Being Set Up

If you want to avoid becoming a victim of Superannuation Fraud and having your hard earned money stolen only to be pocketed by others (including a select few of your fellow Members who are “well connected“), then you need to understand how fraudsters “set up” their victims.

You need to understand the psychology of fraud and how fraud is based on greed and deception.

“The point is, ladies and gentlemen, greed for want of a better word is good”

                Gordon Gekko (Wall Street 1986)

Superannuation Fraud is an example of an “Appeal to Authority” Fraud.

Most Members see Superannuation as a complex subject and so they are willing to “leave it to the experts” and trust what the Authority Figures say.

The use of bogus and fraudulent “Member Benefit Statements” feature in many frauds.

Bogus “Member Benefit Statements” were produced for many years in the Trio Capital Fraud and Bernie Madoff produced bogus “Investment Statements” for many years in the $50 Billion Madoff Ponzi Scheme Fraud.

Therefore understand the tactic.

A group of “experts” will give presentations to Members on how to “Understand their Member Benefit Statements” (The enabling documents of fraud). “Free” assistance is offered by related parties to help Members understand these Statements and to offer recommendations to  “Roll Over” payments in the event of Retrenchment into a High Fee charging Accumulation Fund.

Thus Members are “pre-conditioned” as to how they should act in the event they their positions are declared redundant and they are retrenched. They will be provided with “helpers” to assist them through this difficult period.

{Note: A the 6 minute mark, the presenter from the Fund Administrator stated:”If you were to leave the organisation you would have a leaving service benefit and this would also be paid out in the event of you receiving a redundancy“. However no mention is made that this only applies if a Member has attained the Normal Retirement Age of 65. See how the pre-conditioning works!}

And what do we find on this presentation slide?

A confirmation of the Superannuation Salary Fraud that has been highlighted for the benefit of the victims!

The Superannuation Salary Fraud was widely promoted by international HR Consultants and HR Managers who are not that smart thought: “Well if all these other companies have adopted this strategy to defraud their employees it must be OK, why should I miss out on my bonus, I’ll sign up”.

There is no mention of “Superannuation Salary” in the Governing Rules of the Fund and the “Exclusions List” that empowered the Trustee to make some deductions from what the Employer reports to the Australian Tax Office was deleted in an Amending Deed  executed on 31 March 2006!

So where in the Governing Rules does it say that “packaged items” should be excluded in the determination the final salary Defined Benefit? Motor vehicles that are provided as “tools of trade” are not included as an employee’s remuneration as reported to the Australian Tax Office so they are not included in “Final Salary” but why should vehicles that are part of an Employee’s salary package be excluded? Please show Members the Governing Rule that empowers the Trustee to exclude this amount.

And where does the “Employer and Member Super”@ 18% go? It simply disappears?

Even though it is a criminal offence not to provide Members with details of what happens to their contribution under Section 1017C(2) of the Corporations Act 2001 the Fund Secretary and Member-elected Directors have refused to provide any details of what actually happens to this 18% contribution and in whose pockets it ends up! Theirs?

And what about the “Salary Splitting Fraud“? What about “STIP“?  The Australian Tax Office knows about your “STIP” payments but not the Trustee of your super fund – how convenient?

This is a classic example of the Trustee unlawfully acting under the dictation of the HR Department so the HR managers can justify their bonuses at your expense.

Now the “Upon leaving for any reason” only applies to Members who have attained the Normal Retirement Age of 65. Why is there no mention of Members who leave because they have been retrenched before the Normal Retirement Age of 65?

How many employees are still going to be in the service of the Employer at the age of 70 when their “multiple stops accruing and benefits convert to accumulation“?

But of course there is no mention by these “helpers” of the important legal rights of all Members and Beneficiaries  of Government Regulated Superannuation Funds.

The most important legal right is the right to obtain copies of the Trust Deed and Governing Rules and other prescribed Trust Documents and Information to that any Member can seek his or her own legal and financial advice.

This is what was included in the 1983 Members’ Handbook

The following is a case study of just how “helpful” the “Helpers” become when a Member actually sought to exersize those important legal rights and check his lawful entitlement.

Case Study of Superannuation Fraud – AGCS 2006/10.

A Member was retrenched in late 2006 and in accordance with the Trustee’s Product Disclosure Statement lodged a written request seeking disclosure the Trust Deed and Governing Rules extant on 25 March 1985 when an Offer of Employment was accepted by this Member.

The Member wanted to confirm the promises that had been made to him before he accepted the Offer of Employment and to check that the Governing Rules had been properly amended over the following years.

Member and Beneficiaries of Government Regulated Superannuation Fund are entitled to obtain copies of the Trust Deed and Governing Rules and other prescribed Fund Documents of the Fund under Subsection 1017C(5) of the Corporations Act 2001 and Regulation 7.9.45 of the Corporations Regulations 2001.

The Trustee has one month to provide copies (or allow photocopies to be taken). It is a criminal offence under Item 297B of Schedule 3 of the Corporations Act 2001 for a Responsible Officer of a Trustee to contravene Subsection 1017C(5) of the Corporations Act 2001.

The Fund Secretary ignored repeated requests for copies of the Trust Deed and Governing Rules for over a year. The Member then contacted APRA and asked for APRA to intervene. The Member then received a letter from the Fund Secretary dated 13 May 2008 over a year after the initial request. A copy of this letter follows.

Notice how a criminal contravention of the Corporations Act is merely treated as an “oversight“.

Now most Members would be unaware of the existence of subsection 1017C(5) and Regulation 7.9.45 which allows Members or Beneficiaries to obtain copies of the Trust Deed and Governing Rules so that they can obtain their own legal and financial advice.

Therefore the tactic of the Fund Secretary is to claim that the Trustee has a “policy” of only allowing Members “the opportunity to visit the Trustee’s office in Melbourne during business hours to inspect the Trust Deed“.

The Member again requested copies and this request was again ignored.

It was only after the Member contacted ASIC a year later that the Trustee final provided a copy of a version of the Trust Deed and Governing Rules, however it was not the version requested. Refer to The Matter of the Missing Fund Documents.

After at last receiving at least one version of the Trust Deed and Governing Rules two and a half years after the initial request, on the 10 November 2009 the Member lodged a request for other prescribed Trust Documents that he was entitled to have such as copies of the Audited Accounts of the Fund, the associated Auditor’s Reports and the periodic Actuarial Reports.

The Fund Secretary responded in a letter dated 13 November 2009.