The County Court of Victoria has sentenced former accountant Douglas Johnston to six years of imprisonment for defrauding investors of approximately $815,000.
The sentencing follows the five years and six months jail sentence handed out to his wife, Maureen Johnston, who had worked alongside him to secure funds from investors, lying about how the money would be used.
Many of the victims met Mr and Mrs Johnston through their close association with the Collingwood Football Club, where friendships were developed before the Johnstons first raised the idea of investing personally through them.
During the period of January 2010 to November 2013, investors deposited money into a bank account of Small Business Management Pty Ltd on the basis that they would make returns on their investments. In some cases, Mr Johnston set up self-managed super funds for investors, with the promise of managing the money on their behalf.
Instead, the funds were then withdrawn as cash by the couple, used to repay their credit card debts, transferred to another account in the name of Maureen Johnston and used to pay new investor deposits in a Ponzi-style operation.
Mrs Johnston, a former director of Small Business Management Pty Ltd and Investman Nominees (USA) Pty Ltd, deceived victims into investing money in various bogus property developments in the United States and Australia.
The funds were not used for investment purposes, but instead were spent gambling at the Melbourne Crown Casino and paying personal credit card debt, with Mrs Johnston pleading guilty to three counts of obtaining a financial advantage by deception, totalling $1,027,000.
In sentencing, Her Honour Judge Wilmoth stated that Mr Johnston’s actions were “entrenched in dishonesty” and “showed a callous disregard for the trust placed in [Mr Johnston]”.
The court has set Mr Johnston a non-parole period of three years, with Mrs Johnston at two years.
“The sentences imposed on Maureen, and today on Douglas, demonstrate the types of outcomes ASIC, with the Commonwealth Director of Public Prosecutions, can achieve. This type of behaviour will not be tolerated by ASIC and will be pursued through the courts,” said ASIC deputy chair Daniel Crennan QC.
The Commonwealth Director of Public Prosecutions prosecuted the matter following a referral of a brief from ASIC.
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.