NSW director disqualified over $7m SMSF scam

The Federal Court has permanently disqualified former director Larry Dawson from managing corporations after finding he defrauded investors on their self-managed superannuation funds (SMSF) investments.

Dawson was pulled out for his role as a sole director of PW Kitt, which is now deregistered, between 2019 and 2020. The Federal Court found Dawson contravened his duties by allowing the company to be used in a scheme that defrauded Australian investors of approximately $7 million in superannuation funds.

PW Kitt operated fake websites impersonating real, licensed financial firms to trick consumers under smsfadvisory.com and pwkittco.com.

At the direction of the fraudsters, Dawson transferred the funds predominately to Bitcoin exchanges and to companies based in Indonesia. He retained some funds that he used for personal purposes, including the purchase of a car.

The investors were predominately individuals planning for or in retirement who believed that their funds would be used for the purpose of investing as part of establishing or augmenting their SMSFs. For instance, one investor was falsely led to believe his transfer of more than $200,000 was to be invested in an international share portfolio.

ASIC submitted that an order permanently disqualifying Dawson from managing corporations was required for the future protection of the public and as a matter of general deterrence.

ASIC said it acted on concerns that Dawson set up company bank accounts and facilitating transfers to cryptocurrency accounts that allowed dissipation of investor funds, failing to have any oversight of the activities undertaken by the company and personally benefiting to some extent.

Justice McElwaine found that overseas-based fraudsters could not have inflicted harm on investors without Dawson breaching his duties.

"Dawson actively participated in a scheme to mislead members of the public to invest hard earned capital into a fraudulent scheme," Justice McElwaine said.

"It is obvious that the public requires protection from further conduct of a like nature by Dawson, but also from other persons who may be tempted to participate in schemes to defraud persons of money; more so in this case of unsophisticated investors who were doubtless attracted by the very high rates of return offered by the scam."

Justice McElwaine added the need to send a very clear message to others that deliberate dishonest conduct in utter disregard of a director's duties and responsibilities warrants a very significant period of disqualification.