ASIC has disqualified Sydney property adviser Craig Eric Lynch from managing corporations for 4 years and also banned him from engaging in credit activities for 4 years.

Mr Lynch was the director of Paramount Financial Services Pty Ltd (PFS) and Paramount Finance & Investment Services Pty Ltd (PFIS) which were authorised to act as mortgage brokers.

An ASIC investigation found that Mr Lynch had breached his duties as a director of PFS and PFIS in his treatment of personal loan accounts held with those companies and in managing the taxation affairs of PFS.

In or about April 2011, Mr Lynch diverted $1.6 million of company funds (a ten year advance on his salary) to payout a debt he personally owed to PFS. PFS went into liquidation seven months later (November 2011).

Between about July 2011 and September 2011, Mr Lynch recorded $705,200 received from a third party as a reduction to his personal loan account with PFIS. That money was supposed to be paid to PFIS as commission for property sales.

In both instances, ASIC found that Mr Lynch had misused his position as a director to gain an advantage for himself or cause detriment to the company.

ASIC also found that Mr Lynch was not a fit and proper person to engage in credit activities. ASIC found that Mr Lynch:

• engaged in conduct that resulted in PFS submitting to a credit provider a loan application containing misleading income details of the applicant and a falsified supporting payslip;
• was aware of a practice at PFS and PFIS that clients were instructed to sign blank application forms; and
• had breached his duties as a director of PFS and PFIS in relation to the dealings on his personal loan accounts with those companies.

ASIC Deputy Chairman Peter Kell said: 'The position of company director comes with certain responsibilities and when those responsibilities are breached, ASIC will take steps to remove directors from managing companies.'

Background

PFS and PFIS were authorised to provide credit assistance by Australian credit licensee Paramount Lending Services Pty Ltd (PLS). ASIC cancelled PLS' Australian credit licence on 23 January 2014 at the request of Mr Lynch, the director of PLS. Both PFS and PFIS are no longer trading.