FEATURE ARTICLE

USA: Online Gambling Platform Sued by NFL Embezzler 

Amit Patel is suing FanDuel, an online sports betting platform, over allegations they employed predatory strategies to entice him to gamble stolen money at levels ‘that only an addict could ever gamble,’ according to a federal court lawsuit filed in New York. Patel is an ex-employee of the Jacksonville Jaguars NFL team and is currently serving a prison sentence for stealing $22 million from the business, most of which was spent online gambling.

The lawsuit alleges that FanDuel uses player data to identify high value customers and deploys ‘VIP hosts’ to entice them to continue gambling – practices which have been questioned and criticised by US Federal lawmakers. Patel was in frequent personal contact with VIP hosts who offered additional gambling credit, all-expenses paid trips and other gifts as incentives for continued gambling.

FanDuel declined to respond to questions by the Wall Street Journal. Patel is seeking $250 million in damages.

Welcome to the October edition of View from the Hill – our regular newsletter containing information and insights regarding legal and investigative issues concerning fraud, corruption, and professional misconduct.

IN THIS ISSUE:

  • FEATURE ARTICLE
  • IN THE NEWS
    • Domestic
    • International
  • CASES OF INTEREST & LAW REFORM
  • OUT AND ABOUT

Contact for further information:

Andrew Tragardh
Managing Partner & Founder

Tam McLaughlin
Partner

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IN THE NEWS – Domestic

AFCA Determination:

HSBC required to reimburse and compensate scam victim

AFCA has determined that HSBC is required to reimburse scam victim “Mr H,” $47,028.45 of $47,178.54 lost to scammers, who purported to be contacting him from the bank. The findings of liability hinged on whether Mr H made a ‘voluntary disclosure’ to the scammer of the one-time passcodes that allowed the transaction to occur.

AFCA’s panel took the view that as Mr H was under duress and pressured by sophisticated manipulation tactics, he did not voluntarily disclose the passcodes. His actions of disclosure did not have the requisite choice and free will to be considered voluntary actions. AFCA made this decision according to AFCA’s rules, which allow them to have regard to legal principles, applicable industry codes, good industry practice and previous AFCA decisions.

AFCA also awarded Mr H $1000 in compensation, having made the decision that HSBC did not appropriately address the emotional stress and toil of Mr H in his circumstances, and that he was entitled to have clear, efficient and timely communications with the bank. HSBC did not meet the standards of conduct that are set out in the Banking code, and instead engaged an adversarial position. AFCA also awarded Mr H $5000 in legal costs.

Read full determination here

Book-keeper sentenced for stealing $260K from family businesses

Georgia Sellick has been sentenced to 10 months imprisonment and a two year community correction order to follow, after being caught stealing from local businesses as their book keeper. Sellick’s offending was only found out through extensive forensic accounting, and included taking funds meant for supplier payments and employee superannuation and benefits.

Read more here

Former director defrauded gallery of over $34,000 in ticket sales

Ian Dawson, previous director of the South East Centre for Contemporary Art defrauded the gallery of over $34,000, by funnelling proceeds from ticket sales into his personal bank account. He admitted to the wrongdoing and was sentenced to a three-year community corrections order and 200 hours of community service.

Read more here

Police Hacking: $9.3 million in Cryptocurrency Seized

The arrest of Jay Je Yoon Jung has highlighted the increasing use of hacking by the AFP as a method to obtain evidence from electronic devices and online accounts.

Police allege that Jung created the secure messaging app Ghost to facilitate organised criminal activity. The AFP ran a months-long operation to track messages sent on the app, concluding with the ‘resolution phase’ which involved raids on Ghost users leading to 46 arrests. After Jung’s arrest and the seizure of electronic devices, police have revealed they gained access to $9.3 million in cryptocurrency in his accounts. He has been charged with five offences. Read more

Auditors beware: Professional judgement still crucial even with AI assistance

The Chartered Accountants ANZ and the Association of Chartered Certified Accountants have put together a playbook considering auditing technology in the era of artificial intelligence.

Their findings: that while AI is a helpful supplementary tool, its limitations only further emphasise the importance of professional judgement. AI is trained on large data sets and operated through predictive technology, assessing the most probable outcome based on the information it has previously processed. However, AI has no way of verifying the accuracy of the material on which it is trained on and continues to receive, and instead simply assesses the material against that which it has previously trawled through. If the data input becomes outdated, the output is similarly outdated, which experts flag is a dangerous issue as technology evolves rapidly.

