Enabling the Fraud

The document that is used to enable Superannuation Fraud is the fraudulent “Member’s Benefit Statement“. This document with no legal substance is provided to Members on a an annual basis so that Members are preconditioned to expect a certain benefit payment, even though their lawful entitlement in accordance with the Governing Rules of the Fund is a much higher amount.

Fraudulent Member Benefit Statements were produced for several years in the Trio Capital Fraud for example.

Fraudulent Trustees rely on the fact the most Members never undertake the simple step of requesting a copy of the Trust Deed and Rules of their own fund.

In the few cases where a Member might request a copy, the Trustee ignores the request, even though it is a criminal offence to do so. The Trustees know that the Regulators, APRA and ASIC, will just turn a blind eye to serious criminal contraventions of the Superannuation Law.

Members of any Government Regulated Superannuation Fund should always treat their “Member Benefit Statement” as a fraudulent document, until such time as they satisfy themselves that it is not by obtaining a copy of the Trust Deed and Governing Rules of their Fund and preparing reconciliation statements against the amounts of remuneration reported to the Australian Tax Office and contributions, they or their Employer, have made into the Fund over their period of Membership.

If the Trustee makes deductions for certain components of remuneration when determining a final salary Defined Benefit, then there must be an “Exclusions List” contained within the Governing Rules to empower the Trustee to make such deductions. For example if the Trustee excludes “overtime payments“, then there should be an “Exclusions List” that Empowers the Trustee to do so.

The Trustee is required to act at times in your best interests, whilst acting strictly in accordance with the Trust Deed and Governing Rules of the Fund.

The Trustee cannot “act under the dictation” of the Employer’s HR Department, although many do.

The Incumbent Trustee is required to administer the Trust strictly in accordance with the Trust Instrument – the Trust Deed and Rules. If the Trustee engages an agent  to act as the Fund Administrator then that agent must also act strictly in accordance with the Trust Instrument. The agent will be liable for a claim of negligence if the agent makes no attempt to acquaint itself with the Trust Instrument or fails to put in place proper procedures and processes to ensure benefit payments are processed and paid in accordance with the Trust Instrument. If the agent then assists the Trustee with a fraudulent design on the part of the Trustee with “knowledge” of the Breach of Trust, then the agent will also become liable as a “dishonest assistant” to the Breach of Trust under the second limb of Barnes v Addy.

This strict duty was described in the High Court of Australia as the duty “to adhere to the terms of the trust in all things great and small, important, and seemingly unimportant” {Youyang Pty Ltd v Minter Ellision Morris and Fletcher [2003] HCA 15; (2003) 212 CLR at 498, quoting Augustine Birrell QC in The Duties and Liabilities of Trustees, 1896, p22}.

Who can argue with the High Court of Australia!

The Trustee also has a positive duty to inform each Beneficiary of the Beneficiary’s rights under the trust instrument {Hawkesley v May [1956 1 Q.B. 304}.

Furthermore the Trustee is required to account to the Members and Beneficiaries for the Trustee’s stewardship of the trust.

That is why Members and Beneficiaries are entitled to copies of prescribed Fund Documents such as the Trust Deed and Rules and why it is a criminal offence if Officers of the Trustee refuse to provide these Fund documents upon a written request.

The mechanics of the Fraud is to substitute a fraudulent Member’s Benefit Statement for the lawful entitlement as defined in the Trust Deed and Rules and then to block access to the legal document that determines the proper legal benefit.

The Fund Administrator produces the “Member’s Benefit Statement”. Fraudulent Member Benefit Statements were produced for several years in the recent Trio Capital Superannuation Fraud case.

This is easy since very few Members ever request a copy of the legal basis of their benefit.

The Member perceives the Trustee and the Fund Administrators as “Authority” figures and just assumes that the “Member’s Benefit Statement” presented to them must be correct and ask no further questions. When they receive the payment cheque this matches the fraudulent Member’s Benefit Statement so everything looks OK.

 

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