Adviser who used top cricketers in ‘Tombstoning’ scam convicted

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A shamed former Sydney financial adviser who used the names of international cricketers in a ‘tombstoning’ scam has been convicted for dishonest conduct.

Former Lionsgate financial adviser Pavan Vyas appeared in Sydney’s Downing Centre District Court last week and was convicted and sentenced to a total term of two years imprisonment to be served by way of an Intensive Correction Order.

This follows the lifetime ban from the financial services industry issued by ASIC in July 2013.

An investigation by ASIC last year uncovered that Vyas had submitted applications for life insurance policies in the names of people that did not exist, as well as in the names of friends without their knowledge.

But it didn’t stop there: In August 2013, Wealth Professional reported that among the names of the beneficiaries was New Zealand batsman Martin Guptill, and England all-rounder Tim Bresnan. Former state treasurer Michael Costa was also an unwitting beneficiary, according to News Ltd.

In total, Vyas submitted 15 false insurance applications between June 2012 and March 2013 to earn $243,433 in commissions, according to ASIC.
He also falsified 21 other documents to hide his conduct.

He was an authorised representative of Lionsgate and then HNW Planning, where he worked for just over a month before the company discovered his illegal behaviour, according to HNW principal Robert Cumming.

At the time Cumming said the case highlighted major issues for the life insurance industry around money laundering and their internal data checking and duplicate detection.

This week ASIC Deputy Chairman Peter Kell said, "there is no place in the financial industry for individuals who act with complete disregard for the law".

In ordering the ICO the court, among other things, took into account Vyas’ high level of co-operation with ASIC’s investigation and his decision to plead guilty at the earliest opportunity.

Wealth Professional tried to reach Vyas for comment, but he wasn't available.

SEE MORE:

‘Tombstoning’ adviser targeted cricketers

‘Tombstoning’ case has massive ramifications

Adviser banned for inappropriate advice



 
  • Observer102 on 6/03/2014 10:06:28 AM

    This would not be possible if commissions were removed, it is a commission driven technique that dates back to the 1980's it was used then and can still happen today....

  • JF on 6/03/2014 10:52:39 AM

    Why would this bloke do this? He obviously has to pay the premiums from the commission or get clawed back...

  • GAB on 6/03/2014 10:59:28 AM

    Correct Observer102...but a dishonest or desperate person would then just operate in another part of the industry and do a similar thing...fictitious loans and credit cards or making WDLs from client's investments.

    The way fee for service is going, it won't be long before that's under the scope too. No shortage of shonks milking that system either.

  • Pat on 6/03/2014 11:49:15 AM

    Despite my view on commissions, changing the system won't eradicate crooks, it will just make them adapt. It is similar to doping in sport - those who try to get around the system will always find a way.

  • Observer102 on 6/03/2014 12:30:34 PM

    As a State Manager of Life offices in the 80's 90's I saw a lot of this and it is unique to the Life insurance industry it cannot work in any other financial services product...so banning commissions would help....dead people do not pay fees and this crook would not have been able to make it work.....

  • GAB on 6/03/2014 1:02:11 PM

    As a bank officer in the 80s and 90s I also saw a lot of fake loans being written to fund interest on the other fake loans.

    I know what you are saying Observer but the debate over risk cover on commissions has been done to death. Unless this industry can somehow waive the necessity of an adviser doing a 50 page SOA and the other requirements just to set up a simple life policy, then commissions are probably the only hope consumers have of getting appropriate advice. Can't see my 22 year old prospective client paying me $1000 Fee for service to set up a Death/TPD policy for him. When I add up the hours of red tape that's still a discount price.

    Would love to be able to charge a small set brokerage fee to set up a policy...if it was feasible. I don't exactly have the luxury of looking after all high net worth people.

  • David from Perth on 6/03/2014 1:10:57 PM

    Observer102, so for 15 to 20 years you got paid by a company that had advisers writing polices that paid commissions. So you were riding off that and now you say ban commissions. That has nothing to do with that. He is a crook and scum and fees v commissions has absolutly nothing to do with it.

  • Craig Yates on 6/03/2014 1:28:05 PM

    To Observer102:

    1.To suggest that banning commissions will eradicate or stop dishonest and fraudulent actions by unscrupulous advisers is wrong.

    2.The insurer or insurers who accepted the business from this "adviser" are guilty for not monitoring or assessing the practice.If in fact it was a single insurer at an average commission of $16,500 per case over only a 9 month period don't you think this would ring alarm bells of at least some form of scrutiny?
    Or was it a case of just accepting as much business as possible irrespective of the pattern of submission?

    3.If you were a State Manager of Life Offices in the 80's and 90's (I may know you well!) and this practice went on with agents under your watch or your sales team, then we are all still suffering the stigma of those practices that were not scrutinised or addressed during that period because State Managers were paid large volume bonuses and overrides based on sales team production. Where or how the business was produced was very much a secondary consideration if at all and greed and excess ruled the day.
    So please don't bleat about banning commissions as a form of adviser remuneration as this is the model that probably paid off your mortgage,bought the holiday home or the luxury boat and sent you to numerous overseas conventions.
    Quality advisers with ethical and moral values, do not abuse the commission model.
    The insurers and licensees have an integral role to play and to work together in ensuring the monitoring of improper business practices.

    4.The way to fix this problem is to require Certified photo identification of every Insured AND Policy owner at the point of application.
    It's pretty difficult to produce a drivers license or passport of a deceased person and have it certified as correct.
    You cant withdraw funds from superannuation without Certified Id in an attempt to monitor or control money laundering, so why should it be any different in controlling insurance fraud?

  • Brian on 6/03/2014 4:04:56 PM

    It happens when the insurance companies are not alert. New business staff can easily pick this up by checking bank payment details , phone numbers,identifying clients focussing on greenskin apps. There is always a trend and a pattern. Using this as motivation for banning commissions is like banning driving to eliminate road deaths.

  • Young Gun on 14/04/2014 9:54:43 AM

    It is interesting reading these comments, I cant actually believe an adviser can accept an insurance application for say $1,000,000 without also requiring ID. I work in the stockbroking industry and you can sell $100 worth of BHP shares without providing certified ID - which at minimum requires Drivers Licence and Medicare card plus holding statements. I can understand why our industry isn't really affected by FOFA because we are already so far ahead !

  • Matt on 20/05/2014 1:06:17 PM

    According to ASIC his commissions were $243k. However what they don't tell you is that the commission generated from Tombstoning was just over $40k.
    There are always people who are looking to scam money no matter what the industry. Idiots like this do it for relatively low sums and do not think long term ie premium lapsing when the extra 10-20% commission is not enough to cover the cost of dodgy applications. ID verification and the change to paying over 100% of the premiums would go a long way to getting rid of the scourge in our industry.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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