Abalone boss jailed for 3.5 years for misleading board, investors
White Collar June 1, 2018 5:32 pm By Cat Fredenburgh | Melbourne

The former chief executive of Australian Bight Abalone has been sentenced to three-and-a-half years in jail for making misleading statements to board members and potential investors about the company’s abalone farming operation.

In handing down the sentence on Friday, South Australian District Court Judge Boylan said Andrew Ferguson’s conduct was motivated by greed.

“It extended over a period of nearly two years. It involved a breach of trust in your position as an officer of the company. It was motivated by greed. It was, in short, a sustained, repetitive and deliberate course of criminal conduct involving 17 separate occasions of deceitful conduct.”

The sentence against Ferguson, whose company was once the largest offshore abalone farm in Australia, includes a non-parole period of 12 months.

“Today’s sentencing reflects both the severity of Mr Ferguson’s actions and the consequences facing those who do not abide by the law. ASIC will continue to investigate where investors and board members are deceived, and refer criminal conduct to the CDPP for prosecution,” ASIC Deputy Chair Peter Kell said.

Ferguson faced a maximum of five years’ imprisonment and a fine of $22,000 for each charge against him.

He was found guilty in January of 17 counts of providing false and misleading information to the ABA board and investors, including nine counts of disseminating false information to potential investors and eight counts of making misleading statements to the board about its farm operations.

He pleaded not guilty to the charges and was granted permission from the Court of Criminal Appeal in May to appeal the conviction. A hearing in the appeal is scheduled for June 19.

ABA, which operated off the coast of South Australia between 2005 and 2009, offered investors interest in abalone grown at the farm in exchange for returns from the abalone harvested at the farm.

ASIC says it raised about $44 million over a four-year period from 1400 investors.

The high-flying fish farm was unable to deliver on its promises, however, and was put in administration in 2009 after it was only able to undertake a limited harvest of its abalone stock.

A survey conducted by the administrators of the abalone stock suggested much higher mortality than had been expected.

Witnesses at the trial included marine biologists, staff and former directors involved in the farming operation.

The Commonwealth Director of Public Prosecutions prosecuted the case.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.