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A former director of the collapsed Berndale Capital Securities has pleaded guilty to charges of dishonesty as part of a broader action against the company, which alleged its two directors misused more than $1 million in company funds.
While former director Daniel Kirby this week pleaded guilty to three charges before the Melbourne Magistrates’ Court, his partner in the business, former director Stavro D’Amore, has pleaded not guilty to all charges.
D’Amore was this week committed to stand trial in the Federal Court of Australia on a date to be fixed, while Kirby is due to face sentencing on a date to be fixed.
Kirby has pleaded guilty to one count of dishonest conduct in relation to a financial service, one count of dishonest use of his position as a director, and one count of providing false or misleading information to an auditor.
Kirby and D’Amore were previously directors of collapsed retail over-the-counter (OTC) derivatives provider Berndale Capital Securities which was investigated by the Australian Securities and Investments Commission (ASIC) in 2018 over concerns that the company was not meeting its obligations as an Australian Financial Services licensee.
ASIC subsequently alleged that D’Amore and Kirby each unlawfully transferred Berndale company funds to benefit themselves and other associates and entities.
D'Amore is alleged to have used some Berndale company money to fund deposits for residential property purchases.
The former directors were also alleged to have made a false statement or submitted false or misleading documents to ASIC and an auditor of Berndale about overseas bank accounts containing Berndale funds.
Kirby was also alleged to have fabricated evidence related to Berndale funds in overseas bank accounts in Federal Court proceedings.
Kirby entered the guilty plea to charges against him on the first day of a four-day committal hearing earlier this week.
In the aftermath of its investigation, ASIC cancelled Berndale’s financial services licence on 22 November 2018 due to multiple concerns including failure to comply with various reporting obligations, failure to comply with statutory notices and that its representative was not adequately trained or competent to provide financial services.
ASIC had alleged that prior to, and immediately following this licence cancellation, Kirby illegally transferred Berndale company funds to benefit himself and other associates and entities. Several of these transfers were said to have occurred just hours after Berndale’s licence had been cancelled.
Kirby is also said to have submitted false or misleading documents to Berndale’s auditor about the amount of funds available in overseas Berndale bank accounts.
Berndale’s Australian financial services licence required it to maintain a minimum level of net tangible assets of at least $1 million or 10 per cent of its average revenue, whichever is the greater, and to lodge audited financial reports.
ASIC says the relevant overseas funds and accounts either did not exist or were “grossly inaccurate”.
Kirby has been committed to the Federal Court of Australia for sentence, with his next appearance scheduled for 30 September 2024.
Berndale was ordered to be wound up in October 2019, almost a year after ASIC cancelled its financial services licence. At the same time as cancelling Berndale’s licence, ASIC also banned D’Amore in 2018 from providing financial services for a period of six years.
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