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Thursday 8 June 2017

17-176MR Contempt charges issued as Allianz Metro investigation continues

ASIC has issued an application for contempt charges arising out of proceedings commenced against Allianz Metro Pty Ltd and other entities concerning the operation of binary trading websites.  

On 1 May 2016, ASIC commenced Federal Court proceedings against various entities including Eustace Senese; his son, Cameron Senese; and associated companies Allianz Metro Pty Ltd, Transcomm Global Pty Ltd and Bianco Pty Ltd, in relation to the websites www.titantrade.com and https://tradettn.com.

On 26 July 2016, the Court made freezing orders prohibiting those defendants from dealing with their assets.

ASIC alleges that those defendants and Melbourne-based law firm, Kalus Kenny Intelex (Kalus Kenny), the former solicitors for some of the defendants, have breached the freezing orders by wrongfully dealing with assets. 

The matter returns to court on 31 August 2017 for further directions.

Background

ASIC applied for the freezing orders 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 are designed to protect "aggrieved persons" and the frozen funds may be drawn upon if the Court determines that the  defendants are liable to pay money or damages.

On various occasions since July 2016, the Court has allowed the defendants to use some of the frozen funds to cover living and legal expenses.

In the contempt application, ASIC alleges that certain defendants and Kalus Kenny have breached an order that stated the first to eleventh defendants "be prohibited from selling, transferring, encumbering, disposing of or otherwise dealing with any assets or property".

Kalus Kenny was retained by nine of the eleven defendants in ASIC's proceeding, however, since 2 May 2017, the firm only acts on behalf of the defendants IMC Holdings Pty Ltd and Yoav Ida.

Subsequent to the freezing orders made in July 2016, ASIC issued a Public Warning Notice on 4 August 2016 in relation to Titantrade (refer: 16-246MR).

Editor's note:

At a hearing on 6 September 2017 following ASIC's application, the Court made orders for discovery against the defendants charged with contempt  and the discovery process has now been concluded. The matter is next before the Court for a case management hearing on 15 December 2017.

Editor's note 2:

The matter will return to Court on 26 March 2018 for a two-day contested hearing.

Editor's note 3:

The Court has reserved its judgment following the conclusion of the contested hearing on 27 March 2018.

Editor's Note 4:

On 19 July 2018, the Federal Court handed down judgment in the contempt application brought by ASIC.  The Court dismissed all charges against Melbourne-based law firm Kalus Kenny Intelex. 

The Court held that Eustace Senese (Eustace), Cameron Senese (Cameron) and Transcomm Global Pty Ltd (Transcomm) were guilty of contempt after they accessed and used other funds during August 2016 and February 2017 without authorisation of the Court.

Refer to 18-215MR for further details.  View the Federal Court judgment and orders here.

Last updated: 20/07/2018 04:53