Two plead guilty on Ponzi fund

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

The 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 New South Wales Supreme Court ordered the winding up of the illegal, unregistered managed investment schemes, Integrity Plus Fund, and another related scheme, Super Save Superannuation Fund. About $22 million was recovered.

The liquidator, Barry Taylor of HLB Mann Judd, said in an affidavit in other 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."

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

Mr Taylor said some investors attended seminars by a company called Future Trading Corporation, which described itself as an "innovative supplier of financial education material".

Last week in the Downing Centre Local Court, Brian Wood, of Davistown, and Jimmy Truong, of St John's Park, pleaded guilty to charges of making false statements to investors. Wood also pleaded guilty to charges of misappropriating investors' funds.

ASIC said both men had falsely stated to investors that they would earn returns of 4 per cent a month and 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.

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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 unregistered managed investment scheme that operated between September 2004 and January 2008. It attracted more than $30 million in superannuation money by promising regular returns, but the scheme was a Ponzi operation — paying earlier investors from capital put in by later investors rather than from genuine investment profits.

How much money did the Integrity Plus Fund accept and how much was recovered?

According to the liquidator’s affidavit, the scheme accepted approximately US$29,399,627 from investors and paid total 'returns' of US$9,128,821. About $22 million was recovered after authorities intervened.

Who administered the Integrity Plus Fund and where was it based?

The Integrity scheme was administered by PJCB International, which was incorporated in the British West Indies. Some people involved were described as 'beneficial owners' of PJCB International.

What legal action did regulators take against the Integrity Plus Fund?

The Australian Securities and Investments Commission (ASIC) obtained an injunction in mid-2008 to stop the scheme and secure remaining investor funds. The New South Wales Supreme Court ordered the winding up of the illegal, unregistered schemes, and a liquidator was appointed to recover assets for investors.

Who has pleaded guilty in court over the Ponzi fund and what were the charges?

In the Downing Centre Local Court, Brian Wood (of Davistown) and Jimmy Truong (of St John’s Park) pleaded guilty to charges of making false statements to investors. Brian Wood also pleaded guilty to misappropriating investors’ funds. A third person, Con Koutsoukos of Wiley Park, had not entered a plea to charges of making false statements.

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

ASIC said the men falsely told investors they would earn returns of 4 per cent a month and that their capital was guaranteed — promises that were not true for this unregistered Ponzi scheme.

Were investors recruited through seminars or a financial education company?

Yes. The liquidator said some investors attended seminars run by a company called Future Trading Corporation, which described itself as an 'innovative supplier of financial education material.'

Who handled the liquidation and what happens next for investors seeking recovery?

Barry Taylor of HLB Mann Judd acted as the liquidator and filed an affidavit detailing the scheme’s operations. Legal proceedings continue — the matter was due to return to the District Court — and the liquidator and courts oversee recovering and distributing assets to investors.