Former director faces up to 65 years’ imprisonment

by |

The sole director of Sonray Capital Markets, Russell Andrew Johnson, has pleaded guilty to seven criminal charges brought by ASIC.

Johnson, 41, of Toorak, Victoria, has pleaded guilty to:

  • three charges of false accounting
  • one charge of submitting a false document to ASIC
  • two charges of theft to the value of $742,641
  • one charge of obtaining a financial advantage by deception

He faces a maximum of 10 years’ imprisonment for each of the state offences of false accounting, theft and deception and a term of five years imprisonment for submitting a false document to ASIC.

However, in 2011, former Sonray CEO Scott Murray pleaded guilty to 10 charges brought by ASIC, and was sentenced to five years jail. Murray will serve a minimum of 2 years and 6 months before he is eligible for parole, taking into account his early guilty plea and the cooperation given in the matter. Murray’s charges were:

  • Six charges of false accounting involving fictitious deposits totalling $36,439,588 and USD $9,779,395.25 and false withdrawals totalling $7,800,923
  • Two charges of theft totalling $2,256,500
  • One charge of obtaining a financial advantage by deception
  • One charge of misleading an auditor concerning a capital injection of $5,200,000

Johnson’s charges relate to the use of various Sonray client's 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. The effect of withdrawing funds from client accounts from unfunded deposit entries caused an actual deficiency in the segregated client account funds.

He also made a false statement about equity injections of $5.2m into Sonray, in a solvency report required by ASIC.

ASIC Commissioner Greg Tanzer said: “ASIC expects directors to act honestly and with integrity, and always in the interests of the company. We take very seriously conduct to the contrary, and the charges that Mr. Johnson has pleaded guilty to today reflect that.

“The integrity of the market is one of ASIC's key priorities, and investors have a fundamental right to expect that their money will be handled honestly and appropriately. Where this does not occur, ASIC will not hesitate to take action to protect the interests of the clients.”

When asked whether Johnson was likely to receive a full sentence, ASIC said that it is a matter for the courts.

What do you think of Australian financial services penalties? Share your thoughts below.

  • Innocent Observer on 3/10/2013 10:45:20 AM

    Unfortunately precedence has been set by ASIC and the court's poor track record of imposing penalties on crooks, such as these.

  • Alistair on 3/10/2013 10:57:50 AM

    How much time will this guy do. My bet is less than 10 years. In fact with good behaviour my hunch is oh less than 3 years. Why not. After all this is the pattern of the tough cop on the beat ASIC.
    Don't we all love the statement that
    " ASIC Commissioner Greg Tanzer said: “ASIC expects directors to act honestly and with integrity, and always in the interests of the company. We take very seriously conduct to the contrary, and the charges that Mr. Johnson has pleaded guilty to today reflect that.

    “The integrity of the market is one of ASIC's key priorities, and investors have a fundamental right to expect that their money will be handled honestly and appropriately. Where this does not occur, ASIC will not hesitate to take action to protect the interests of the clients.”
    Well if this be true and ASIC won't hesitate to take action, then what of the need to protect investors from these parasites by handing down mandatory consecutive sentences which make sense along with the confiscation of assets from what is essentially a criminal act and ensuring that any monies transferred is also trapped via Superannuation Law, Family Law and the need for associates of these vermin to demonstrate how assets were acquired or risk forfeiture by the Crown.
    Its time ASIC gets tough but alas I fear that under the current crew and the associated way Corporations Law works in this country, nothing but a negligible effort and punishment will be the outcome.
    The current Minister for Corporations Law and Financial Services need to show real teeth and calling the endless array of financial disasters at the hands of vermin for what it really is. A criminal act perpetrated on ordinary investors. Not a civil matter which ought end up in courts via litigation where the investor has next to no hope. As a $90K victim of Timbercorp, I am disgusted at the ineptitude of ASIC and the previous government. Time for a change. I would like to see ASIC explain their actions with Note Printing Australia, Securency and their boards.
    I am sick of the FP industry being blamed for nonsense like this and being the scapegoat.
    But I bet the incompetents and the Big Chiefs at ASIC will do just that to show how tough they are. What a joke as people lose their savings.

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

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions