, 4% per month), pressure to channel retirement savings into a single product or via seminars, use of offshore entities to administer funds, and investments offered by unregistered managed investment schemes. The outcome shows why investors should be cautious about such claims and verify registration and oversight before investing SMSF assets.