Developer Craig Gore has been sentenced to five years in jail for swindling investors in order to float his ill-fated business.
Last month, Gore was handed down a guilty verdict on six counts of fraud after duping investors with self-managed superannuation funds of $345,000, knowing the money was unlikely to be repaid.
Brisbane's District Court was told Gore's offending occurred between December 2013 and May 2014 when he was in managerial control of the companies Arion Group and its financial services arm, Arion Financial.
Investors told the court of having set up self-managed superannuation funds with an entity later taken over by Arion.
Sleipner Financial, a financial services company he was associated with, was bought out by Arion Financial in 2013.
Justice Michael Byrne said the complainant companies had each been created by Sleipner Financial as corporate trustees of self-managed super funds.
Gore personally contacted the directors of the complainant companies and induced them to pay money into debentures offering high-interest returns, up to 8.25 per cent on a 90-day offer, despite knowing the companies involved in receiving the funds were in a perilous financial position.
In April, Gore was arrested and charged with fraud relating to the obtaining of funds from self-managed superannuation fund of investors during 2013 and 2014.
The prosecution, led by Michael Copley QC, argued that Gore had taken advantage of the vulnerability of investors who were simply looking to who put their money to work through his financial advisory business.
Justice Byrne said Gore's complainants had taken a chance with their investments and did so because of the trust Gore had built with them, noting his actions had been dishonest, deliberate and targeted.
“In essence the sales pitch was that [Gore] offered a higher rate of interest to be paid on the debentures than the comps could obtain on their bank interest,” Justice Byrne said.
“In reality, they were unsecured loans.”
Justice Byrne said Gore must have been aware that his projections were falling vastly overshooting the actual within a matter of a few months.
“In that few months, the only significant income emanating from outside the Arion companies was from debentures, which in themselves created a liability to be repaid with interest.
"On the findings I have made, it was in December 2013 [Gore] knew at the time [he] made the representations to the respective director or directors that there was no real prospect of Arion Financial or Arion Property having the capacity to repay the money invested by them or the money invested together with the accrued interest at the end of the respective investment periods.”
Prior to sentencing, Gore lodged an appeal for the earlier guilty verdict.
Judge Byrne ordered the term of Gore's five year jail sentence be suspended after serving two years behind bars.
Gore also faces three charges of acting in the management of three corporations—MOGS, Sleipner Financial and Arion—while disqualified as a director.
The verdict marks a stark fall from grace for the one time BRW Young Rich Lister, who in 2007 commanded an estimated fortune of $190 million.
Gore has established and headed up a development company, financial advisory firm, started a wine company, ran a V8 Supercar racing team and even been part of the US IndyCar racing scene.
The latest court ruling caps off a dogged pursuit of Gore by the Australian Securities and Investments Commission after crashing into bankruptcy in 2012 owing creditors $282 million.
ASIC brought civil charges against Gore in 2013 in Federal Court alleging he was involved in an offshore scheme that misused more than $4 million raised from small investors to buy distressed residential assets in the US.
Justice Richard White handed down his judgement in 2015, finding that Gore, while bankrupt, was responsible for the scheme that channelled funds raised from self-managed super funds to offshore entities in the British Virgin Islands.