ASIC revealed in a statement that NSW man Nicholas James Ellis, who had operated in the Lake Macquarie suburb of Valentine, had been ordered to serve three years imprisonment by way of an Intensive Corrections Order.
Under the order, he will serve 12 months’ home detention — which is subject to a suitability assessment — and be required to undertake 700 hours of community service.
According to the companies regulator, Mr Ellis had pleaded guilty in August 2017 at the Downing Centre District Court to two charges: one each of fraudulent misappropriation of client funds and making false or misleading statements to obtain money from clients.
An original sentencing hearing of 26 April 2018 was pushed back several times, before the judgment was ultimately handed down on 11 October 2019.
He was also given a six-year ban from providing financial services in 2013, and as a result of this month’s sentence, will now be automatically disqualified from managing companies for five years.
ASIC said that Mr Ellis admitted to sending 10 letters and one email to clients in relation to raising funds to purchase a hotel in Tura, NSW, through his company Tura Pty Ltd, and as a result had misappropriated $562,000 in client funds received.
Some of these funds, according to ASIC, were used to purchase a house in the beachside Sydney suburb of Manly.
“Mr Ellis was a trusted financial adviser and accountant, who misled his clients and misused their funds for the benefit of his own business,” ASIC commissioner Danielle Press said in response to the sentencing.
ASIC quoted the sitting judge as stating that the information provided to the investor clients “was untrue and caused those investors to act on that information”, and that “had the true picture been disclosed, the investors may have been less forthcoming”.
Ms Press said that both accountants and financial advisers hold a position of trust, and as such, the regulator is willing to take action against those who breach this trusted status.
“As demonstrated in this case, ASIC is prepared to take criminal action where trusted advisers misappropriate clients’ money,” she said.
The matter is due to return to court this Thursday, 17 October, to determine Mr Ellis’ suitability for home detention.