The liquidator of failed funeral fund Youpla, which targeted Indigenous Australians, is investigating whether its founder, Ron Pattenden, committed a crime by having it pay more than $20m to an insurance company he controlled in Vanuatu.
In a report to creditors, filed with the Australian Securities and Investments Commission (Asic), David Stimpson of SV Partners said his preliminary investigations indicated that various directors of Youpla may have committed crimes including using their position to gain an advantage at the expense of the company and failing to act in good faith.
“I am continuing my investigations regarding the potential offences and will report these offences in a confidential report to Asic,” Stimpson said in the report, released on Friday.
Breach of directors’ duties can be a criminal offence penalised by a fine of up to $200,000 or up to five years in jail.
Youpla, formerly known as Aboriginal Community Benefit Fund, collapsed in March, leaving at least 13,000 people without insurance cover to pay for their funerals. Families have been forced to leave the bodies of loved ones in the morgue because they have been unable to pay for funerals.
A Guardian Australia investigation revealed that Pattenden personally made more than $20m tax-free from Youpla/ACBF between 2010 and 2020, through his ownership of the company and his control of the Vanuatu-based company it used to reinsure its members, Crown Insurance Services.
The liquidator reported that between 2002 and 2020, Pattenden and entities associated with him made more than $40m from Youpla/ACBF.
He said that over this period Crown alone made more than $23.6m in profits from Youpla.
In addition, from 2010 onwards Youpla/ACBF paid more than $19m in “purported dividends” to Pattenden and entities associated with him.
These dividends included $750,000 paid to the Blue Marlin Lodge, a luxury fishing lodge formerly operated by Pattenden in Vanuatu, and almost $11m paid to another of Pattenden’s Vanuatu companies, Just Solutions.
Stimpson told creditors he had requested bank traces to confirm who received the dividends and his investigations into the payments were continuing.
“A number of other payments have insufficient notations in the bank statements and accounting records to confirm the likely recipient,” he said.
The report also reveals the huge profit margin enjoyed by Crown.
It shows that between 2002 and 2020, Youpla/ACBF paid insurance premiums totalling $41.3m to Crown. Over the same period Crown paid back $17.6m in claims, leaving it with almost $26.7m in gross profit – more than half the premiums it received.
Guardian Australia has asked Pattenden for a response to the creditors’ report.
