A Queensland director of five failed property and development companies has been disqualified.
Gene Robert Farrelly was accused of phoenixing activity across several companies, falsifying financial information and paying fictitious employees.
Companies related to Farrelly owed a combined total of $20,105,830 to unsecured creditors upon liquidation, according to the Australian Securities and Investments Commission.
This included about $58,741 owed to the Australian Taxation Office, it said.
Farrelly was the director of prominent south-east Queensland property development company United Project Partners Pty Ltd.
Following its liquidation in 2017, Farrelly and other directors and employees of UPP faced Brisbane Federal Court in 2020 over accusations that the company had inflated quotes to secure bank funding.
ASIC says that Farrelly subsequently transferred UPP’s business to a related entity known as Summit QLD Pty Ltd, authorising UPP to pay staff wages and support Summit when it was in financial difficulty.
This amounted to phoenix activity, said ASIC, over which there has been renewed focus this year, with suggestions it could cost billions annually.
In addition to Farrelly’s alleged business phoenixing activities, several other companies at which he was a director were named by ASIC where it was claimed he had failed to meet his obligations as a director.
Unidev Qld Pty Ltd and One Thought Pty Ltd, both thought to be involved in the southeast Queensland property development industry, while United Property Sales Pty Ltd was a real estate business.
Farrelly is said to have operated both UPP and another company, Secure Holdings Qld Pty, under a scheme that used self-managed superannuation funds for the benefit of investors in contradiction of self-managed superannuation fund regulations.
The Queensland director was also believed to have deceived Westpac into making loans to investors using “misleading” financial information, and misused funds belonging to UPP to make payments to fictitious employees and family members, resulting in “substantial” loans being made to himself.
Farrelly has been disqualified from managing corporations for five years, a ban that is valid until May 15, 2028, but he has the right to seek a review of ASIC’s decision by the Administrative Appeals Tribunal.
ASIC is a member of the ATO-led Phoenix Taskforce, a multi-level organisation designed to combat illegal phoenix activity, and “identify, disrupt and prosecute” those who engage in or facilitate illegal phoenix activity.
As a result of this anti-phoenix push, from the start of this year all directors of Australian companies were required to register for a Director Identification Number (DIN) or face penalties of up to $1 million.
