11-275AD Fuelbanc promoter and director of investment scheme sentenced
Wednesday 30 November 2011
The former director of an investment scheme which collapsed owing almost $1.5 million has been sentenced to two years imprisonment wholly suspended with a recognisance to be of good behaviour following an ASIC investigation.
Mr Stephen McDougall, 48, of Emerald, Queensland, appeared in the County Court of Victoria and was sentenced today after pleading guilty to seven charges of dishonestly using his position as a director of Fuelbanc Australia Ltd to gain a financial advantage from investors in the Fuelbanc Scheme.
Fuelbanc collapsed in August 2006 owing 510 investors more than $1,499,900.
The charges against Mr McDougall specifically concerned eight investors who became members of the Fuelbanc Scheme towards the end of its operation (post 1 June 2006) and paid a total of $158,730 to join.
The Court heard that the eight individuals did not receive their full entitlements. Instead, their money was used to meet the growing list of member plans at a time when it was obvious that the scheme was no longer viable.
The Court also made compensation orders in favour of the eight investors in the sum of $158,730.
As a result of today’s conviction, Mr McDougall is also automatically disqualified from managing corporations for five years.
ASIC’s action against Mr McDougall is consistent with its focus on ensuring individuals who fail to act responsibly and honestly on behalf of investors are held to account.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
The Fuelbanc petrol scheme operated between January and July 2006. Membership of ‘Ebanc’ was a prerequisite to joining the Fuelbanc scheme. The Ebanc system was based on bartering and facilitates the indirect exchange of goods and services among members. It is through the association with Ebanc that members gained access to the so-called benefits of the Fuelbanc scheme. While cheaper petrol was not offered, the Fuelbanc scheme did offer another way to pay for petrol.
Consumers were offered a chance to turn their barter units, known as trade dollars, into petrol. The scheme offered the member, in exchange for cash and trade dollars, a debit card, or ‘fuel card’, on which a weekly deposit was made. The fuel card provided a mechanism by which the member could pay for petrol (at any petrol station outlet) to the weekly debited amount.
The member could choose the length of the period for which they chose to invest their cash and trade dollars – either 10, 26 or 52 weeks. However, the full amount for the 10, 26 or 52-week period had to be invested on joining the scheme.
In the case of the 26 and 52-week periods, the invested amount comprised of 50 per cent cash and 50 per cent trade dollars.
Following Federal Court action taken by ASIC, a number of companies, including Fuelbanc and the Fuelbanc Scheme were ordered to be wound up on 29 June 2007. The Court also permanently restrained Mr McDougall from carrying on a financial services business, as well as other conditions. Mr McDougall was made a bankrupt in March 2007 (07-175).
Mr George Georges of Ferrier Hodgson is the liquidator of Fuelbanc.