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Court disqualifies chartered accountant for part in land banking scheme

Court disqualifies chartered accountant for part in land banking scheme

The Federal Court of Australia has disqualified officers, including a chartered accountant, from managing corporations due to their involvement in a land banking scheme that raised some $24 million from investors.

  • Maja Garaca Djurdjevic
  • February 08, 2019
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The court has disqualified Michael Grochowski and Ian Stephens from managing corporations for five and a half years and four years, respectively, due to their being officers of companies that had failed and been wound up by the court, ASIC said.

The court found that while Mr Grochowski was not a named director of Bilkurra Investments and Foscari Holdings (both in liquidation), he was an officer of the companies until they were wound up by the court, on application filed by ASIC, in April 2016.

Both Bilkurra Investments and Foscari Holdings operated land banking schemes in Victoria, known as Hermitage Bendigo and Foscari. Promoters of the land banking schemes used Bilkurra and Foscari to raise about $24 million from investors.

"In deciding the period of banning, the court considered an earlier decision of a delegate of ASIC, made in April 2012, prohibiting Grochowski from providing financial services for four years," ASIC disclosed.

"The court was also satisfied with ASIC’s claim that the way both companies were managed was the reason for their failing."

The court found that the appointment of Mr Stephens as a director of both companies, who was an experienced chartered accountant, presented a false facade of meaningful oversight and governance of the companies’ affairs.

Further, the court found Mr Stephens failed to exercise any meaningful decision making and management responsibility for the companies, which had obtained large amounts of investment from the public.

"These bannings will help protect the public from further investing with officers of companies that repeatedly fail. ASIC will continue to investigate failed land banking schemes and take whatever action is necessary to ensure failed schemes do not continue," said ASIC commissioner John Price.

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