Melbourne law firm Mackay Chapman has filed a class action in the Federal Court on behalf of 24 of Caddick’s out-of-pocket investors alleging that four auditors were negligent,engaged in misleading or deceptive conduct and breached the Corporations Act.
Melissa Caddick and husband Anthony Koletti in April 2020.Supplied
The lawsuit alleges that the auditors engaged to review the annual financial reports for the SMSFs failed to identify fraudulent documents prepared by Caddick and that they failed to confirm that the shares supposedly held in super funds actually existed.
“The auditors all provided audit reports that,in effect,gave the SMSFs a clean bill of health,” said Mackay Chapman in a media release.
Caddick,49,disappeared in November 2020. Hours before her disappearance,her Dover Heights home was raided by the Federal Police acting on behalf of the corporate regulator,ASIC,relating to a $23 million Ponzi scheme running since 2012.
Over those years,Caddick’s friends and family thought that Caddick,who falsely purported to be a licensed financial advisor,was investing their money or superannuation funds in shares.
Each month she created fraudulent CommSec documents that purported to show how well investors’ shares were doing. Instead,Caddick was stealing millions of dollars to maintain an extraordinarily lavish lifestyle.
An arrest warrant was issued for the con woman on February 22,2021. She was facing 38 criminal charges including falsely claiming she had a financial services licence as well as a number of fraud-related offences. However,the charges were dropped when DNA tests revealed that a running shoe with human remains found on a remote South Coast beach the previous day belonged to Caddick.
By law,a SMSF must have an annual audit to check the validity and accuracy of its financial statements and its compliance with superannuation legislation.
One industry body warns that “close relationships between auditors and referral sources can create self-interest,familiarity or intimidation threats.”
Caddick,who was a joint trustee of the super funds as well as being a signatory to the relevant bank accounts,regularly used Khanh Huynh to audit her clients’ SMSFs.
Huynh,an accountant with Campbelltown firm Bladen King,is one of those named in the class action. Last year he was permanently banned by ASIC from being an SMSF auditor. Among the reasons listed for his disqualification was his “close relationship” with a person who was sourcing many of his SMSF clients.
Huynh was also found to have failed to act with honesty and integrity by the Disciplinary Tribunal of Chartered Accountants in July 2022. He is yet to file a defence in the Caddick matter.
TheHerald has previously revealed that at one stage Caddick’s personal accountant was a former bankrupt who’d been jailed in Queensland for embezzling money from a superannuation fund.
Cyril “John” Pearson,79,was sentenced to five years’ jail in 1998 for stealing from a super fund as well as falsifying documents to cover his tracks. He was the first person to be prosecuted by ASIC over misuse of superannuation funds.
Melissa Caddick and her one-time accountant,Cyril ‘John’ Pearson,who is a former bankrupt and was jailed for fraud.Supplied
His company looked after super funds for thousands of hospitality workers. Members lost $2.7 million in contributions,half of which was fraudulently used by Pearson for his own benefit.
Pearson was not involved in the auditing of Caddick’s clients’ super funds.
The class action will return to court in December.
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