A former financial adviser has been jailed for 13 years for stealing more than $4 million from her clients.
Tina McPhee, an adviser-turned-entrepreneur from Adelaide, was sentenced in a South Australian court this week, after previously pleading guilty to 181 separate counts of theft. There were six victims named in the case, all clients of Ms McPhee who, in her capacity as a financial adviser licensed by AMP, acted as their trustee.
The first client, Melanie McGuire, suffered a serious brain injury whilst a patient at the Whyalla Hospital, leaving her permanently incapacitated. She was awarded a settlement of $1.1 million for her injury and incapacity in late 2005, and in February 2006, appointed Ms McPhee as her trustee.
Another client, Kevin Trahar, appointed Ms McPhee as his trustee after he was seriously injured in a car accident in August 2009. Mr Trahar received $1,941,235 compensation for his injury and incapacity.
The remaining four victims were children, whose mother died in a car accident. Ms McPhee acted as trustee for the children, who received nearly $500,000 in compensation for the accident.
It is difficult to conceive of a worse or more serious breach of trust
Between 14 August 2006 and 16 October 2012, Ms McPhee was found to have committed a range of continuous offences with the intention of depriving these clients of the settlements entrusted to her. Instead of fulfilling her duties as trustee and distributing the money as requested and required, a forensic accounting report showed Ms McPhee spent just 5% of the $4,358,263 she was entrusted with on the victims or their family members.
A court psychologist’s report, along with filed evidence and the forensic accounting report, all of which were submitted as evidence during the hearing, showed that Ms McPhee in fact went on numerous shopping sprees, and took holidays to Italy, Europe and America. It was the last of these trips that Ms McPhee became interested in a New York-based juice franchise, opening her own Juice Revolution business in South Australia in 2012.
A spokesperson for AMP confirmed that Ms McPhee ceased working for the license in 2009. Ms McPhee told the court psychologist that she left the company because she did not enjoy being with AMP.
AMP has expressed sympathy for the victims of Ms McPhee. “It is a very unfortunate situation and we really feel for the people involved,” a spokesperson told riskinfo. “Our priority is to work with the people impacted. We’ve been communicating with those involved and we’re confident that we’ll reach a suitable resolution soon.”
Handing down his sentence, Judge Stretton described Ms McPhee’s actions as appalling, premeditated, calculated and prolonged.
“That you would spend six years stealing their money, spending it, by and large, extravagantly on yourself, whilst they suffered and went without, and that they are now left with the prospect of living their lives without the money that was there to help them with their injuries and difficulties, is simply outrageous. It is difficult to conceive of a worse or more serious breach of trust than you’ve committed,” Judge Stretton said.
The victims and the community expect that the law will do all it can to deter this kind of outrageously dishonest and amoral conduct
“Your breaches of trust in the particular circumstances of this case were extreme. The victims and the community expect that the law will do all it can to deter this kind of outrageously dishonest and amoral conduct, particularly where the victims are injured and defenceless people left without resources as a result.”
During the hearing, Ms McPhee read out an apology to the victims. The Judge said that it was hard to accept the sincerity of the comments, because the offending was “…so callous, so persistent and so relentless over such an extended period in relation to six helpless and trusting victims”.
The Judge also noted that AMP has, to date, provided none of the victims with compensation for the actions of Ms McPhee. However, both AMP and the solicitors who appointed Ms McPhee as trustee, are currently being sued by each of the victims, in three separate Supreme Court civil actions.
“I can only assume that the formal commencement of proceedings means that the likely pre-action attempts by the plaintiffs to be compensated by the financial licence holder and the solicitors have proved unsuccessful,” Judge Stretton said.
Ms McPhee will serve a minimum of 10 years without parole.
I wonder if ASIC will go after amp and make their CEO of financial planning stand aside like they do for independent groups who have bad advisers! Bring on the investigation of all the big boys!!
Will be interesting to see that outcome of this. As an AMP accredited adviser, I can tell you that our licence agreement specifically prohibits acting as a trustee for a client. Wondering which rule stops people acting criminally????
Big dealer groups such as AMP, CBA Financial Planning etc, really need to ensure that they compensate clients who have entrusted their life savings to an adviser, primarily because the adviser has the AMP or CBA brand on their business card. At the end of the day, its all about trust. These companies can’t hide behind their large legal teams and the fine print of the law and launch appeal after appeal to wear down the hapless victims. Where was the compliance department during the many years that these gross irregularities were going on?Why did’nt this come up at the annual compliance audits/reviews? Will any one from these departments be disciplined or sacked?
Interesting that you think only “Big dealer groups” have a responsibility in this regard. Surely, all dealer groups – regardless of size – would have this obligation. Or do you mean that “big” dealer groups have deep pockets and can therefore afford to pay compensation?
