Dec.21, 2009

ASIC, the Australian Securities and Investment Commission has established a precedent by becoming possibly the first regulator to secure a conviction for money laundering.

The former head of Newcastle investment company, Whet Investments Ltd, has been convicted in the Sydney District Court on four charges laid by ASIC.

Gordon, of Redhead, New South Wales, was convicted of the following indictable charges:

one charge of dishonest use of position as a director and improper use of approximately AUD91,000; and three charges of fraudulent concealment or removal of property to the value of approximately AUD285,000.

ASIC alleged that Whet Investments, an unlisted public company, raised approximately $10.8 million through the issue of redeemable preference shares to retail investors.

On 10 July 2005 Whet Investments was placed into voluntary administration by its directors. A Deed of Company Arrangement was executed on 21 October 2005. Mr Gordon was declared bankrupt on 23 January 2007.

In 2005, ASIC took several civil actions against Whet Investments, Mr Gordon and companies associated with him.

The case has been listed for sentencing on 22 January 2010.

Regulators around the world are pushing to establish that they have the power to bring criminal prosecutions for money laundering. But most run in to challenges which, if not actually effective, have certainly delayed the actions.

So far as our colleagues over at www.bankinginsurancesecurities.com can recall, the ASIC action is the first successful money laundering prosecution brought by a regulator in a criminal court.