Tony Iervasi has pleaded guilty to five criminal charges regarding the operation of a Ponzi scheme when he was director of Courtenay House Pty Ltd (in liquidation) and Courtenay House Capital Trading Group Pty Ltd (in liquidation).
Iervasi pleaded guilty to four offences of engaging in dishonest conduct between 13 December 2010 and 21 April 2017, when he was the sole director and shareholder of Courtenay House, which raised around A$180m (£102m, $117m, €117m) from around 585 investors.
The Courtenay House companies, based out of Bondi Junction, New South Wales, told investors that their funds would be traded in Forex and Futures markets when only around 3% were traded. Instead, monthly amounts paid to investors were derived from capital deposited from new investors, the Australian Securities & Investments Commission (Asic) said.
This has been referred to, and admitted by Iervasi, as a Ponzi scheme.
In addition to offering purported ‘standard’ investment products, Iervasi ran several ‘investment specials’ to encourage trading.
In December 2016, Iervasi invited clients to invest in a ‘US Election Special Trade’ which was to take place between 1 January 2017 and 1 February 2017 to coincide with the Inauguration of President Trump, as a way to invest in what Iervasi claimed was ‘fast-money markets’. On this occasion, Iervasi offered a 15% return with a 20% risk, the Aussie regulator added.
Asic said that his clients were told, via weekly emails, that they had made profits from the US Inauguration Special Trade, but the money was instead used to sustain the Ponzi scheme.
Iervasi also pleaded guilty to one charge of carrying on an unlicensed financial services business, as neither of the Courtenay House companies held an Australian Financial Services (AFS) license to cover the provision of financial services including the promotion of financial products or trading on behalf of clients.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions after an investigation and referral by the Australian Securities and Investments Commission.
Upon pleading guilty to the charges, Iervasi was committed to the Supreme Court of New South Wales for sentence, which will occur on a date yet to be fixed.
Iervasi’s first appearance before that court will be on 9 December 2022.
The maximum penalty at the time for engaging in dishonest conduct in relation to a financial product or financial service was 10 years’ imprisonment, a fine of A$810,000, or both.
The maximum penalty for operating without an AFS licence is two years’ imprisonment, a fine of A$22,000, or both.
The Courtenay House companies appointed liquidators on 16 May 2017.
On the application of Asic, the Supreme Court of NSW made interim orders on 1 May 2017 against Tony Iervasi, Courtenay House, Courtenay House Trading Group (and others) by consent.
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.
The liquidators of Courtenay House Capital Trading have distributed dividends of A$0.28 in the A$1.00. The liquidation process is ongoing.