Athan Papoulias of Brighton Le Sands, NSW, a former contractor to and promoter of Courtenay House investments, has been sentenced to two years’ imprisonment, to be served by way of an intensive corrections order for his role in the unlicensed financial services business. As part of his sentence, Mr Papoulias was ordered to complete 120 hours of community service.
Mr Papoulias pleaded guilty to one charge of carrying on an unlicensed financial services business between 2 November 2017 and 21 April 2017, reckless about the fact that the business did not have the required licence and one charge of dealing in the proceeds of crime worth $100,000 or more, reckless as to it being derived from the carrying on of an unlicensed financial services business.
During this period, Mr Papoulias received commissions totalling $670,860 for promoting investments in Courtenay House.
In May 2017, liquidators were appointed to the Courtenay House companies and the director, Tony Iervasi, was restricted from leaving Australia. On 8 November 2022, Mr Iervasi pleaded guilty to five criminal charges (22-307MR). Four of those charges included engaging in dishonest conduct between 13 December 2010 and 21 April 2017 in relation to $180 million raised by the Courtenay House companies from around 585 investors.
The Courtenay House companies represented to investors that their funds would be traded in the Forex and Futures markets when only a small proportion of funds were traded. Instead, a Ponzi scheme was being run, with monthly amounts paid to investors from the capital invested by other investors, with Courtenay House falsely representing that these amounts were returns from trading. Mr Papoulias was not aware that the funds were used to fuel a Ponzi scheme.
ASIC Deputy Chair Sarah Court said ‘ASIC has taken civil action to freeze assets, assisted liquidators and is now seeing justice for investors through the criminal court. To ensure a fair and strong financial system, and to protect consumers, financial services businesses need to be licenced. Those promoting unlicenced businesses should not assume they are immune from criminal consequences.’
When handing down the sentence, Judge McHugh SC remarked that Mr Papoulias’ actions had undermined public confidence in the regulatory regime of the financial services industry. The Judge also took into consideration Mr Papoulias’ guilty plea.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions after an investigation and referral by ASIC.
The maximum penalty at the time for carrying on a financial services business without an Australian Financial Services license was two years imprisonment, a fine of $36,000 or both. The maximum penalty at the time for dealing with the proceeds of crime, reckless to it being proceeds of crime was 10 years imprisonment, a fine of $108,000 or both.
On the application of ASIC, the Supreme Court of NSW made interim orders on 1 May 2017 against Tony Iervasi, Mr Papoulias, Courtenay House, Courtenay House Trading Group (and others) by consent (Courtenay House Key Matters page). These orders prevented those parties from carrying on a financial services business in Australia and limited the extent to which they could deal with their cash and other assets. ASIC sought these orders to preserve funds that might be available for the benefit of investors in the Courtenay House companies who had lost money and to prevent these companies from accepting further funds from investors.