ASIC declares former adviser’s 12-year sentence appropriate

The Australian Securities and Investments Commission (ASIC) has declared that a 12-year prison sentence meted out to a former financial adviser represents a demonstration that dishonest and harmful behaviour will not be tolerated.

ASIC deputy chair, Sarah Court pointed to the sentence of former Brisbane financial adviser, Ben Jayaweera as an example of what could be expected.

Jayaweera was found guilty in the Brisbane District Court of 28 counts of fraud over the course of 28 transactions which caused 12 former clients total detriment of over $5.9 million.

Commenting on the sentence handed down to Jayaweera, Court said ASIC is committed to pursuing criminals who commit serious harm against individuals and act dishonestly.

“Mr Jayaweera’s actions betrayed the trust of his clients with some clients at or near retirement age and caused them significant financial harm. This sentence demonstrates that such behaviour will not be tolerated,” the ASIC deputy chair said.

In sentencing Jayaweera, Judge Moynihan KC described his conduct as ‘brazen, gross, and callous’ and said ‘his actions were not only criminal but evil, demonstrating no remorse’. His Honour noted there was a gross breach of trust and the victims have suffered, and continue to suffer, substantial personal and financial harm.

Judge Moynihan KC also observed that this was a case of serious offending as Mr Jayaweera was a trusted financial advisor and his actions were deliberate, sophisticated and systematic. Mr Jayaweera withheld information from his clients concerning the true nature of the fund and, in some cases, removed clients’ funds from self-managed super funds (SMSFs) without their knowledge or consent.

Between August 2013 to November 2015, Mr Jayaweera dishonestly obtained money from his clients via two methods:

• he induced clients to invest in the Australian Diversified Sector Investment Fund (ADSIF) by misrepresenting the attributes/qualities of the fund to give the impression that it was a diversified investment fund holding assets in a range of asset classes. Those investment monies were then transferred to one of Mr Jayaweera’s corporate entity accounts, and
• he encouraged clients to establish SMSFs, which involved transferring the clients’ superannuation funds into a newly set up  bank account with the Adelaide Bank. Mr Jayaweera then transferred money from those accounts to one of his corporate entity accounts without authority.

Mr Jayaweera made the following representations about ADSIF, both orally and in writing, to investors:

• ADSIF was a diversified fund which held underlying assets in aquaculture, agriculture, property and cash investments in Australia, and
• there was a maximum fund allocation assigned to each asset class.

Mr Jayaweera intentionally omitted to inform investors of the following critical information, knowing that it would be relevant to their decision as to whether to invest in ADSIF:

• ADSIF was not a diversified fund; its only asset was in the form of loans to Mr Jayaweera’s private corporate entities, which held the assets comprising an abalone farming project in South Australia
• he was involved and had a controlling interest in the abalone farming project through those private corporate entities as the sole director and shareholder
• since ADSIF did not hold any physical assets, there was no capacity for its investments to achieve capital growth.

The matter was prosecuted by the Office of the Director of Public Prosecutions (Cth) (CDPP) following an investigation and referral by ASIC.

The sentence was imposed followed a three-week retrial in the Brisbane District Court before his Honour Judge Moynihan KC. Mr Jayaweera will be eligible for parole after six years, with 977 days of pre-sentence custody declared as time already served.