ASIC has disqualified Gene Robert Farrelly from managing corporations for five years due to his involvement in the failure of five companies.

Since February 2012, Mr Farrelly was the director of five companies that entered liquidation:

• United Project Partners Pty Ltd (ACN 155 849 399) (UPP);
• Secure Holdings Qld Pty Ltd (ACN 162 409 181) (SHQ);
• Unidev Qld Pty Ltd (ACN 164 500 690) (Unidev);
• United Property Sales Pty Ltd (ACN 161 026 615) (United Property); and
• One Thought Pty Ltd (ACN 160 821 705) (One Thought).

UPP, SHQ, Unidev and One Thought were involved in the property and construction industry in southeast Queensland while United Property operated in the rental, hiring and real estate services industry also in southeast Queensland.

ASIC found that Mr Farrelly failed to meet his obligations as a director when he:

• operated UPP and SHQ under a scheme that used self-managed superannuation funds (SMSF) for the benefit of investors that was contrary to the intent of the SMSF laws,
• allowed the scheme operated by UPP and SHQ to deceive Westpac into making loans to investors by using misleading financial transactions that falsely demonstrated their financial suitability, and
• misused funds belonging to UPP by making payments to fictitious employees, and family members, which resulted in substantial loans being made to himself, and also used UPP funds for personal expenses.

ASIC also found that Mr Farrelly engaged in illegal phoenix activity when he:

• transferred the business of UPP to related entity, namely Summit QLD Pty Ltd ACN 612 907 061 (Summit) for no consideration,
• authorised UPP to pay the staff wages of Summit, and
• authorised UPP to financially support Summit when it was in financial difficulty.

At the time of ASIC’s decision, the companies owed a combined total of $20,105,830 to unsecured creditors including approximately $58,741 owed to Australian Taxation Office.

In disqualifying Mr Farrelly, ASIC relied on reports lodged by UPP and SHQ former liquidator, Adam Ward of Worrells Solvency & Forensic Accountants. ASIC assisted Mr Ward to provide a supplementary report by approving an application for funding from the Assetless Administration Fund.

Mr Farrelly is disqualified from managing corporations until 15 May 2028.

Mr Farrelly has the right to seek a review of ASIC’s decision by the Administrative Appeals Tribunal.

Background

Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven-year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC about each of the company’s inability to pay its debts.

ASIC maintains a banned and disqualified persons register that provides information about people who have been disqualified from:

• involvement in the management of a corporation;
• auditing self-managed superannuation funds (SMSFs); or
• practising in the financial services or credit industry.

View more information about ASIC’s work in combatting illegal phoenix activity.

ASIC is a member of the ATO led Phoenix Taskforce, which comprises federal, state and territory government agencies who collaborate to combat illegal phoenix activity. The aim of the Phoenix Taskforce is to provide a whole-of-government approach to identify, disrupt and prosecute those who engage in or facilitate illegal phoenix activity. 

Suspected phoenix activity can be reported to ASIC or the ATO by calling 1800 060 062, online at the ATO website or by emailing PhoenixReferrals@ATO.gov.au.