DISGRACED Gold Coast businessman Craig Gore has been labelled the architect of an elaborate scheme that pilfered $1.7 million from private super funds for his own apparent benefit.
Federal Court Judge Richard White has also found that if "left unrestrained", there is a "very real risk" he could do it again.
Justice White has handed down his long-awaited decision just days ahead of Gore being discharged from a three-year bankruptcy on Friday.
The former high flyer, who has been bankrupted twice, has more recently been linked to plans to revive the Port Hinchinbrook Resort in north Queensland.
Justice White has found that Gore, while bankrupt, exerted control over companies associated with his wife Marina and former business partner Graeme Stonehouse to bring the offshore scheme to fruition.
The plan involved the establishment of companies in the British Virgin Islands (BVI) where funds raised from Australian retail investors would be channeled, ostensibly for the purchase of distressed real estate assets in the US.
The funds were raised by two Gold Coast companies ActiveSuper and Royale Capital which were controlled by Jason Burrows and Justin Gibson respectively.
Justice White found that both Burrows and Gibson had engaged in misleading and deceptive behavior while raising the funds from self-managed super funds, whose trustees were cold-called with promises of high returns.
The court found that of the $3.1 million raised from 187 super funds, only $455,000 was used to acquire properties and that much of the remainder of the funds were forwarded through a loan arrangement to property developer MOGS a Gold Coast-based company of which Marina Gore and Stonehouse were directors.
Craig Gore gave evidence that the companies were set up in the BVI with a view to listing a new property investment entity on the NASDAQ. However, Justice White rejected this argument as "not plausible".
"I am satisfied that a purpose of Mr Gore right from the initial conception of the BVI Scheme was the avoidance of the Australian regulatory regime," Justice White says.
"Ms Gore must also have known of this purpose. This finding as to Mr Gore's purpose supports the inference that he had some knowledge of the Australian law which he sought to avoid."
Although Justice White was critical of Marina Gore's involvement, he has found that Stonehouse was not knowingly concerned in the contraventions of the law in the establishment of the funds.
ASIC brought the case against Gore in 2013 with the civil trial heard between October and December of that year. The 155-page decision handed down on Tuesday finds largely in favour of ASIC which had sought to show that Gore was the primary driver of the scheme, despite his bankruptcy and his exclusion from being a director of a corporation.
"The evidence indicates that Mr Gore exercised considerable control and influence over the affairs of MOGS in the latter part of 2011 and the first part of 2012," says Justice White.
"Mr Gore's role was not, as he submitted, merely to 'develop sales with third party advisors to sell MOGS properties'.
"I am satisfied that Mr Gore was the principal promoter of the BVI Scheme. He conceived and promoted the scheme and was the organiser of its implementation.
"It is very apparent that the purpose of the BVI Scheme was to provide a source of funds for the operations of MOGS."
Justice White says there is "overwhelming" evidence that Gore knew the funds were being raised from small self-managed super fund investors.
"It must, as a matter of fact, have been obvious to him that most of the clientele of ActiveSuper and Royale was small investors who did not on any view satisfy the description of 'sophisticated investors'. Mr Gore was desperate to secure the advance of funds from the SMSF investor clients of ActiveSuper and Royale."
Justice White says Gore has been involved in 'serious contraventions' of the Corprotations Act and the ASIC Act.
"The consequences of Mr Gore's conduct are serious as the superannuation savings of a large number of SMSF investors, including those with limited savings, appear to have been wholly lost," he says.
"ASIC has calculated that more than $1.7 million of the investors' savings were paid for the apparent benefit of Mr Gore. Mr Gore's conduct continued over several months and involved the promotion and development of a scheme designed intentionally to avoid the application of Australian law.
"I am satisfied that there is a very real risk that left unrestrained, Mr Gore will engage in like activity in the future, especially as there was no recognition by him of the wrongfulness of his conduct during the course of the trial. The court should do what it can to protect investors from such conduct."
ASIC has yet to respond to the Federal Court decision with a spokesman saying the corporate regulator is digesting the findings by Justice White.
The judge has adjourned until May 8 for submissions on orders and costs.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support