AFS licensee faces trial for $6.5m theft

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An Australian Financial Services (AFS) licensee and company director is to stand trial at the Supreme Court of Victoria on a litany of criminal charges brought by the Australian Securities and Investments Commission (ASIC).

Mr Russell Andrew Johnson, who is the sole director of Sonray Capital Markets Pty Ltd, will faces the following charges:

  • two charges of conspiracy to commit theft to the value of $5,780,000;
  • 17 charges of theft to the value of $742,641.
  • two charges of conspiracy to engage in false accounting;
  • one charge of conspiracy to obtain financial advantage by deception; and
  • two charges of submitting a false document to ASIC.

Johnson, who has entered a plea of not guilty, faces a maximum of 10 years in prison for each of the state offences of conspiracy and theft and five years for the submission of a false document to ASIC.

According to an ASIC statement, the charges relate to allegations that Johnson conspired with another person to use various Sonray clients’ trading accounts to create numerous unfunded deposits “for which no physical cash was involved”.

“This was done to either obtain funds for use by himself or Sonray or to hedge the trading book against margin calls,” added ASIC.” The effect of the unfunded accounting entries caused a deficiency in the segregated clients trading accounts.”

On top of the litany of charges listed above, Johnson is also facing charges that a false statement about equity injections into Sonray was included in a solvency report submitted to ASIC.

Johnson was granted bail and will appear at the Supreme Court on 22 August 2012, on conditions that he:

  • Inform the informant of any change to his residential address;
  • surrender his passport and not attend any international port of departure; and
  • not contact any prosecution witness.

According to ASIC , Sonray – which was established in 2003 and held an Australian financial services licence – was one of the first brokers in Australia to provide advice on contracts for difference (CFDs).

On 22 June 2010, John Lindholm and George Georges of Ferrier Hodgson were appointed voluntary administrators. On 27 October 2010, Sonray was placed into liquidation. According to Ferrier Hodgson, Sonray had (as at 22 June 2010):

  • gross client positions of $76.85 million;
  • gross client holdings in either cash/equities held by counterparties of $30.15 million;
  • a shortfall of $46.70 million;
  • approximately 3,500 clients, and;
  • 54 employees.

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