Trio Capital Superannuation Fraud

Trio Capital Limited (ACN 001 271 256) was the corporate Trustee of four Government Regulated Superannuation Funds:
  • the Astarra Superannuation Plan (ABN 43 724 394 795)(R1056020),
  • the Astarra Personal Pension Plan (ABN 74 351 127 106)(R1056037),
  • the My Retirement Plan, (ABN 732 008 457)(R1056051) and
  • Employers Federation of NSW Superannuation Plan (ABN 31 061 350 115)(R1056983)
Trio invested some assets of the funds into a managed investment scheme, Astarra Strategic Fund. Most of its assets were directed into what were called hedge funds, located in the Caribbean. There is little, if any, credible evidence that the purported investments were actually made, or if they were, that they have any realisable value. Most of the assets invested were subsequently lost In December 2009 ASIC suspended Trio’s licence as a fund manager. Since ASIC’s investigation started on 2 October 2009, more than 11 people have either been jailed, banned from providing financial services, disqualified from managing companies or have agreed to remove themselves from the financial services industry for a total of more than 50 years.

ASIC’s enforcement outcomes include:

  • Shawn Richard, former investment manager of the Astarra Strategic Fund (ASF), being sentenced to 3 years and 9 months jail with a minimum of 2 years and 6 months: ASIC Media Release 11-169MR
  • Tony Maher (formerly known as Paul Gresham), pleading guilty to 20 criminal charges including making false or misleading statements to obtain a financial advantage relating to one of the Trio funds, the ARP Growth Fund: ASIC Media Release 13-293MR
  • The permanent banning of Eugene Liu, ASF’s chief investment strategist, from providing financial services: ASIC Media Release 13-041MR
  • Enforceable undertakings (EU) with five former Trio directors where they agreed not to be involved in the financial services industry or manage a company for between two and 15 years. The former directors are Natasha Beck, Keith Finkelde, David O’Bryen, David Andrews and Rex Phillpott: ASIC Media Release 11-182 MR and 11-133 MR
  • An EU with planning firm Kilara Financial Solutions to address compliance issues: ASIC Media Release 11-122AD
  • An EU with Tony Maher to never provide financial services or manage a company: ASIC Media Release 12- 15 MR
  • Suspending the licence of financial planners Seagrims, with this licence then being cancelled at the company’s request on 19 September 2011: ASIC Advisory 11-134AD
  • Banning Seagrims directors Peter Seagrim and Anne-Marie Seagrim for three years, with the Administrative Appeals Tribunal subsequently cutting the ban to 6 months: ASIC Advisory 11- 134AD
  • An EU with former ASF auditor Timothy Frazer, providing he would not act as a registered company auditor for three years: ASIC Media Release 12-22MR
 

Whistleblower

The Trio Capital fraud was uncovered by an alert industry participant. In September 2009, Mr John Hempton, Chief Executive Officer at Bronte Capital Management and a former Treasury official contacted ASIC. He also asked his former boss, Dr Ken Henry, the former Secretary of the Treasury, to contact the Chairman of ASIC at the time Tony D’Aloisio. Mr Hempton had become suspicious about smooth returns achieved by on of the Capital Trio funds in a turbulent financial environment, just like Harry Markopolos had become suspicious of similar smooth returns reported by Bernie Madoff.  

Legal Proceedings

Regina v Shawn Darrell Richard [2011] NSWSC 866 Mr Richard has pleaded guilty to two offences contrary to section 1041G(1) of the Corporations Act 2001 (Cth) that: Charge 1: Between about 15 November 2005 and about 30 June 2009 at Sydney in the state of New South Wales in the course of carrying on a financial services business did engage in dishonest conduct in relation to financial services knowing that conduct to be dishonest. Charge 2: Between about 8 October 2007 and about 30 September 2009 at Sydney in the state of New South Wales in the course of carrying on a financial services business did engage in dishonest conduct in relation to financial services knowing that conduct to be dishonest. Garling J stated at [71]:

“It is also appropriate to note that funds lost as a consequence of Mr Richard’s conduct included those invested by members in superannuation funds. Superannuation monies represent an important and significant element in the financial system in Australia and in ensuring its economic and financial stability. Superannuation monies represent the savings of individual members of the community which are intended to provide a secure retirement fund. The need for honesty is dealing with superannuation funds is self-evident.”

  Trio Capital Limited (Admin App) v ACT Superannuation Management Pty Ltd [2010] NSWSC 286 APRA Report APRA Trio Inquiry submission 24Aug11

Compensation

The Government provided a grant of around $55 Million to the victims of fraud who invested through Government Regulated Superannuation Funds. In April 2011, the Hon Bill Shorten MP, the Minister Responsible for Superannuation announced that the Government would be providing financial assistance to over 5000 victims of fraud in theTrio Capital Superannuation Funds by providing a grant of approximately $55 million to the new Trustee of these Superannuation Funds. The assistance to the new Trustee was granted under Part 23 of the Superannuation Industry (Supervision) Act 1993.