media release

12-16AD ASIC obtains Supreme Court orders against fraudulent Gold Coast financial services business

Published

An unlicensed financial planning business based on the Gold Coast has been wound up following an application by ASIC to the Supreme Court of Queensland.

ASIC alleged Golden Sparrow Pty Ltd, GS Contracting Pty Ltd and Michelle Margaret Bruhn operated an unlicensed and fraudulent financial services business, defrauding 36 investors in excess of $350,000.

The court made declarations on Monday 30 January 2012, that Golden Sparrow, GS Contracting and Ms Bruhn carried on a financial services business without holding an Australian financial services (AFS) licence, as required under the Corporations Act 2001. The court also ordered Golden Sparrow and GS Contracting be wound up, that William Fletcher and Katherine Barnet of Bentleys Corporate Recovery Pty Ltd be appointed as the liquidators of the companies, and that Ms Bruhn, Golden Sparrow and GS Contracting be restrained from carrying on a financial services business without holding an AFS licence.

ASIC alleged that Golden Sparrow used cold calling and a website to induce investors to deposit funds into a number of bank accounts held in the names of Golden Sparrow and GS Contracting with the promise that the funds would used to buy shares on behalf of the investors and generate returns of between 1% and 3% per week.

ASIC further alleged that Ms Bruhn was the sole director of these two companies and withdrew the money from company bank accounts. ASIC’s investigation found that, between mid-August and November 2011, approximately $350,000 was deposited by investors into these accounts. During the same period of time, approximately $300,000 was withdrawn in cash.

ASIC’s investigation into this matter continues. This action follows interim orders obtained by ASIC in November 2011 to prevent the business from continuing to operate (refer ASIC advisory 11-271AD ASIC obtains court orders against Gold Coast-based investment scam).

ASIC continues to work with the Queensland Police Service and the Australian Crime Commission on this and similar cases of investment fraud.

Background

An increasing number of ‘boiler room’ investment scams, predominantly based on the Gold Coast, have targeted investors across Australia.

The fraudsters usually contact their victims by telephone and convince them to invest in schemes involving the purchase of shares or investment in index funds or currency trading schemes. Once an investment is made, the fraudsters provide access to a website that shows projected returns however those returns are completely fraudulent. These fraudsters operate without an AFS licence and use false addresses and phone lines often routed to another address.

These scams generally cause investors to lose their money and include the following features:

  • promoters adopt the company names of legitimate companies who are licensed to provide financial services in the US, but not in Australia

  • the scam is supported by sophisticated internet technology including a website which purports to provide investors with real-time information in relation to their trading

  • victims are initially cold called by a person purporting to survey their interest in investing generally

  • victims are lured with promises of huge returns and then subjected to intense pressure in order to induce them to hand over their money, and

  • when a person falls victim a first time, they are often called back and encouraged to invest in a more sophisticated trading strategy which requires even more money.

Cold calling people with investment opportunities in shares is generally illegal and ASIC’s MoneySmart website highlights the warning signs that consumers should heed when called by someone offering an investment opportunity:

Go to www.moneysmart.gov.au/scams for more information.

Media enquiries: Contact ASIC Media Unit