The founders of collapsed investment company Chartwell Enterprises, Graeme Hoy and Ian Rau, are now facing 243 criminal charges between them with the failed company owing $60 million to investors.
Hoy, the Geelong-based company’s founding director, is facing 220 criminal charges, several of which refer to him allegedly stealing $26 million from investors to whom he promised returns of up to 70%.
About 180 of the charges, which include obtaining a financial advantage by deception and practicing financial services without a license, hold a maximum penalty of 10 years’ jail for each offense.
Rau, who was arrested yesterday, was charged on 19 counts, including carrying on a financial services business without a license, engaging in dishonest conduct, using false documents and obtaining property by deception and dishonest use of his corporate position.
The company, which accepted over $70 million from clients, promised returns of up to 70%, but investigations by the company’s liquidator found Chartwell engaged in a Ponzi scheme – it used money from new clients to pay earlier investors.
The company’s administrators also said last year it was investigating claims the missing funds were used by the two men to fund lavish lifestyles.
Alleged expenditures include the renovation of a $2 million mansion. Other payments allegedly went towards a $6 million yacht, a $900,000 Rolls-Royce and a $25,000 per month advisor, who assisted in deciding which stocks in which to invest.
The liquidator, Bruno Seccatore from Cor Cordis, handed the results of his own investigation to the Australian Securities and Investment Commission, in which he made recommendations regarding criminal action.
The two men are scheduled to appear at the Geelong Magistrates Court on 11 September. The criminal action will be prosecuted by the Commonwealth Director of Public Prosecutions.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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