Virtical’s $50 million scam of the ATO

Hospitality empire Virtical who collapsed into administration with $91 million in overdue loans, owes at least $50 million to the ATO for false claims of GST refunds. The auditor found that many refunds were based on claimed construction work to renovate pubs and hotels that the conglomerate never ended up buying. The ATO has fined the company $27 million dollars and is still seeking avenues to regain some of the credits falsely paid.

Read the full story here

ASIC investigates Super Retail whistle-blower dispute

Super Retail has been embroiled in controversy since April, when they announced that they expected to be hit with major legal action which would claim bullying and victimisation, and would also expose an affair between chief officials at the company. The whistle-blowers have claimed that this decision for Super Retail to ‘out’ themselves was targeted, and done to further intimidate them for making their reports. ASIC has not yet commented on their investigation, but has asked the board to provide documents and details on the circumstances of the reporting.

Read more here

Former Moonee Valley Mayor involved in bribery uncovered by IBAC

IBAC’s investigation ‘Operation Leo’ has revealed that Cameron Nation, former Mayor of Moonee Valley, accepted cocaine and Xanax as bribes for processing planning applications. Other council members also received free memberships and dinners in return for favouring certain clubs. IBAC highlights that the code of conduct for councillors must be updated to include a ‘clear expectation’ that councillors report suspected corruption.

Read the full story here

Investigation ordered into billion dollar munitions deal

A defence official who was previously at the centre of an investigation ordered by the National Anti-Corruption Commission, is now working at munition company Thales, who won a lucrative contract with defence. The investigation into the leak of confidential company information was carried out internally, and findings were ‘unable to substantiate allegations’ of misconduct, despite contrary reports from other regulating bodies.

Read the full story

IN THE NEWS – Asia Pacific

Singapore: Billionaire Ong Beng Seng charged with abetment and obstruction of justice

Ong Beng Seng, head of a prominent Southeast Asian business conglomerate, has been charged with abetment and obstruction of justice amidst a gifting scandal. Ong allegedly gave high-value gifts to Singapore’s former transport minister Subramaniam Iswaran, who was last month sentenced to a term of imprisonment for obstructing justice and accepting gifts.

Singapore prides itself on strict anti-corruption laws for government officials, with Singaporean Prime Minister Lawrence Wong stressing that ‘standards of integrity … and conduct must be beyond reproach.’ Ong has not yet entered a plea, and has been released on a S$800,000 (approx. AUD$900,000) bail. He faces a term of imprisonment of up to two years and fines.

Read more

Selling shares over social media a breach of the SFA

Singapore’s Securities and Futures Act (SFA) may be construed to outlaw selling shares through social media and messaging. Oon Yun Cong has been given a 16 month jail term and fined $12,105 for inducing others to deal in shares, having been found to make false statements on 10 occasions. These statements included overstating target sale price and claiming to purchase shares where he had not done so.

Read the full story

Fiji: New Anti-Corruption Commissioner arrested on day one of the job

Head of Fiji’s anti-corruption body (FICAC) was arrested on her first day on the job. Barbara Malimali was detained by police on instruction of her own Deputy Commissioner, Francis Peleiwai, who considers her ineligible for the role as Malimali is under investigation for alleged abuse of power in her previous role as the Chair of the Electoral Commission. Puleiwai also cited concern about political interference with the body as a whole, and has since resigned from her role as Deputy Commissioner and fled to Australia.

Read more

Yakuza member arrested for allegations of insurance fraud

Masahiro Nouchi, who is a senior yakuza member, presented at a hospital with a missing pinky finger, claiming he had been involved in an industrial accident. He has now been arrested on suspicion that he intentionally amputated this finger, costing the national health insurance system $45,000. Finger shortening is a ritual in Japan’s underworld where the amputation expresses a sincere apology for a transgression.

Read more

IN THE NEWS – UK

Former Human Rights Lawyer Pleads Guilty to Fraud

Disgraced former human rights lawyer Philip Shiner has pled guilty to three counts of fraud in the UK. After having been struck off the roll of solicitors in England in 2017, Shiner now faces sentencing for false legal aid claims made in 2007 in relation to allegations of torture and abuse by British military personnel. The most serious of these allegations were proven to be fictitious.

