THE Australian Competition and Consumer Commission has secured hefty strike-out bans against a bankrupt businessman who duped elderly retirees of tens of thousands of dollars, marking the first time a court has made such orders under new consumer laws.
Laurence Glynne Hann, 71, of Henty in western Victoria, has been barred by the Federal Court from managing a business for 15 years. He has also been restrained for 15 years from carrying on any business or trying to get people to invest money or work for him in relation to claimed charities or household cleaning products.
Hann, who was bankrupted in December, was penalised $450,000 by the court after the ACCC accused him of misleading and deceptive conduct over the marketing of a scheme involving Heartlink household cleaning products.
The case marks the first time the ACCC has obtained court orders banning a person from managing companies. Such orders have only been possible since the Australian Consumer Law came into effect in late 2010.
ACCC chairman Rod Sims told BusinessDay that while the regulator considered handing Hann's case to police to investigate for possible fraud, the ACCC recognised ''they would say they have got better things to do with their time, and we know, as a regulator, there are not infinite resources''.
The only criminal provisions in the Trade Practices Act relate to cartel behaviour.
Federal Court judge Richard Tracey said Mr Hann engaged in ''egregious'' conduct between 2007 and 2010, when he lured people to invest large sums in a business - a purported charity - that had no hope of generating any profits.
The judge noted that Hann was a repeat offender; most recently, he was found by the Ballarat Magistrates Court in April 2010 to have breached the misleading and deceptive conduct provisions of the Fair Trading Act.
''There can be no doubt that Mr Hann's conduct was deliberate,'' Justice Tracey said. ''He was seeking to induce new investors to commit funds to distribution businesses at the same time that, as he well knew, the large number of existing distributors - despite his undertakings to buy back the businesses - were never going to recover their investments.
''The fact that they had been cynically exploited did not deter Mr Hann from continuing his attempts to attract further investors, who, I readily infer, would have been destined to lose their money.''
Hann did not oppose the ACCC's moves against him and did not appear in court when the case went to trial in March.
Justice Tracey found Hann breached sections 52 and 59 of the Trade Practices Act, which relate to misleading and deceptive conduct. Hann potentially faced penalties of as much as $1.98 million, but the judge said that sum would only be levied against the worst offenders.
''He well knew what he was doing was wrong but still he persisted,'' the judge said.
Justice Tracey also noted that one of the companies controlled by Hann, Halkalia Pty Ltd, had received $1.1 million in its bank accounts between June 2006 and June 2010, all in transactions of more than $5000.
This was part of $3.5 million deposited in accounts linked to the Heartlink business in the same period, again all involving deposits of more than $5000.
''Mr Hann has never accounted for these funds,'' the judge said. ''He controlled the various accounts in which they were held and, I infer, they were distributed at his direction.''
Halkalia was also penalised $450,000, and three associated companies have been restrained for 15 years from making certain representations.