Mr Craig John McKim, former director of the Pegasus Leveraged Options Group Pty Ltd (Pegasus), has been banned from being involved in the management of a company for 30 years.

The Australian Securities and Investments Commission (ASIC) initiated proceedings in the Supreme Court of NSW after an investigation found evidence that a managed investment scheme operated by Pegasus and Mr McKim breached the Corporations Act.

Mr McKim and Pegasus were found to be operating an unregistered managed investment scheme, to have engaged in misleading or deceptive conduct and to have made misleading statements in order to entice investors into the scheme.

Pegasus did not have a securities dealer’s licence and the scheme did not have a disclosure document for fundraising lodged with ASIC as required under the law.

Evidence showed that while approximately $3.7 million from approximately 90 investors was traced through the Pegasus bank accounts, the likely funds taken by the scheme were far in excess of that amount.

In preliminary hearings, Mr McKim, who was managing Pegasus while disqualified from being a director on account of previous criminal convictions, claimed his investors’ money was being held in a bank account in Spain, and that efforts were being made to return this money to Australia.

The court heard that money invested in the scheme was used to pay business expenses as well as high rates of return to investors. Cash transfers were made to Mr McKim and his relatives as well as cash withdrawals from the relevant bank accounts.

Mr McKim also lost approximately $2 million through gambling.

ASIC froze the assets of both Mr McKim and his company in March 2001 after receiving complaints from investors in the scheme. Orders have been made for the winding up of the scheme and Pegasus.