The Supreme Court of Victoria today made findings of contraventions of the Corporations Act against a number of companies and directors related to the Melbourne-based PFS Group.

ASIC sought declarations that Mr Shaun Oliver White, Mrs Nicole Elaine White, Mr Damian Tolson and companies within the PFS Group contravened provisions of the Corporations Act and the ASIC Act relating to misleading and false conduct, breaches of directors duties and the provision of financial services. The breaches were alleged to have occurred in relation to self managed superannuation funds and a number of property developments.

The Court found that Mr White, Mrs White and Mr Tolson and eight of the defendant companies in the PFS Group had carried on an unlicensed financial services business. These eight companies included:

• PFS Business Development Group Pty Ltd (In Liquidation)
• PFS Construction Consulting Group Pty Ltd (In Liquidation)
• PFS Construction Consulting Group (Ashridge Lane A) Pty Ltd (In Liquidation)
• PFS Construction Consulting Group (Ashridge Lane B) Pty Ltd (In Liquidation)
• Kaluski White & Associates (Black Gully Road) Limited (In Liquidation)
• Meridian Event Management Pty Ltd (In Liquidation)
• Nycam Werd Pty Ltd (In Liquidation)
• Kaluski White & Associates Pty Ltd (In Liquidation)

It also found that the three personal defendants together with seven of the defendant companies had engaged in a variety of activities that were misleading and deceptive. The victims of the false and deceptive conduct included beneficiaries of self managed superannuation funds, investors in property developments and employees of the defendant companies.

In relation to the allegations of breaches of directors’ duties, the court found that Mr White, Mrs White and Mr Tolson had breached their duties. While Tolson was found to have breached his duties by gross negligence, the Court found that Mr White and Mrs White had failed to discharge their duties in good faith, citing various acts of dishonesty as the basis for such findings.

The Court will consider the penalties to be imposed as a result of today’s findings on 20 June 2006. ASIC’s investigation is continuing.

Background

This application follows action taken by ASIC to have 11 PFS Group companies placed into liquidation by the Supreme Court on 8 December 2005, as well as restraining Mr White, Mrs White and Mr Tolson from carrying on business relating to superannuation. ASIC successfully applied for orders on 5 August 2005, restraining the three directors from carrying on a financial services business without holding an Australian financial services licence (AFSL) or from carrying on a business related to superannuation interests (without holding an AFSL).

ASIC alleged, among other things, that the PFS Group misled investors and acted unconscionably, leading investors to roll over approximately $800,000 of existing superannuation funds into self-managed superannuation funds (SMSFs) that the PFS Group established for them, while also persuading investors to invest a further $700,000 into joint venture investments with the PFS Group.