Former directors of Australian Managed Funds Limited (AMF), Messrs Peter Cornelius Beekink, Gregory Phillip Gaunt and Hersch Solomon Majteles, have been fined a total of $45,000 in Perth's Federal Court after making misleading statements in a prospectus.
Former directors of Australian Managed Funds Limited (AMF), Messrs Peter Cornelius Beekink, Gregory Phillip Gaunt and Hersch Solomon Majteles, have been fined a total of $45,000 in Perth's Federal Court after making misleading statements in a prospectus.
Mr Beekink was fined amounts totalling $25,000 and Messrs Gaunt and Majteles were each fined amounts totalling $10,000.
All three are part of a major breakaway group that has left Phillip Fox in Perth to join forces with Martin Bennett's firm, forming a new independent player Lavan Legal.
The decision by the court follows civil penalty action by the Australian Securities and Investments Commission (ASIC) in relation to materially misleading information in a second part prospectus for Onslow Trading Company Pty Ltd (Onslow Trading).
At the time, Onslow Trading Company was constructing the Blackrock Caravan Park in South Hedland, Western Australia.
The materially misleading information in the prospectus included that:
- at 31 January 2000, $2.2 million had been raised and that a further $320,000, proposed to be raised under the prospectus, would enable the borrowers to complete the project, and
- work was nearing the final stages and the caravan park should be open by the end of February 2000.
Contrary to these statements, construction of the caravan park was in fact not nearing the final stages.
There was also evidence that approximately $1.6 million was required at the time that the prospectus was circulated to clients of Clifton Partners Finance Pty Ltd (Clifton Partners).
At the relevant time, Messrs Beekink, Gaunt, and Majteles, were all partners of the law firm Phillips Fox. Mr Beekink and Phillips Fox have agreed to repay (in equal instalments) the capital losses suffered by investors in the Blackrock Caravan Park project.
This amount will total $207,040. ASIC sought significant pecuniary penalties against the three defendants as well as an order disqualifying Mr Beekink from the management of companies. The Court declined to make a disqualification order against Mr Beekink.
ASIC will review the Court's decision concerning both the size of the penalties and the decision not to disqualify Mr Beekink.
Background
AMF was the Responsible Entity (RE) for the former Clifton Partners Finance Mortgage Scheme (later known as the Knightsbridge Finance Mortgage Scheme) which was placed into administration by ASIC in December 2000.
Clifton Partners Finance Pty Ltd (Clifton Partners) operated as a licensed finance broker managing a mortgage lending business arranging pooled mortgages from February 1995.
In December 1999, it regularised its mortgage broking business to comply with the managed investments provisions of the Corporations Act 2001. In so doing, AMF became the responsible entity for a managed investment scheme then known as the Clifton Partners Finance Mortgage Scheme.
On or about 31 May 2000, Knightsbridge Managed Funds Ltd acquired all the shares in AMF, becoming the new responsible entity, and Knightsbridge Finance acquired all the shares in Clifton Partners. Clifton Partners became known as Knightsbridge Finance Pty Ltd (Knightsbridge Finance), and the Clifton Partners Finance Mortgage Scheme changed its name to the Knightsbridge Finance Mortgage Scheme (the Scheme).
At the time the Scheme was placed into administration following action taken by ASIC in December 2000, the total value of the mortgage schemes exceeded $100 million. Mr William Frederick Harmer, of Mt Claremont in Western Australia, was originally sentenced to two years jail (later reduced to 12 months) after being found guilty of making materially misleading statements in the Blackrock prospectus following an investigation by ASIC.
Mr Harmer was a director, senior executive, finance broker and an authorised representative of Clifton Partners. Mr Harmer issued a prospectus between 1 February and 3 March 2000 that sought to raise money to enable Clifton Partners to finalise a total loan facility to Onslow Trading Company Pty Ltd of $2,520,000.