Mr Shiner entered guilty pleas and faces sentencing in December. Andy Kelly, head of the British National Crime Agency’s International Corruption Unit, said the conviction was a ‘milestone in what has been a thorough and complex domestic and international investigation.’ Read more

Starling Bank Fined £29m Over Lax Crime Controls

The UK based Starling Bank has been fined for failing to meet regulatory standards to prevent criminal banking activity. Starling, a challenger bank founded in 2014, has had a rapid growth in customer base but the UK Financial Conduct Agency (FCA) said that their measures to tackle financial crime have not kept pace.

Starling’s safeguards against opening accounts for high risk customers and sanctioned individuals were ‘shockingly lax,’ according to an FCA executive director. Starling allowed individuals subject to suspicious activity reports, which alert authorities to money laundering or terrorist financing, to open accounts at the bank.

Starling has apologised for its shortcomings and committed to improving its governance and capabilities to ensure compliance in the future. Since Starling agreed to resolve the issues, the bank was eligible for a 30% discount on the fine, reducing the amount from £41 million to £29 million.

Read more

CASES OF INTEREST & LAW REFORM

Extent of knowledge of fraud and personal liability

O’Brien v Supercheap Security Pty Ltd [2024] NSWSC 1117

This case in NSW related to a sustained fraud against multiple victims who transferred money into the account of Supercheap Security, which was fraudulently represented as an investment opportunity. Mr Medhi, a director of Supercheap Security, argued that he was a third party to the fraud, which was in fact committed by his former friend, Mr Waheed, who does not reside in Australia. The court heard submissions on the individual liability of Mr Medhi.

In personam liability for third parties under Barnes v Addy depends on the type and extent of their knowledge of the fraud. The Court found that while Mr Medhi did not have actual knowledge of the fraud, he was aware of ‘various matters which would have indicated to an honest and reasonable person’ in his position that the account was being used for dishonest purposes. He also had knowledge that satisfied the third or fourth Baden category for knowledge of the fraud – i.e. that he wilfully and recklessly failed to make inquiries, and that he had knowledge of the circumstances that would have indicated to a reasonable person that a fraud was taking place.

The court held that Mr Medhi ‘turned a blind eye’ to the fraud and in some respects ‘knowingly assisted’ in it, and as such was personally liable to the plaintiffs. This case represents an alternative pathway to recovery of funds from banks or overseas bank accounts, where an individual may be personally liable to pay damages. In this case, Mr Medhi indicated to the court that he would declare bankruptcy if an order was made against him.

Read the full case here

Presenting recollections of conversation as evidence

Wild v Meduri [2024] NSWCA 230

Chief Justice Bell of the NSW Court of Appeal has offered some guidance on the question of how recollections of conversations should be presented by witnesses when giving evidence. The case revolved around probate and trust proceedings over the estate of an elderly woman and required that evidence be given by a solicitor and witness to a will who spoke to his recollection of certain conversations.

Counsel for the Respondents argued, per the obiter of White JA in Gan v Xie [2023] NSWCA 163, that the phrase ‘words to the effect of’ followed by a recreation of direct speech gives a false impression of a witness’s true recollection. However, Bell CJ in the NSW Court of Appeal suggested that the prefatory phrase ‘words to the effect of’ is appropriate to signal that a witness is giving their best recollection, rather than ‘purporting to recall the exact words used.’ It may be sufficient for a witness to testify as to the ‘gist’ of a conversation, and this may be the extent of their recollection. Where evidence is controversial or material, it may be further tested in cross examination.

Chief Justice Bell indicated that the practice of using the prefatory phrase ‘words to the effect of’ should continue, as it represents the best way to signal to a Court that a witness is not providing a verbatim recollection, but testifying to the substance of a conversation according to their recollection.

Read the full case here

DUXTON HILL OUT AND ABOUT

On Thursday 24 October, Tam McLaughlin attended the KordaMentha Expert Evidence book launch and panel event on the ever-evolving use of expert evidence in commercial disputes. Discussion involved an in depth look at recent cases and how these judgements are likely to impact future practice.

On 17 October Brendan Facey attended the LGPro Women’s Forum and Network Dinner, where Duxton Hill was proud to sponsor an LGPro Rural Women’s Scholarship. Earlier in the day Brendan attended a Meet the Board Breakfast for a very insightful conversation with the LGPro Board.