EXPOSÉ: Adviser warns about buying 'exclusive' database

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Advisers are being warned not to get sucked in by offers of access to an ‘exclusive’ client book which is reportedly being resold. 

Prosperity Financial Group owner Simone de Medici said she was first contacted by a man claiming to be Mark Whittingham – a banned company director – around nine weeks ago, who offered her the chance to purchase an “exclusive” client database. He continued to press her over the phone and email up until a week ago.

However, de Medici became suspicious when the man would not provide further details. “He wasn’t very forthcoming with information at all. He said he had clients all over the country but couldn’t identify them. I smelt a rat straightaway,” she told Wealth Professional.

When de Medici spoke to other advisers about it she heard similar stories.

According to de Medici, the database offered was discounted from $9,000 to $900 over the period she was in contact with the man.

Being pushed client books which others already believe they own is something other advisers “absolutely” need to be wary of, de Medici said.

Wealth Professional’s sister publication Australian Broker uncovered a potentially related scam involving Whittingham last week, after talking to a broker who received an offer from Whittingham to purchase the 'exclusive' database – which the broker already owned.

Patrick McMenamin, director of Common Cents Financial Services in NSW, signed an agreement to purchase 'approximately 21,000 mortgage broking customers' from Whittingham, operating through the company Connection Blue in December 2012. 

The contract, which Australian Broker read, stated the database 'is to be sold exclusively to the Purchaser alone' and that 'the data will be permanently removed from all computer systems and/or storage devices owned and operated by the Vendor'.

It appears Whittingham, however, failed to do so. Australian Broker also received a copy of a database sold early last week to an Adelaide broker. The database matched the one purchased 'exclusively' by McMenamin more than a year ago.

The tax invoice the Adelaide broker received along with the database came from Califour Family Trust.

Califour.com is registered to Mark Whittingham, and the address given on the invoice matches that given as Whittingham’s contact address in the registry. Cali Four is also the name of the company run by Whittingham’s wife, Kate, which was previously under investigation by Consumer Affairs Victoria.

To add insult to injury, McMenamin said Whittingham even attempted to resell the same database back to him four months after he purchased it.

“What I discovered is despite all of his antics he doesn’t keep good records, because having completed the transaction it was only a matter of months and he was emailing another email address that he probably didn’t know was mine," said McMenamin.

The second email, forwarded to Australian Broker, is remarkably similar to the first received by McMenamin. The email came from the address hlselserv.com.au – a domain registered to Mark Whittingham and the company Home Loan Selection Services. 

Home Loan Selection Services is one of the company names used by Whittingham in trail book scams in 2011. It is also the company name in the subject line of an email which a Victorian broker flagged as a scam from Whittingham earlier this week.

McMenamin received a further email from incomebuy.com.au – the same address used to contact the Victorian broker – in August last year attempting to sell a database.

An ABN lookup reveals Whittingham's company Connection Blue as the registered owner of trading names Income Buyers and Rent Roll Buyers. Rent Roll Buyers was the name of the company which Kate Whittingham operated through Cali Four.

A reverse domain name search also reveals Connection Blue as registrant of incomebuy.com.au.

In July 2013 Connection Blue and Whittingham were ordered by Consumer Affairs Victoria to pay compensation to buyers of rent rolls which were never provided. In October 2013 it banned Whittingham from being the director of a company until 2028.

McMenamin lodged a complaint with Consumer Affairs Victoria in June 2013 regarding Whittingham's attempts to resell client databases. He received no response.

Consumer Affairs Victoria told Wealth Professional that while it does not comment on any matter that may currently be subject to an ongoing investigation, any adviser that has been contacted by Whittingham or done business with him recently should contact them on 1300 55 81 81.

"[Whittingham's] disqualification was a direct result of Consumer Affairs Victoria’ action and was seen as a significant penalty that will help to protect Victorian consumers and businesses," said director Dr Claire Noone.

"Consumer Affairs Victoria regards any breach of a court order as a very serious matter and works with other regulators to stop conduct in breach of consumer or corporate law." 

Noone warns advisers to be "wary" when recieving unsolicited emails regarding the sale of client books.

Jon Denovan, principal at Gadens Lawyers, said Whittingham's resale of the database will have breached a number of laws which could carry harsh penalties. Denovan encourages those who have had dealings with Whittingham to report his conduct to ASIC.

Wealth Professional asked ASIC whether it was aware of any allegations against Whittingham and whether it would investigate. However, a spokesman replied: “We don't comment on whether we have – or haven't – received reports about an individual or entity.”

But ASIC encourages those who have a complaint to register it through its website.

De Medici said advisers should do their own due diligence and be careful not to get sucked into offers which may not be all they seem.

“We work in an extremely regulated environment. But it is buyer beware, really.

“There’s something really sinister about it. It’s a shocking thing to be ripping off your colleagues. There’s no ethics in the middle.”

Whittingham failed to return calls to Wealth Professional however an email reply said he considered the interview request to discuss the allegations “spam” which he would report if contacted again.  

Wealth Professional would like to hear from anyone offered 'exclusive' client books which they believe were being resold. Please contact editor_wp@keymedia.com.au.

Additional reporting Amy Rosenfeld at Australian Broker.