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Monday 10 February 2020

20-027MR Former Kleenmaid director sentenced to nine years imprisonment for fraud and insolvent trading

A former director of the Kleenmaid group of companies, Mr Andrew Eric Young was sentenced to nine years’ imprisonment on Friday 7 February 2020 after being found guilty by a District Court jury of 19 offences arising out of the collapse of the national whitegoods distributor.

Following a trial which lasted for 59 days, on 10 January 2020, the jury found Mr Young guilty of:

  • Count 1: one count of fraud by dishonestly gaining loan facilities from Westpac in November 2007 totalling $13 million;
  • Counts 2 & 3: two counts of criminal insolvent trading of debts of $3.5million relating to two additional loan facilities obtained by one of the Kleenmaid companies, EDIS Service Logistics Pty Ltd (EDIS) from Westpac in July 2008;
  • Counts 4 to 17 and 19:fifteen counts of criminal insolvent trading of debts amounting to more than $750,000 that were incurred during the period October 2008 to April 2009; and
  • Count 20, one further count of fraud by dishonestly causing $330,000 to be withdrawn from a Kleenmaid company bank account two days prior to administrators being appointed and transferred to a bank account held by a company in which Mr Young held an interest and from which he and his wife would benefit from the payment.

Mr Young was convicted on two counts of fraud and sentenced to a term of imprisonment of nine years with a non-parole period of four years. The parole date for the fraud offences was set at 9 January 2024.  Mr Young was convicted of 17 counts of insolvent trading for which he was sentenced to a total of three years imprisonment to commence from the parole eligibility date for the fraud, and after serving 12 months imprisonment, Mr Young will be eligible for release upon entering into a recognizance of $500 to be of good behaviour for two years.

In passing sentence, Judge Devereaux SC said ‘It would be obnoxious and naive to consider these types of offences as victimless…’ and that ‘people in the community must be put on notice that dishonesty will bring with it commensurate punishment.’

ASIC Commissioner John Price noted the sentencing of Mr Andrew Young concluded ASIC’s criminal proceedings against the Kleenmaid directors.

Mr Price said, ‘Mr Young’s lengthy imprisonment reflects the seriousness of this matter and should serve as a strong warning to company directors of the consequences where misconduct is established.’

Mr Price noted the proceedings against Mr Andrew Young and his co-accused were the culmination of an extensive and complex investigation by ASIC and prosecution of the charges by the Commonwealth Director of Public Prosecutions.

‘ASIC will continue its efforts to ensure directors and company officers meet their obligations, establish and maintain strong corporate governance standards and to bring those who fail in their duties to account’ Mr Price said.

Background

Kleenmaid was a white goods importer and retailer which operated a chain of company and franchised stores across Australia.  The business was founded by Andrew Young in 1980.

Based on Queensland’s sunshine coast, the Kleenmaid group of companies employed about 200 staff Australia wide.

Administrators were appointed to the Kleenmaid group of companies on 9 April 2009.  The consolidated debts of the Kleenmaid group amounted to approximately $96 million, which included $26 million in customer deposits that had been paid for appliances yet to be delivered.

In February 2012, the three former directors of the Kleenmaid group, Andrew Eric Young, Bradley Wendell Young and Gary Collyer Armstrong appeared in court for the first time on criminal charges following an investigation being conducted by ASIC (12-27AD; 14-064MR).

The registration of Wayne John Wessels, the former auditor of the Kleenmaid group, was suspended for three years on 29 November 2013 by the Companies Auditors and Liquidators Disciplinary Board, following a successful application by ASIC (14-082MR). 

Mr Armstrong pleaded guilty to one count of fraud and two counts of insolvent trading on 24 August 2015 and was subsequently sentenced to five and a half years’ jail (15-225MR; 15-283MR).

Following a 71 day trial, Bradley Young was found guilty of one count of fraud totalling $13 million and 17 counts of criminal insolvent trading of debts amounting to more than $4 million. The jury found him not guilty of one count of insolvent trading. He was sentenced to nine years’ imprisonment for fraud and a total of three and a half years for the insolvent trading charges.  At the time the offences were committed, Bradley Young was the managing director of EDIS (16-248MR; 16-257MR).

On 29 August 2017, a trial was commenced in relation to Andrew Young. The trial was aborted on 20 October 2017 for reasons including the accused’s medical condition.

A new trial was commenced on 16 September 2019 in relation to Andrew Young and after 59 days a jury found him guilty of all 19 charges (20-007MR).

At the time the offences were committed, Mr Young was found to be acting as a “shadow director” of EDIS.  Shadow directors can still be liable for breaches of the laws relating to directors’ duties, even though they were never formally appointed as a director of the company, if they act as a director or give instructions to the appointed directors on how they should act.

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Editor's note:

On 7 February 2020, Mr Andrew Young filed an application to appeal his conviction.

On 6 March 2020, Mr Andrew Young filed an application to appeal his sentence.

Editor's note 2:

On 20 and 21 August 2020, the Court of Appeal of the Supreme Court of Queensland heard Mr Andrew Young’s appeal and reserved its decision.

Last updated: 24/08/2020 03:47