A former financial adviser who used $5 million in client funds to prop up his own business, pay off his credit cards and gamble has been jailed.
James Gibbs was convicted of theft and dishonesty offences committed when he was director of James Gibbs Investments. At the time, Gibbs was an authorised representative of Madison Financial Group.
ASIC said losses to Gibbs' clients came to a total of approximately $4.88 million.
Gibbs' clients trusted him with the operation of their self-managed superannuation funds. In some cases, Gibbs had almost complete control of clients' affairs - enabling him to conduct unauthorised transactions.
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Gibbs also created and used false documents, including bank documents and member statements in which he lied to his clients about the value of their investment portfolios in an effort to cover up his theft.
ASIC commissioner Danielle Press said: "Clients need to be able to trust their financial advisers, and in this case, Mr Gibbs breached that trust."
She explained that an ASIC investigation revealed Gibbs deliberately withheld information from clients to avoid detection.
"Financial advisers should always allow clients to access information about their own investments, and clients should be concerned if this is not occurring," Press said.
Judge Boylan sentenced Gibbs to 10 years prison and, in delivering the sentence, said Gibbs has repaid the trust of his clients by systematically stealing their life savings and spending their money for his own purposes.
Judge Boylan said Gibbs stole from the''easiest targets... who placed blind faith in him."
Gibbs was called "despicable" and "cruel" by the judge.
ASIC became aware of the allegations as a result of a breach report made by Madison regarding Gibbs.
A victim of Gibbs' crimes, Dallas Stevenson said: "When we realised that it really was true that he'd taken everything... You just can't believe it. You feel like an idiot. You feel like how could this man who invited us to social dos and whose family we met do this? Then we realised it wasn't just us, it was so many other people."
Stevenson and her husband invested about $720,000 with Gibbs as retirement savings. Over $350,000 of this money went unaccounted for.
"He came across as such an honest, kind, lovely person and that made it very difficult to come to terms with what had happened," Stevenson said.
"He did talk a lot and if we tried to ask questions he'd brush things aside and say it was all going well, don't worry about it."
When Madison reported the misconduct to Stevenson, she was told that the only investment in her SMSF was a Macquarie cash account with a balance of $63.66.
A spokesperson for Madison Financial Group said: "As confirmed by ASIC, Mr Gibbs' behaviour was detected and reported by Madison to ASIC, at which time he was immediately suspended, preventing him from continuing to act as a financial adviser."
"Since reporting the behaviour to ASIC, Madison has assisted with remediation efforts, including facilitation of compensation payments from the insurer. Only a small portion of compensation is still to be resolved."