Victorian bankrupt convicted for disposing of property before bankruptcy

On 6 February 2020, Mr James Brendan Nash was convicted in the Ringwood Local Court after he pleaded guilty to three charges of disposing of property and making a false declaration.

He was sentenced to a 12 month community corrections order, including 120 hours of community service.

Mr Nash became bankrupt in April 2015. In November 2014, he disposed of more than 30,000 shares held in a private company. In January 2015, he disposed of five ordinary shares from a separate company that would have potentially yielded a significant dividend.

In his Statement of Affairs, lodged with the Australian Financial Security Authority (AFSA), Mr Nash failed to declare that he had sold, transferred or given away shares in a private company. He also failed to declare his previous directorship of a company.

Disposing of property within 12 months of going bankrupt and making a false declaration are offences under Commonwealth bankruptcy law. The matter was prosecuted on behalf of AFSA by the Commonwealth Director of Public Prosecutions.

In sentencing, Magistrate Wighton noted that Mr Nash had pleaded guilty and was a low risk of reoffending, but recognised that the serious nature of the charges warranted action.

AFSA Deputy Chief Executive, Gavin McCosker, explained that all efforts to defraud the personal insolvency system are treated seriously.

“AFSA is a firm and fair regulator,” Mr McCosker said.

“We take enforcement action against those who have broken the law to maintain the public’s confidence in the personal insolvency system.

“As I have said previously, AFSA relies on information and intelligence from businesses, practitioners and the community. We encourage people to send us tip-offs if they suspect wrongdoing.

“AFSA takes alleged breaches of bankruptcy law seriously. We investigate, and where we find evidence of wrongdoing, we work with the Commonwealth Director of Public Prosecutions to seek convictions.

“It is important that people entering into bankruptcy are honest with their trustee and provide accurate information about their financial circumstances. Failing to declare the sale or disposal of shares prior to bankruptcy disadvantages genuine creditors. Not only is it unfair, it is also illegal.”

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Charges:

Bankruptcy Act 1966 (Cth)

Mr Nash pleaded guilty to three charges under the Bankruptcy Act 1966 (Cth).

Useful links:

Personal Insolvency Compliance Report

In 2018-19, AFSA received nearly 2,000 referrals of alleged misconduct. We analysed each referral and found that 744 warranted further investigation. We referred 115 of these matters to the Commonwealth Director of Public Prosecutions.

In total, 96 individuals were prosecuted for offences under the Bankruptcy Act. Our prosecutions attracted wide-ranging penalties, from fines to imprisonment.

Pleasingly the number of prosecutions decreased in 2018-19, down from 137 in the previous year. The overall value of proven fraud also dropped, down from $5.5 million in 2017-18 to $4.6 million.