The Paperwork that Protects You

Statements are sent to you by investment funds, by companies you hold shares in, by your superannuation fund for your protection. Always get the originals sent to you personally. If you cannot look after your own affairs, get them sent to a person you trust (but not your adviser), so there is always a pair of independent eyes looking after you. Love your paperwork!

The importance of this is illustrated by the case of a financial planner and tax agent based in Newcastle. Stuart Forsythe is his name and ASIC's investigation gathered the evidence that had him sent to gaol for six years.

The people who went to see Mr Forsythe were elderly people with superannuation money and savings, and they wanted him to help them choose appropriate investments to see them through their retirement. The first part of the process went well enough when Forsythe put their money into solid funds with a reasonable track record.

Then he made these people what sounded like a really sensible and attractive offer. He arranged for the funds to send all clients statements direct to him at his office. He told them that when he does their tax, he would have all the paperwork handy and that it would easier than them searching around at home to find them. Needless to say, some his clients agreed to this, because it seemed such a good idea.

But here's the trick. Because Forsthye received the clients' statements, he was now in a position to make withdrawals from their investment accounts without their knowledge. He then forged the clients' signatures on withdrawal requests from their various investment accounts and helped himself to their money. They had no idea what he was up to.

Forsythe eventually came unstuck but his victims are still trying to sort out the mess.

As you can see this was a really simple fraud that could easily have been prevented.

All the clients had to do was say no. They should have received the original statements themselves to check what was happening with their money. If they wanted Forsythe to do their tax, they could have sent him the copies whenever they got a statement.

© Australian Securities & Investments Commission. Reproduced with permission.