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A former property developer who spent investors' withdrawn superannuation funds on a house, cars, jewellery and travel has been sentenced to eight years’ imprisonment, with a current ban from managing corporations to be extended for five years after his jail time is served.
Michael David Steele, who was an officer of Eastco Developments and EA Invest which were placed in external administration in 2018 owing investors more than $4.5 million, pleaded guilty to four rolled-up counts of fraud in April this year.
Steele admitted to having misappropriated more than $1.3 million of investor funds from companies he controlled between May 2016 and February 2017 - funds which were intended for a commercial and residential property development at Biggera Waters on the Gold Coast.
Steele was responsible for raising finance to enable EA Invest and Marketing Machine International to complete the development, persuading 14 investors to withdraw more than $1.3 million from their superannuation and other savings to lend to the companies.
Instead of using the funds for the development, Steele used the funds to purchase a house in his wife’s name, paid his son’s university fees, bought cars, jewellery and spent money on international travel, entertainment, and online gambling. None of the investment monies were repaid to the investors.
"The sentence imposed by the Court demonstrates the seriousness of Mr Steele’s misconduct," says Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court.
"When individuals misappropriate funds for personal gain, they not only harm their investors but also undermine the integrity of the financial system, diminishing public trust in investment opportunities."
The case against Steele was prosecuted by the Office of the Director of Public Prosecutions following a referral from ASIC, whose investigation relied on supplementary reports lodged by the liquidators of Eastco and EA Invest, namely David Hambleton of Rodgers Reidy and Glenn O’Kearney of GT Advisory and Consulting.
In October 2020 the commission disqualified Steele from managing corporations for the maximum period of five years; a ban that is automatically extended as a result of his conviction.
In proceedings yesterday before the Southport District Court, Steele was sentenced to eight years for one count of fraud and four years for the remaining three counts of fraud, with the sentences to be served concurrently.
He will be eligible for parole after having served a period of 20 months’ imprisonment.
"At all times, you were the controlling mind of the scheme," said Judge Prskalo KC when handing down the sentence, adding that "investors generally expressed their trust in you and as a result did not seek legal advice".
"The gravamen of your offending is of course the use of money dishonestly for personal expenses when that money had been given to you to invest in a development project," the judge said.
"No sentence I impose can undo the harm caused to investors who have lost their money."
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