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06-386 Former Adelaide company director jailed

Friday 3 November 2006


Mr Guiseppe Antonio Mercorella, formerly of Rosslyn Park, South Australia, has been jailed for five years following investigations by ASIC.

The District Court in Adelaide sentenced Mr Mercorella, who pleaded guilty to 13 offences under the Corporations Act, to five years imprisonment with a non-parole period of two and a half years.

The first of the charges relate to the unlawful operation of an unregistered managed investment scheme by Mr Mercorella in which he raised approximately $215 million from investors. The scheme resulted in investors being owed a total of $75.8 million.

Further, Mr Mercorella was sentenced on three charges of dishonestly using his position as a director of Entek Energy Limited (Entek) to obtain $1,035,000 for his own advantage.

Nine charges related to the dishonest use of his position as a director of Lion Energy Limited (Lion) to obtain $2,166,000 for his own advantage.

Twenty-four charges relating to Mr Mercorella’s failure to disclose his acquisition or sale of relevant interests in various parcels shares of both Entek and Lion were admitted by Mr Mercorella and taken into account by the Court in imposing sentence.

Ms Jan Redfern, Executive Director of Enforcement at ASIC, said the jailing of Mr Mercorella demonstrated ASIC’s commitment to taking strong enforcement action against those who misused their positions for their own benefit.

‘Those who act dishonestly and cause significant loss to consumers will be pursued with the full force of the law’, Ms Redfern said.

‘People contemplating investment decisions should ensure that they are being advised by licensed advisors and that the investment product is offered in accordance with the law’, Ms Redfern added.

The charges were prosecuted by the Commonwealth Director of Public Prosecutions.

Background

On 19 July 2005, ASIC obtained interim orders in the Federal Court of Australia in Adelaide as part of its investigation into the conduct of Mr Mercorella restraining him from:

On 8 August 2005 ASIC obtained orders with Mr Mercorella’s consent: On 30 September 2005, following an application by ASIC, the Federal Court in Adelaide ordered the winding up of 10 companies associated with Mr Mercorella and appointed Mr Colin Nicol of McGrathNicol+Partners as liquidator after finding that the 10 companies were parties to Mr Mercorella's scheme.

On 2 December 2005 Mr Mercorella appeared in the Adelaide Magistrates Court on 24 charges relating to his failure to disclose his interests in shares of Lion and Entek, companies of which he was a former director, to the Australian Stock Exchange Limited (ASX). These charges will be withdrawn in the Magistrates Court because they were admitted by Mr Mercorella in the District Court and have been taken into account in the imposition of his sentence.

The charges relate to Mr Mercorella’s failure to disclose the acquisition of 124,760,000 and disposal of 287,935,708 shares of Lion and the acquisition and subsequent sale of 4,183,196 shares of Entek between 25 February 2003 and 5 August 2005. The Corporations Act requires both directors and substantial shareholders to disclose changes to relevant interests in shares to the relevant market operator, in this case, the ASX.

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