Former Financial Advisor, 51-year-old Melinda Scott was sentenced to six years and three months imprisonment, with a minimum non-parole period of three years and ten months for defrauding 163 clients of $5.9 million over a period of 23 years—collecting close to $3 million personally.
Most of the fraudulent transactions involved superannuation and annuities products that were invested for the longer term, because there was a low demand for redemption which reduced the risk of detection. When clients looked to seek redemption on their investments, Scott used funds of other clients in the nature of a Ponzi scheme—a highly thought-out and planned scheme.
Following an investigation by the Australian Securities Investments Commission (ASIC), Scott admitted to misconduct that occurred between August 1989 and April 2012.
It was also revealed that in early February 2004, Scott became an authorised representative of Millennium3—a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ). Prior to Millennium3, Scott was employed in various positions in the financial services industry.
Scott made regular payments to clients who were expecting an allocated pension payment, but from whom she had fraudulently obtained their money. The net benefit derived by Scott was approximately $2.9 million.
ANZ and Millennium3 fully cooperated with the investigation led by ASIC and also engaged external investigators to ensure a thorough investigation was conducted. In addition, immediately upon becoming aware of the issue, Millennium3 operations ceased and Scott’s authorisation to operate in the industry was terminated. ANZ then commenced a remediation program to ensure all clients who had funds misappropriated were compensated for their losses.
In December 2013 Scott pleaded guilty to three ‘rolled-up’ dishonest conduct charges (noting that there had been two legislative changes during the 20-year period), and four charges relating to the making and use of false documents of which two were rolled-up, contrary to the Crimes Act (NSW) and the Corporations Act 2001.
On 10 February 2015 Scott was sentenced to six years and three months imprisonment, with a minimum non-parole period of three years and ten months.
- One count of obtaining money be deception between 2 August 1989 to 8 February 2004 – s178BA Crimes Act 1999(NSW)
- One count of dishonest conduct in relation to a financial product or service between 9 February 2004 to 12 December 2010 – s1041G Corporations Act 2001
- One count of dishonest conduct in relation to a financial product or service between 13 December 2010 to 27 April 2012 – s1041G Corporations Act 2001
- One count of make false instrument between 16 May 1996 to 15 January 2010 – s300(1) Crimes Act 1900 (NSW)
- One count of use false statement between 20 May 1996 to 15 January 2010 – s300(2) Crimes Act 1900 (NSW)
- One count of make false document on 21 June 2010 – s253 Crimes Act 1900 (NSW)
- One count of using false document on 21 June 2010 – s254 Crimes Act 1900 (NSW)
This is a matter in which ASIC and CDPP negotiated early guilty pleas, for which Scott received a 25% discount on sentence. The court also took into account the extent to which the offender had assisted ASIC and ANZ, including by revealing conduct that preceded the timeframe for ASIC’s investigation.