Multiple criminal charges laid on three Sterling directors
Three directors connected to the collapse of managed investment scheme Sterling Income Trust have been charged with multiple criminal charges.
The three men appeared in Perth Magistrate Court today (3 November) for the charges.
Raymond Jones, founder of Sterling Group, and Simon Bell have each been charged with 11 charges of aiding and abetting Sterling Corporate Services to engage in dishonest conduct in relation to a financial product or service, in breach of section 1041G of the Corporations Act.
The maximum penalty for that type of offence is 10 years imprisonment and/or a fine of 45,000 penalty units, ASIC said.
Sterling Corporate Services was the investment manager of the managed investment scheme Sterling Income Trust.
Ryan Jones, who is the son of Raymond Jones, has also been charged with 10 charges of aiding and abetting Sterling Corporate Services to engage in dishonest conduct in relation to a financial product or service.
Sterling Income Trust, run by Sterling Group, was sold to investors as a “lease for life” as their long-term tenancy was linked to investment performance. Investors, many of whom were elderly individuals, were told the returns from their initial lump sum would be sufficient to cover the rent on the lease and no other payments would be required towards rent.
When it later collapsed in May 2019, people were unable to pay their rent.
In 2021, ASIC chair, Joe Longo, appeared before the Senate Economics Committee and admitted the regulator had received multiple misconduct complaints about the scheme as far back as 2016 but that these "did not trigger any particular concern" for ASIC.
It first began investigating in March 2017 when it was raised by its Consumer Affairs division.
Longo also stated he believed "unachievable return targets" were behind its collapse.
"What went wrong was the business model was far too ambitious, was looking for returns that were unachievable and the cost of running the business was high, at its height it had 75 employees. That’s the gist of the matter," he told the committee.
“They had a very big rent roll, they bought a lot of properties and the returns they were looking for were ambitious – 10 per cent to 15 per cent.
“If we are in a constrained environment then they are very ambitious forecasts for returns and they weren’t achievable.”
This matter is being prosecuted by the Commonwealth Director of Public Prosecutions.