When Shawn Richard sought character references as he faced a lengthy jail sentence, there were a few people from his past he felt he could ask.
Even the mention of Richard's name would be bad news to investors in the Albury-based fund manager Trio Capital.
Investors had more than $400 million in funds frozen in December 2009 when Australia's largest superannuation theft was first uncovered.
So investors would not be among those likely to give the most glowing assessments of the Canadian-born investment manager.
Richard, 36, faced a sentencing hearing on Friday for his part in the disappearance of $180 million from two investment funds managed by Trio Capital: Astarra Strategic and ARP Growth.
The court heard how Richard, now remanded in custody, had received $1.3 million in personal payments for his part in the thefts.
His company, Astarra Asset Management, had received further millions to keep sucking in investors' dollars.
Instead of investors, Richard turned to some old mates, some professional contacts and some financial planners for some kind words. Including his dentist.
Among those setting pen to paper were Peter Wood, Richard's old flatmate in Manly and the one-time Trio Capital marketing manager.
Wood didn't reminisce about some rather wild-looking parties he and Richard enjoyed, but spoke to the qualities of Richard he had observed.
Then there was a financial planner from the Wollongong financial planning business Dominion, Colin Warne, who was prepared to go on the record about Richard's strenuous help since the fraud had been uncovered.
"I wish to confirm that Mr Richard has already assisted our clients, providing critical evidence which has assisted the process in recovering some investments," Warne wrote.
This is the same Warne who was found by the NSW Supreme Court in 2004 to have breached the Corporations Act by operating an unregistered managed investment scheme.
The failed investment scheme involved raising $4.6 million to buy the Queen Victoria Hospital in the Blue Mountains and turn it into a retirement home.
The case resulted in Warne receiving a lifetime ban from managing an investment scheme.
Sadly for investors in Trio Capital, the ban did not stop Warne from operating as a financial planner.
So Warne met Richard through Trio Capital and promptly placed large amounts of investors' money into Astarra Strategic.
Another who put pen to paper for Richard was a second Wollongong financial planner, Ronald Caines.
Caines was eloquent about the help Richard had given him.
"He has shown honesty and integrity and his ongoing compassion and financial assistance during an extremely difficult time for our family will forever be appreciated," Caines wrote.
Caines said Richard "continued to provide loan funds" and credited Richard with "standing by and helping your mates during difficult times". Stirring stuff. However, it is worth remembering some facts about the Trio Capital "loan funds" - more than $500,000 - that Richard forwarded so generously to Caines.
Back in 2008, the Australian Securities and Investments Commission grilled Richard about the loans to Caines under its section 19 powers to compulsorily interview people.
ASIC went on to ban Caines from the financial planning industry for life, after he advised people to invest in Trio Capital without disclosing the loans.
In March, the Administrative Appeals Tribunal overturned the life ban, and replaced it with a three-year ban.
Showing that the gods of financial services have a wry sense of humour, Caines can start work as a financial planner again on August 12 - the same day Richard is due to be sentenced to jail.
Another referee sought out by Richard was Graham Kinder. Kinder made a brief appearance in the Trio saga last year when he became a director of financial planner Wright Global Investments, alongside Wood.
ASIC has told the Supreme Court that Wright Global Investments was one of the vehicles that was owned and controlled by the supposed mastermind of the Trio Capital fraud, the Hong Kong businessman Jack Flader. (There is no evidence Flader controlled the company at the time of Wood's and Kinder's involvement.)
Another referee was Ron Phipps-Ellis, an employee with auditing firm BCS whose character reference confirmed that the "company's employees had money invested in Astarra [Trio] and lost 10 per cent".
Richard's defence bundle, tendered in court on Friday, showed the sad truths facing a man destined for jail time.
It disclosed that Richard had sought a recent diagnosis from a neurologist. In a letter, his defence team articulated his symptoms as: "Double vision, headaches, muscle weakness, neck aches, numbness or tingling, most often on the face, poor co-ordination, sudden unco-ordinated movements and vertigo".
The diagnosis was inconclusive.
And an assessment by a forensic psychologist, W. John Taylor, spelled out the none-too-happy realities of the prison system that Richard faced.
He wrote: "Because of threats that have been made against Mr Richard, it is likely that any custodial sentence given to him by the court will need to be served in protective custody. This is far more difficult and restrictive than serving a custodial sentence."
Frequently Asked Questions about this Article…
What was the Trio Capital case and how did it affect investors?
The Trio Capital case involved the disappearance of large amounts of money from funds managed by Albury-based Trio Capital. Investors had more than $400 million in funds frozen in December 2009 when what was described as Australia’s largest superannuation theft was first uncovered, and about $180 million was linked to the disappearance from two Trio-managed funds, Astarra Strategic and ARP Growth.
Who is Shawn Richard and what was he accused of in the Trio Capital fraud?
Shawn Richard was an investment manager involved with Trio Capital and Astarra Asset Management. He faced a sentencing hearing for his part in the disappearance of funds from Astarra Strategic and ARP Growth. The court heard he had received about $1.3 million in personal payments and that his company had received further millions connected to the scheme.
Were investor funds frozen and how much was affected in the Trio Capital matter?
Yes — the article says investors had more than $400 million in funds frozen in December 2009 when the theft was uncovered. Separately, about $180 million was identified as missing from the two funds managed by Trio Capital that were at the centre of the case.
What kinds of character references did Shawn Richard submit and who provided them?
Richard sought character references from a range of contacts, including an old flatmate and former Trio marketing manager Peter Wood, financial planners such as Colin Warne and Ronald Caines, a dentist, auditor employee Ron Phipps-Ellis, and director Graham Kinder. The referees praised his assistance to clients and personal qualities, even while some had their own regulatory histories noted in court documents.
What regulatory actions did ASIC take against people linked to Trio Capital?
The Australian Securities and Investments Commission (ASIC) had previously taken action against some people connected to the wider story. The article notes ASIC found Colin Warne breached the Corporations Act in 2004 over an unregistered managed investment scheme and that ASIC had previously banned Ronald Caines from the financial planning industry (later reduced to a three-year ban by the Administrative Appeals Tribunal). ASIC also told the Supreme Court that Wright Global Investments was one of the vehicles owned or controlled by a person alleged to be a mastermind of the fraud.
What conflicts or undisclosed loans were mentioned in the article that everyday investors should watch for?
The article describes cases where financial planners placed client money into Astarra Strategic while having undisclosed loans or other ties — for example, Ronald Caines received more than $500,000 in 'loan funds' from Trio, which he didn’t disclose to clients and which later led to regulatory action. That highlights the investor risks when advisers have undisclosed conflicts or financial links to investment products.
Did the article say anything about investor losses or employee investments at Trio-related firms?
Yes. An employee from auditing firm BCS, Ron Phipps-Ellis, confirmed in a character reference that the company's employees had money invested in Astarra (Trio) and lost about 10 percent. The reporting underlines that losses affected a range of people, including firm staff.
What did the court documents say about Shawn Richard’s health and possible custodial risks?
Richard’s defence bundle included a recent, inconclusive neurologist assessment citing symptoms such as double vision, headaches and balance problems. A forensic psychologist wrote that, because of threats made against Richard, any custodial sentence would likely need to be served in protective custody — which the psychologist said is more restrictive and difficult than ordinary imprisonment.
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