Two former financial advisers appeared in court in Sydney in separate cases yesterday, accused of crimes which effectively duped clients out of their money.
Melinda Scott, a former financial adviser at Millennium3 Financial Services, pleaded guilty in the Downing Centre Local Court to three dishonest conduct charges and four charges relating to the making and use of false documents – involving $5.9 million of her clients' money over 23 years.
Following an investigation by ASIC, Scott – from Lilli Pilli, NSW – admitted to the crimes between 2 August 1989 and around 27 April 2012.
On 9 February 2004, Scott became an authorised representative of Millennium3. Before this, Scott worked in various positions in the financial services industry including at Roach Graham Scott, FPI and Financial Wisdom.
Scott admitted she:
- fraudulently obtained $5.9 million worth of her clients' money for her own purposes without her client's knowledge or consent
- made and used false documents by forging clients’ signatures on redemption requests, altering payee details on client cheques and providing clients with falsified bank statements so that account balances did not reveal her misconduct.
She also made regular payments to some clients who were expecting an allocated pension payment, but from whom she had fraudulently obtained their money. Scott made around $2.9 million from her crimes, said ASIC.
ANZ and Millennium3 fully cooperated with the investigation and fully compensated clients for their loss, ASIC said.
Scott was granted conditional bail and will next appear in the NSW District Court on 24 January. Each charge carries a maximum penalty of either five or 10 years.
The other former adviser to appear in Downing Centre Local Court yesterday accused of duping an elderly couple out of their savings was a former Storm Financial adviser Walter John (Wally) Fullerton-Smith.
ASIC permanently banned Fullerton-Smith – of Carrara, Queensland – from providing financial advice in November last year.
The regulator found Fullerton-Smith – a former Queensland and Australian rugby league player of the 1980s and 1990s – had engaged in misleading and deceptive conduct and failed to comply with financial services laws.
Yesterday, he was charged with making a false and misleading statement to obtain a financial advantage. The penalty is a maximum five years jail.
Fullerton-Smith did not enter a plea and was granted conditional bail. He surrendered his passport to ASIC, and the case was adjourned to 11 February.
It is alleged he misled an elderly couple from NSW in 2007 with the intent to obtain a financial advantage for himself and his wife, Kim Michele Fullerton-Smith.
The conduct allegedly occurred when Fullerton-Smith was procuring the couple’s units, valued at approximately $706,436.94, in an MLC MasterKey Unit Trust as security for the trust margin loan account.
Prosecutors allege Fullerton-Smith implied the investment would be safe if the couple signed documents authorising a third party mortgage over it as security for a proposed loan to either him and his wife or The Young Trust, of which he was the trustee and he and his wife were primary beneficiaries.
However, the ASIC investigation concluded he gave a false representation of the risks.
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