ASIC imposes maximum penalty for phoenix activity and deceitful SMSF scheme.
Director banned for failed construction companies owing $20m
ASIC has disqualified a director for five years over the failure of five Queensland construction and real estate companies that collapsed owing more than $20 million.
From February 2012, Gene Robert Farrelly was the director of property and construction companies United Project Partners (UPP), Secure Holdings Qld (SHQ), Unidev Qld, One Thought, and United Property Sales, which operated in the rental, hiring and real estate services industry.
ASIC found that Mr Farrelly had failed to meet his obligations as a director because:
- He operated UPP and SHQ under a scheme that used SMSFs for the benefit of investors that was contrary to the intent of the SMSF laws.
- He allowed the scheme operated by UPP and SHQ to deceive Westpac into making loans to investors by using misleading financial transactions that falsely demonstrated their financial suitability.
- He misused funds belonging to UPP by making payments to family members and fictitious employees which resulted in substantial loans being made to himself, and also used UPP funds for personal expenses.
ASIC said Mr Farrelly also engaged in illegal phoenix activity by transferring the business of UPP to a related entity, namely Summit QLD, for no consideration, and authorising UPP to pay the staff wages of Summit and to support it during financial difficulty.
At the time of ASIC’s decision, the companies owed a combined total of $20,105,830 to unsecured creditors including approximately $58,741 owed to ATO.
In disqualifying Mr Farrelly, ASIC relied on reports lodged by UPP and SHQ former liquidator Adam Ward of Worrells Solvency & Forensic Accountants. Mr Farrelly is disqualified from managing corporations until 15 May 2028 and has the right to seek a review of ASIC’s decision by the AAT.
In a separate decision, ASIC has disqualified Edoardo Perlo of Fortitude Valley, Queensland, from managing corporations for four years over his involvement in three retail food companies that failed owing $2.8 million.
Mr Perlo was a director of Casa Gusto, SMC Drummoyne and Popina Kitchen between 2015 and 2020.
In relation to SMC and Popina, ASIC was concerned that Mr Perlo had traded the companies while insolvent, failed to meet statutory tax lodgement requirements, and keep proper business records.
The amount owed across the three companies totalled $2.8 million, including $1.3 million to the ATO and $162,000 for workers’ compensation insurance and payroll tax.
ASIC relied on an initial statutory report lodged by liquidator Steven Kugel of the Insolvency Experts, who was appointed to Casa, and supplementary reports lodged by liquidators Andrew Sallway of BDO Australia, who was appointed to SMC, and Adam Preiner of Integra Restructuring and Insolvency, who was appointed to Popina.
Mr Perlo is disqualified from managing corporations until 22 June 2027.