| | | Effective PR

Australia: Fraud charges dropped after witnesses become "unavailable."

Nigel Morris-Cotterill

In a criminal prosecution brought by the Australian Securities and Investment Commission, ASIC, the financial regulator, two out of five criminal charges brought against an alleged fraudster were dropped because the witnesses in those cases became "unavailable." The charges related to conducting an unauthorised financial services business and to soliciting moneys which were used improperly.

Nevertheless, the accused has pleaded guilty to the remaining three charges at the door of the court before his trial commenced yesterday.

It's a long and convoluted story across years and jurisdictions as well as various enforcement agencies.

On 17th March 2017, the Commonwealth Director of Public Prosecutions, with the assistance of ASIC and Queensland Police began criminal charges against Dr Munro and he was arrested and charged not under Federal law but under the Queensland Criminal Code. Each of the five charges laid carries a maximum sentence of 12 years in jail.

He was bailed and the bail conditions included that he surrendered his passport, that he was to have no contact with certain prosecution witnesses and that he not leave Australia nor approach any point of international departure.

That, one might imagine would be pretty much it: Munro had consented to relevant orders and a delay in a criminal trial would prolong a horrible experience.

But no: Munro held out with a not guilty plea to three charges and two more were dropped.

In the 2016 trial which, you will remember, the Munros defended until the second day of the trial, there was a clear indication of what the Criminal court would hear.

During the trial of the proceeding, three investors gave evidence that:

- Dr Munro approached the investors about investing in a trading group, which he subsequently called “Tradestation Futures”.
- the investors paid money to Dr Munro as investments in Tradestation.
- some investors signed an agreement with Dr Munro relating to their investment in Tradestation.
- the investors received quarterly returns from Dr Munro for a period.
- each investor received a number of quarterly reports from Dr Munro about their investments, and
- each investor is still owed significant sums by Dr Munro, including one investor who is owed AUD500,000.

The Supreme Court did not accept Dr Munro's assertion in defending the matter that the funds were advanced by the investors as unsecured personal loans to TradeStation or Tradestation futures. The Court found that the arrangement between the investors and Dr Munro was one by which Dr Munro was seeking to trade on behalf of investors using pooled funds.

On the last page of this article, we list, courtesy of ASIC, the dates on which the Criminal case has been before the Court.

On 7 July 2021, the Court ordered that the Trial commence on 19th July 2021.

Munro and his wife were subject to costs orders in the civil case. There is little doubt that those costs were dramatically increased by the lack of co-operation by the Munros.

It is remarkable, then, that Munro would follow the same course of action and to change his plea at the door of the court, rather than months, perhaps even years, earlier because while he will save the costs of a trial set for three weeks, he will bear the full costs of preparation for it. The hearing is often the cheap bit, depending on how much the parties spend on advocates. In this case, relatively open and shut, juniors would be sufficient.

Regulators rarely use juniors but state prosecutors often do.

On the other side of the same coin, it seems that ASIC and the DPP should have known earlier that there were only three witnesses and that two cases were unsustainable. In relation to costs, Munro would have a valid argument that such costs as can be allocated or imputed to the two dropped charges should not be for him to pay and, indeed, that he should get a costs order in relation to his defence thereof after the situation became clear or the Court says it should have become clear.

On the substantive matter, ASIC says "Dr Munro received funds from investors for a trading fund which he referred to as the TradeStation Futures Trading Fund (TradeStation). Dr Munro did not invest these funds into TradeStation as promised. Instead, Dr Munro dishonestly applied those funds to his own use or the use of another. Investors were not aware that their money was being used by Dr Munro is this way and Dr Munro continued to make representations to investors that their money was being invested in TradeStation by falsely reporting on the profits and losses being made by TradeStation.

"The charge of aggravated fraud contrary to s408C(2) of the Queensland Criminal Code carries a maximum penalty of twelve years imprisonment."

Dr Munro will be sentenced on 30 July 2021. He was released on bail and is required to report to police daily. His passport remains surrendered to the Court.

Like this content?

---------------- Advertising ----------------