Legal

Melbourne lawyer jailed for 12 years over “calculated and complex” Ponzi scheme

Kirsten Robb /

Well-known Melbourne musician Joe Camilleri was among those stung by the Ponzi scheme

A trusted Melbourne lawyer who swindled clients out of more than $12 million yesterday received a 12-year jail sentence for his crimes.

The Supreme Court of Victoria heard Philip Linacre operated a 12-year-long Ponzi scheme, a fraudulent investment where returns are paid to investors are paid by new investors, rather than from profit earned from the investment itself.

Linacre told clients, including his own family and friends, their investments would be given to a third party as a mortgage loan, promising them between returns of 12% and 24% on the investments. He was instead using their money to pay out the interest on other clients’ investments.

Linacre, who said he started the scheme because of his own bad financial position, operated the arrangement from 2000 until 2012, when he turned himself in to police. He pleaded guilty to 21 counts of dishonesty and five counts of having a deficiency in a trust account.

Chief Justice Warren called Linacre’s actions “calculated and complex” and said many of the victims were already in difficult financial circumstances when Linacre convinced them to invest.

“You have committed a number of serious offences in the trusted position of a lawyer,” said Warren in her ruling.

“Importantly, these victims came to you in their time of need. Many sought information about investing their life savings, superannuation or inheritance. They placed complete trust in you. You did not only steal money from your victims, you robbed them of their future.”

Warren also found many of Linacre’s victims suffered ill health because of his criminality.

Linacre will serve a minimum of eight years’ jail.

Brett Warfield chief executive of forensic accounting firm Warfield & Associates, told SmartCompany Ponzi schemes have been around for a long time and there were two major red flags for investors to watch out for.

“The first, and most glaring, is the rate of return you are promised,” says Warfield.

“As soon as you are promised above the market rate, so in this instance the mortgage lending rate, when you get someone offering double, triple or four times that, straight away that should be a sign.”

Warfield says the greater the return on investment, the greater the risk for investors.

“The other thing with Ponzi schemes is asking questions about the actual investment,” he says. “Asking what type of information will be provided about my investments?”

Warfield says investors should expect detailed reports and correspondences on their investment, such as what one might expect from superannuation funds. He says although some people may feel uncomfortable asking for this information, investors have to be proactive to protect themselves.

“You have to be in charge of your money,” he says. “The good thing is vulnerable people who would have invested may see and may think twice.”

 

Advertisement
Kirsten Robb

Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.

We Recommend

FROM AROUND THE WEB