Michael Grochowski and Ian Stephens have been disqualified 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.
Companies 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 approximately $24 million from investors
While the court found that Mr Grochowski was not a named director of both companies, he was an officer of the companies until they were wound up by court, on application filed by ASIC, in April 2016.
ASIC said Mr Stephens, who was a director of both companies, was found by the courts to be an “experienced chartered accountant”, who 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.
Court documents show that Mr Stephens held a number of management accounting and chief financial officer roles in the food and beverage industry before he became involved with Bilkurra Investments, Foscari and the Project Companies.
From around August 2014, his accounting firm, GPTAA, began to provide accounting services to Bilkurra Investments, Foscari and the Project Companies.
In October 2014, Mr Stephens was asked to assume the directorship of the companies because Mr Grochowski wanted to improve the companies’ accounting practices, in order to impress potential investors in the companies, with a view to eventually seeking a listing. GPTAA continued to provide accounting services to the companies following Mr Stephens’s appointment as director.
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.
The court was also satisfied with ASIC’s claim that the way both companies were managed was the reason for their failing.
“These bannings will help protect the public from further investing with officers of companies that repeatedly fail,” said ASIC commissioner John Price.
“ASIC will continue to investigate failed land banking schemes and take whatever action is necessary to ensure failed schemes do not continue.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.