Rollicking times for con artists
Warning: what follows 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.
Warning: what follows 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 all around the world to the Marriott Hotel in Pattaya, Thailand.Here are some extracts:"Sunday, April 3: Delegates arrive in Bangkok.Monday, 4 April: You will be collected at the Marriott and taken to Jack's house for meetings. Please be at the Marriott lobby promptly at 9:30 am ... please, Greg!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 on regulatory and other legal issues (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, Phoenix Golf Club. Please advise day before 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 day before 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 of the conference, Saturday, activities were scheduled to start promptly at 1pm. "BBQ and Pool Day," the program says. "Please advise if you will be bringing any additional 'pool toys.' " And at "9pm - Gregory S. Rullo Bar Tour II".Don't let anybody tell you that conferences are a waste of time. That was in 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 tried and sent to jail. But the fun-loving Flader remains at large."Jack Flader is allegedly the ultimate controller of the Trio group," the Australian Securities and Investments Commission said this week as the recriminations over the scandal rolled on."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.Its investment returns were dazzling. 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 that there is no way to quarantine the system entirely against fraudsters and reckless operators.The likes of Trio and Storm Financial are bound to happen again. Still far more will be ripped out of the $1.3 trillion Australian superannuation system by gouging middlemen than by con artists.What would help is reform to the defamation laws. We speak from weary personal experience here, constantly harassed as we are in the financial press by ambulance-chasing lawyers.Although the last set of reforms stopped big companies suing - as they can adequately defend their reputations through their advertising and PR budgets - they still deploy their shareholders' funds to sue on behalf of their directors and executives.While the mainstream media feels the heat from falling ad revenues, pressure from defamation threats and the growing throng of PR urgers lobbying against journalists is on the rise.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.Regulatory action against Trio Capital came only after investigative work by reporters in this publication acting on a tip-off from a concerned citizen.There were legal threats, as usual, repelled by Fairfax lawyers. It is plausible to contemplate, however, that in the media landscape of the future the cost and the effort of defending free speech against vexatious litigators might just be too high - unless there is reform.This menace to the institutional press might be half-acceptable, from a public interest perspective, if it were open-slather online, as it is in the US and most of the rest of the world.In China, the Communist dictatorship will bob along and shut you down if you set up a website and criticise somebody rich who might have stolen your life savings and put your family in a caravan park.In Australia, we have defamation lawyers to do that.It is no exaggeration to say that the greatest threat to freedom of speech in this country is lawyers. It is time the country's defamation laws were brought into step with the rest of the developed world.