ASIC obtains orders against fraudulent debt relief company
The Australian Securities and Investments Commission (ASIC) has obtained interim orders and injunctions against Debts Knockout, which provided financial services through Debt Wipeout, for making false or misleading representations.
Debt Wipeout advertised on billboards, shop-a-dockets, websites, social media and in person with claims it could “extinguish” consumer debt for an up-front payment of 15%-25% of the outstanding balance.
However, the company failed to pay any creditors and consumers debts were not extinguished.
The orders were obtained from the Federal Court of Australia, which also included operator of the business, David Murphy; owner of the business name, Anastasios Mavroulis; and Kewa Ruqhiu and Matthew Ruwhiu due to unlicensed financial services.
The alleged contraventions of the Corporations Act 2001 (Cth) and ASIC Act 2001 (Cth) included:
- Carrying on a financial services business without holding an Australian financial services licence (AFSL);
- Engaging in misleading or deceptive conduct while carrying on a financial services business;
- Making false or misleading representations while carrying on a financial services business;
- Engaging in unconscionable conduct while carrying on a financial services business; and
- Engaging in conduct that was liable to mislead the public as to the nature while carrying on a financial services business.
Daniel Crennan, ASIC deputy chair said: “We will continue to address the impact of the COVID-19 pandemic, which includes taking action to protect consumers in financial stress due to potentially unscrupulous conduct.”
On 6 October 2020, Justice Farrell found on the evidence filed by ASIC that there was a prima facie case that the defendants and Debts Knockout had engaged in contraventions of the Corporations Act and ASIC Act.
The Court also found there was a need to protect aggrieved persons and made asset preservation orders against Murphy.
Additional orders requiring the disclosure of information to ASIC against each of the defendants and Debts Knockout were also made.
Recommended for you
Single adviser-led firms continue to expand their footprint in the Australian advice ecosystem, Adviser Ratings research shows, as market conditions prove favourable for boutique practices.
With HNW investors representing the largest market for alternative assets, Praemium and CoreData research underscores why this presents a compelling opportunity for advisers.
Having completed the successful integration of Diverger, Count has upgraded its forecast for expected synergy benefits achieved by the acquisition by a third.
Australia’s largest licensee has seen the biggest number of adviser losses over the past week, while the expected wave of new entrants has boosted overall adviser numbers.
