NSW man Allan Raad and his brother-in-law Yousef Joseph Bazouni both pleaded guilty in the Downing Centre District Court in Sydney to charges of breaching director duties and the fraudulent removal of company assets.
Mr Raad was charged with using his position as a director to dishonestly gain an advantage and removing company property, while Mr Bazouni was charged with being complicit to the fact.
The charges relate to the sale of assets from Mr Raad’s business Cornish Property Services to Mr Bazouni’s newly incorporated company Flow Management for $20,000 on 2 July 2011.
But these assets were then on-sold by Mr Raad for $176,000, with the money used to pay down various debts and obligations for which he was personally liable.
Cornish Property Services was then put into voluntary liquidation, with debts estimated at $1,110,695.93.
The Australian Securities and Investments Commission (ASIC) alleged that Mr Raad subsequently made two withdrawals from the company accounts, totalling $37,654.09, and that Mr Bazouni was complicit in this removal of funds.
After pleading guilty to the charges, Mr Raad was sentenced to a total of 18 months’ jail for the various offences, but was released on a two-year good behaviour bond.
Meanwhile Mr Bazouni, while convicted, escaped penalties and was given a 12-month good behaviour bond.
As a result of the convictions, both men automatically receive the maximum five-year ban on managing companies.
“ASIC is committed to addressing illegal phoenix activity. ASIC is a member of the Australian Taxation Office-led Phoenix Taskforce, which comprises 29 Commonwealth and State governments agencies who are sharing intelligence and information to detect, deter and prosecute directors and facilitators that engage in illegal phoenix activity,” commissioner John Price said.
The regulator urged anyone with concerns or suspicions about phoenix activity occurring to report their concerns to the Phoenix Hotline on 1800 807 875.
Earlier this month, another NSW man was banned for phoenix activity that left creditors out of pocket to the tune of $1.4 million.