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18-215MR Allianz Metro contempt decision
On 19 July 2018, the Federal Court handed down judgment in the application brought by ASIC seeking contempt findings against multiple defendants. The matter relates to ASIC’s ongoing Federal Court proceedings concerning the operation of binary option trading websites.
The Court found that defendants, Eustace Senese (Eustace), his son Cameron Senese (Cameron) and associated company, Transcomm Global Pty Ltd (Transcomm), were guilty of contempt charges arising out of breaches of certain freezing orders made in the Federal Court proceedings.
Contempt charges were also brought by ASIC against Melbourne-based law firm, Kalus Kenny Intelex (Kalus Kenny). The charges related to five payments made from Kalus Kenny’s trust account while the law firm acted for Eustace, Cameron, Transcomm, Eustace’s associated company, Allianz Metro Pty Ltd (Allianz Metro) and Cameron’s associated company, Bianco Pty Ltd (Bianco) in the proceedings. Those charges were dismissed following a contested two-day hearing commencing 26 March 2018. The Court decided that, as Kalus Kenny was not bound by the freezing orders, ASIC needed to establish that Kalus Kenny had effected the payments knowing them to contravene the orders but that ASIC had not established this.
The Court held that Eustace, Cameron and Transcomm were guilty of contempt after they accessed and used other funds during August 2016 and February 2017 without authorisation of the Court. The judgment referred to the agreed statements of facts and agreed proposed orders between the parties, where Cameron admitted to 455 charges, Eustace 23 charges and Transcomm 5 charges. As a part of the agreed statements of facts, charges against Allianz Metro and against Bianco were dismissed.
Submissions will be considered by the Court to determine the penalty against Eustace, Cameron and Transcomm in relation to the proven contempt charges.
On 26 July 2016, ASIC applied for freezing orders against a number of defendants in the proceedings under sections 1323 and 1324 of the Corporations Act 2001 after identifying that Australian users of the Titantrade websites had deposited funds into an Australian bank account owned by Allianz Metro Pty Ltd. The orders were designed to protect potentially 'aggrieved persons'.
On 1 May 2017, ASIC commenced the Federal Court contempt proceedings alleging breaches of various court orders in place that allowed the defendants to use some of the protected frozen funds for living and legal expenses.
The main Federal Court proceeding in the matter remains ongoing, with a trial regarding the allegations against a number of international and Australian companies and associated individuals listed for 26 April 2019*.
The trial relates to the operation of binary options websites www.titantrade.com and https://tradettn.com and the offering of binary trading services to Australian customers (See 17-391MR – ASIC takes further action in Allianz Metro binary option trading investigation).
*Editor's note 1:
The matter now returns to Court on 29 April 2019 for a three day contested hearing.