Judge's decision cracks open $1.9m fraud case

by Miklos Bolza14 Aug 2017
The district court judge who handed down an eight year, nine month jail sentence to former broker Michael Samra has described the $1.9m case as “a consistent and persistent demonstration of fraud” through actions that were “premeditated, deliberate and repetitive”.

In the final ruling, Her Honour Judge Geraldine Davison described the circumstances which led to Samra pleading guilty to six counts of deception. 

Samra’s broking business, Adelaide Lending Centre (ALC Group), was formed on 13 July 1999 at which time Samra was co-director and shareholder along with his wife. He became the sole director on 19 May 2009.

On 6 August 2009, ALC Group was placed into voluntary liquidation following a letter of demand. While liquidation was completed on 19 August 2015, Samra himself became bankrupt on 3 March 2010. He was discharged from bankruptcy on 30 October 2013.

“There is ongoing litigation by some creditors to recover moneys lost in their investments with the ALC Group. The total amount of money invested with the group by the investors who are the subject of the charges totals just over $1.9m,” Davison said.

Samra convinced a number of individuals to invest funds which would then be lent to clients in the building industry. These would pay high interest rates (30% for 30 days) for quick access to short-term funds.

Davison gave several examples of how these funds did not make it to either builders or developers and were instead paid to other investors dealing with the firm.

“Contrary to the representations that had been made by you in January 2009, the amount of $150,000 and the amounts of $50,000 and $70,000 were not lent to builders or developers but instead were paid to other investors in the ALC Group,” she said of one case.

An investigation into ALC Group began in September 2009 with Samra participating in the compulsory ASIC examination. He made no admissions, Davison said.

“ASIC investigated the collapse of your group and conducted a reconstruction in relation to the invested deposits through your group for the period from 1 January to 31 July 2009. That reconstruction shows that in that period there were deposits into your bank account totalling over $66m. Investor deposits totalled $58m and there were further miscellaneous deposits of over $7m.”

At the same time, ASIC found that payments from Samra’s bank account totalled over $67m with payments from investors equalling $64m.

In determining the sentencing, Davison took into account the impact these actions had on investors with ALC Group.

“These people have been generally hardworking individuals who have been striving to do their best to provide for their families and their own retirements,” she said.

“Each of them has been significantly financially disadvantaged by your behaviour. Beyond that, of course, they have the devastation and stress that comes from financial difficulties and the effect of having so badly judged the situation as they see it.”

The fact that funds were immediately sent out to various investors meant that Samra was effectively “robbing Peter to pay Paul”, she said.

“You knew that you had this significant financial difficulty that was unlikely to be resolved when you sought and obtained the funds that were used to prop up the business, knowing at the time when you obtained them that there was little, perhaps no prospect that they would be repaid.”

However Davison also acknowledged Samra’s personal circumstances, noting that he had no ability to make reparations for his actions. She also recognised the stress Samra would have been under while trying to keep his business afloat. This eventually led to two suicide attempts, hospitalisation and psychiatric treatment in July 2009.

“However, these factors, whilst they would have impaired your judgment significantly, do not mean that you were unaware of the nature and quality of your actions,” she said.

In deciding the sentence, Davison took into account a range of factors, including Samra’s apology and his previous good character, as well as the amount of money involved, a belated guilty plea, and a lack of any reparations made.

“Sentencing principles require me to consider the whole of your criminal behaviour in determining the appropriate sentence to be imposed, whilst also considering your personal circumstances,” she said.

“In the circumstances, I consider that the appropriate head sentence is eight years and nine months imprisonment.”

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