As pointed out in another comment, this is strictly against AMPFP’s terms and conditions as well as being illegal. Regardless of the size of the dealer group, fraud and criminality happens in every industry and the more trust you place in someone, the greater their ability to breach that trust. Without trying to minimise the horrendous results of this persons actions, this was 6 client files from one of 1,000’s of AMPFP advisers. Speak to anyone who works in the audit field and they will tell you that – short of checking every single file of every single adviser, there are no guarantees.
This seems to be an argument for clients only dealing with “big” dealer groups – if something does go wrong, they are better placed to pay compensate the victims.
Steve, many people deal with big dealer groups because they assume this sort of thing won’t happen. You can’t have it both ways.
If the adviser is in fact a free agent, it is misleading for them to be allowed to trade as a rep of AMP.
Only $4million, I bet the management of CFPL have cost CBA customers much more than that in relation to far more clients. Will there be custodial sentences?
Laying blame on the licensee is totally unjustified. In fact, I would argue that the victims of McPhee’s fraudulent activities are more likely to receive appropriate compensation from a large dealer group.
A “boutique” licensee would be more likely to be placed under administration, with the potential to destroy more lives.
The only positive out of this case was the sentence McPhee received.
Reasonable sentence for once. It would be reasonable if the alywers and AMP could help the victims instead of prolonging the pain these people have suffered. AMP & these laywers should hang their heads in shame.
I agree with Frank – as bad as it is, it is better for these poor victims that their ‘adviser’ was the responsibility of a large dealer group with deep pockets and a public image to protect. Much more likely they will reach a satisfactory resolution, better than the process the Storm Financial victims had to go through because the Licensee did not have the resources to satisfy their claims.
I have been associated with AMP for more than 30 years, and one of the reasons for sticking, through good times and bad, is the good faith and good intentions that AMP has shown over the years, despite some well publicised hiccups (that have been rectified) along the way. I have been able to trust them to get it right, maybe not always the at the first attempt, but in the end.
So, although it transpired that these victims could not trust their ‘adviser’, I’m sure they will find that they can trust AMP to reach a just and fair conclusion for them, and that AMP is well able to afford whatever settlement may be reached.
As for the ‘adviser’ getting away with improper and unapproved conduct for so long – someone must have known what she was doing and should have let the regulators and AMP know. I know how quick AMP is to act as soon as it knows of misconduct. They advise the regulator and terminate with prejudice, very quickly.
I wish there was a way to prevent the misconduct of ‘bad apples’, but all the regulation and laws do not fulfil this function. As in any profession; it is also up to us to be vigilant in protecting our clients and our profession. This obviously is not enough either. There will always be people who take advantage of their position of trust and get away with it for a while. So the laws and regulations are there to provide a remedy when good faith fails, and the large licensees have the wherewithal to fund the remedies.
What an incredibly devastating case. The transcript of judgement is stomach wrenching. We as an industry (regardless of large or small licensee) should all shake our heads.
I am personally sick and tired of the debate between large and small licensees about who has greater probity and professionalism. This case is not about the licensee. Rather than focus on the Licensee “blame game” lets focus on the facts of the case and the consequences for the victims. Shame on those seeking to make political mileage on this.
An adviser from our industry has failed in her basic fiduciary role. She has acted with callous and extreme criminal intent to the detriment of those that entrusted her. The verdict of the court recognises this.
However we as an industry bear the moral and financial cost and collateral damage.
If someone is so intent to work outside the law, frankly no level of additional compliance nor regulation would have stopped this. Can anyone seriously believe that this behaviour has manifested itself as a consequence of being aligned to a large licensee? Criminal behaviour is criminal behaviour that’s the end of it. Again shame on those seeking to make political mileage on this.
What needs to be understood is how did it get to this point? Her proper authority with AMP ceased in 2009. Yet she committed offences up to October 2012. How? Was anyone in a position to “blow a whistle?”. Surely someone, somewhere from our industry smelt a rat? We cant stop people choosing to take criminal action but what we can do is manage and mitigate the damage.
Subsequent to the devastating outcome, what support has been offered to victims by the licensee, the PI insurer, the industry (including Associations) and the regulator?
All stakeholders in Financial Planning bear ultimate culpability. Until we recognise this, how far have we progressed in our quest to be recognised as a profession.
Good points, Andrew. I assume the answer to the question about the criminal activities continuing after the cessation of the proper authority lies in the fact that she was the trustee for her victims – a role which is not only separate to her financial planning role but – as pointed out in other comments – would have been against AMPFP’s proper authority rules and regs.
This is probably one of the reasons why AMPFP have this rule. They are responsible for what you do while you have a proper authority with them and they can oversee what you are doing while that PA remains in place. In a case like this, they have no oversight/control once the PA is no longer but then usually you agree not to contact your former clients for at least a set period of time.
However, they can’t cancel a trusteeship (for trust law reasons) but they will (arguably) still be responsible for the trustee’s actions as the relationship was started when (and probably because) the proper authority was in place!
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