The Federal Court has disqualified and fined 5 former directors of Australian Property Custodian Holdings Ltd (APCHL) for breaching their directors’ duties and making an illegal related party payment of more than $30 million.

The case relates to the collapse of retirement village scheme Prime Trust. 

The Prime Trust scam saw $500 million poured into a planned retirement village, which then failed, but not before the directors managed a lucrative $33 million rip-off.

The judgment follows an ASIC investigation into the directors’ role in amending Prime Trust’s constitution, so a $33 million fee could be paid to the trust’s founder and one of its directors, Bill Lewski.

This week’s judgment in the Federal Court in Melbourne ended with the following disqualifications and penalties:

  • William Lionel Lewski – disqualified for managing a company for 15 years and fined $230,000
  • Mark Frederick Butler – disqualified for managing a company for 4 years and fined $20,000
  • Kim Jaques – disqualified for managing a company for 4 years and fined $20,000
  • Dr Michael Wooldridge – disqualified for managing a company for 2 years, 3 months and fined $20,000
  • Peter Clarke – was not disqualified from managing a company but fined $20,000

The Court also ordered that the defendant directors pay the costs of ASIC’s proceeding.

The ban handed to former NSW health minister Dr Wooldridge should see him forced to step down from a number of ASX-listed boards, including Australian Pharmaceuticals Industries (API), the company that owns Priceline and Soul Pattinson chemist chains, and the Vision Eye Institute.

Dr Wooldridge maintains his position at Aspen Medical, the company recently handed a $20 million Federal Government contract to conduct Australia's fight against Ebola in West Africa.

The $33 million has never been repaid.

“These individuals, through their actions, showed a complete disregard for the unit holders of Prime Trust to which they owed important obligations,” ASIC Commissioner Greg Tanzer said.

In delivering his judgment, Justice Murphy stated that Mr Lewski’s conduct was “central in Prime Trust’s suffering a substantial loss” and that he had failed to demonstrate any real understanding of the seriousness of the breaches.

He also found that there was a risk of re-offending by Mr Lewski and that “the lengthy disqualification and significant pecuniary penalty attempt to put a price on his contraventions that will show him that the game is not worth the candle”.

In regards to the other defendant directors, Justice Murphy found that “rather than acting in the best interests of the Members” Mr Wooldridge, Mr Butler and Mr Jaques had “capitulated to the interests of Mr Lewski”.

In relation to Mr Clarke, Justice Murphy said, “he sat passively” and “merely waved through a resolution which allowed a $33 million breach of trust”.

A stay of the orders in respect of Mr Lewski and Dr Wooldridge was granted until 23 December 2014.

The defendants have 21 days within which to lodge an appeal to the Full Court of the Federal Court.