Thursday 25 October 2007 – Lawfuel – Legal Newswire – Mr Anthony John Scott, of Blackburn, Victoria, pleaded guilty today to two charges following an Australian Securities and Investments Commission (ASIC) investigation into his involvement in Homesafe Equities Pty Ltd (Homesafe). Mr Scott, 67, appeared in Melbourne’s County Court on one count of aiding, abetting, counselling or procuring the offence of carrying on a financial services business without holding an Australian Financial Services Licence (AFSL), and one count of aiding and abetting dishonest conduct in relation to financial products. Mr Scott played an integral role in the establishment and running of Homesafe, a company that issued builders warranty bonds in relation to 792 building projects throughout Victoria between June 2003 and March 2004.
These projects had a potential value in excess of $100,000,000. Homesafe contended that it was the manager of what it called a ‘Captive Pool’ and that the insurance it provided by way of the bonds was fully reinsured. ASIC alleged that, unknown to the builders who obtained the insurance certificates, there was no pool of money set aside in the ‘Captive Pool’ to pay any claims, and that contrary to what was claimed, full reinsurance was not in place in respect of any claims that might have been made. ASIC also alleged that the bonds issued by Homesafe were insurance products that required the company to hold an AFSL. Neither Mr Scott nor Homesafe held such a licence. Mr Scott is scheduled to return to the County Court for sentencing on 19 November 2007.
The Commonwealth Director of Public Prosecutions is prosecuting the matter. Background Homesafe was placed into liquidation on 13 August 2004 following an application by ASIC to the Supreme Court of Victoria that the company was unable to pay any claim made on the bonds it had issued. In November 2006, Mr Scott’s son and the former director of Homesafe, Mr James Alexander Scott, was sentenced on one count of carrying on a financial services business without holding an AFSL and 15 counts of dishonest conduct in relation to financial products. Mr Scott was fined $5,000 and placed on a community-based order requiring him to perform 250 hours of unpaid community work.
Builders warranty bonds protect homeowners against non-completion and building defects for up to seven years in the event that the builder becomes insolvent or dies. Builders cannot obtain building permits without first obtaining a warranty bond. Following the inability of Homesafe to pay any claim made on the bonds, leaving home owners exposed to serious loss, the Victorian Managed Insurance Authority (VMIA) established a scheme to issue indemnities to home owners whose homes are covered by builders warranty bonds issued by Homesafe. To date, the VMIA has paid in excess of $200,000 for claims. Further information on the scheme’s operation can be found at www.hgcf.vmia.vic.gov.au For further information contact: Emma Forehan ASIC Media Unit Telephone: (03) 9280 3354 Mobile: 0409 702 310