A financial adviser, whose clients followed him when he left a large institutional investment firm to set up in his own business, has admitted a $5 million fraud.
Evan Paul Cherry was a director of the Albany-based Investment Solutions companies, which received about $9 million from an estimated 175 investors.
The 53-year-old pleaded guilty in the North Shore District Court today to four charges laid under the Crimes Act by the Serious Fraud Office.
The charges relate to the misapplication of investor funds and false statements in investor reports while Cherry was the director of Investment Solutions, ISL Nominees, Trading Strategies, ISL Strategic Investments and ISL Strategic Investments 100 Limited.
Between January 2001 and February 2007 when the majority of offending occurred, approximately $5 million of funds was invested contrary to investment instructions.
Most of the investors affected had transferred to investments offered by Cherry’s personal advisory business from those of a large institutional investment company when he quit that firm, the SFO says.
SFO chief executive Adam Feeley says the case illustrates the importance of looking beyond personal connections and carefully assessing the risk of investments.
“The high level of trust associated with personal relationships reduces any questioning by the investor when presented with a change in the underlying nature of the investment. It can be a dangerous arrangement that clouds judgement”, Mr Feeley says.
The SFO started investigating Cherry in June 2011.
Cherry was remanded in custody until sentencing on December 11.