Financial advisor misappropriates clients’ trust and funds
Date of Judgment: 25 May 2021 and 7 July 2021
Court: District Court of NSW
Partner Agency: Australian Securities and Investments Commission
Summary of charges:
On 17 November 2020, Ross Hopkins entered pleas of guilty to 15 charges under sections 1041G and 1311(1) of the Corporations Act 2001 (Cth).
The maximum penalty for an offence against s1041G committed prior to 13 March 2019 is:
- 10 years’ imprisonment (15 years’ imprisonment on or after 13 March 2019)
- the greater of $810,000 or a fine of three times the total value of the benefits. (a fine of 45,000 penalty units ($9,450,000) or three times the benefit derived and detriment avoided because of the offence on or after 13 March 2019)
- or both.
A guilty plea was negotiated prior to initiation of proceedings and the matter was expedited under the NSW Early Appropriate Guilty Plea regime..
It was alleged that between about 14 October 2016 and 8 October 2019, Hopkins, a financial advisor, engaged in dishonest conduct in relation to the provision of financial services to 13 clients of his financial advisory business, QWL Pty Ltd.
Hopkins executed a total of 167 unauthorised transfers of funds from accounts held in the names of his clients. In sum, Hopkins misappropriated funds in the amount of $2,938,750 from his clients. The misappropriated funds were used to fund Hopkins’ lifestyle, including rent for a house in an affluent Sydney suburb, private school fees and overseas holidays.
The CDPP’s Witness Assistance Service, assisting the victims in this matter, received written requests from victims that the CDPP seek orders on their behalf, pursuant to s21B of the Crimes Act 1914 (Cth), for reparation for loss suffered as result of Hopkins’ criminal conduct. The CDPP determined to seek orders on their behalf.
The amounts sought were comprised, variously, of the misappropriated amounts as charged, professional fees incurred in seeking to recover the misappropriated funds, management fees charged during the periods of offending, non-economic loss as determined by the Australian Financial Complaints Authority (AFCA) and interest calculated at the rate published by the Reserve Bank of Australia plus six per cent with interest accruing from the start date of the charge period for each respective victim until date of payment.
This matter was the first prosecution of offences against s1041G of the Corporations Act following the enactment of Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth), which came into effect on 13 March 2019. The applicable definition of dishonesty was amended in the Act and the maximum penalty for an offence against s1041G was increased from 10 years’ imprisonment to 15 years’ imprisonment.
The significant period of imprisonment imposed upon Hopkins demonstrates that the Courts are taking white collar crime seriously and condign punishments are being imposed.
On 25 May 2021, his Honour Woods QC ADCJ sentenced 56-year-old Hopkins to a maximum term of six years’ imprisonment with a non-parole period of four years. This penalty incorporated a 25 per cent utilitarian discount.
A number of victims provided moving Victim Impact Statements where they spoke of their deep distress as to their personal and financial circumstances as a result of Hopkins’ conduct.
Despite indicating prior to the sentence date that reparation orders would not be opposed, Hopkins resisted the making of reparation orders in their entirety at the sentencing hearing. As a result, there was vigorous argument as to the entitlement of the victims to reparation.
On 7 July 2021, his Honour granted the CDPP’s application for reparation orders in favour of the victims. Reparation was ordered with respect to the charged fraud amounts and professional fees incurred in seeking to recover the misappropriated funds, with interest to be calculated at the rate published by the Reserve Bank of Australia plus six per cent and accruing from the start date of the charge period for each respective victim until date of payment.
His Honour did not consider non-economic loss or management fees to fall within the purview of the provision. His Honour did observe, however, that even if he was wrong as to the potential breadth of s21B(1)(d), the order is discretionary and to extend it in this case to such indirect matters would be unhelpful in the administration of the criminal law.
ASIC Media Release: 21-114MR Former Sydney financial adviser sentenced to six years imprisonment