Lawyer fooled by conman Peter Foster’s “psychological brilliance”, court hears
Class Actions July 12, 2018 10:45 pm By Miklos Bolza | Sydney

A Sydney lawyer accused in a class action of conspiring with notorious conman Peter Foster in a fraudulent sports betting scheme that left investors $29 million out of pocket was taken in by Foster’s “psychological brilliance”, her barrister told a court Thursday.

One of 12 defendants named in the class action over Foster’s scam, solicitor and former Sports Trading Club partner Leigh Johnson was not a perpetrator in the scheme but was duped by Foster in the same way STC’s investors were fooled, her lawyer, Philip Argy told the NSW Supreme Court on day one of a two-day hearing in the case.

Argy claimed Foster, who is currently incarcerated, was a charmer who fooled everybody.

“It’s important that Your Honour comes to grips with the psychological brilliance of Mr Foster,” Argy said.

“So your case is that this is a complete Foster concoction,” Justice James Stevenson asked.

“Absolutely,” the lawyer replied. “If Mr Foster appeared in the witness box, he would charm Your Honour as well.”

Foster, another defendant in the class action, faces seven criminal fraud charges after being arrested at his Byron Bay home in February last year. He is alleged to have moved STC investors’ funds offshore to accounts in Hong Kong, Vanuatu and the Cayman Islands.

Foster’s niece, Arabella Louise Foster, was also named as a defendant, along with Foster’s Hong Kong-based companies Sports Trading Ltd and Banksia Holdings. Justice Ball entered judgement against those three defendants in June last year and ordered them to pay almost $8 million.

Barrister for the class Thomas Dixon, of State Chambers, accused Johnson at Thursday’s hearing of being party to the STC conspiracy.

Dixon told Judge Stevenson that the lawyer, who had also invested in STC, had knowingly helped suppress knowledge of Foster’s role in the scheme and used his alias “Mark Hughes” in communications with investors.

“She was keeping from investors one key bit of information: that is his involvement,” Dixon told Judge Stevenson. “It meant that the investors were not apprised of the true risk involved in their investments and that, in my submission, was to visit an injury on them… That risk was ultimately manifested in the loss of all their money.”

Johnson knowingly omitted mention of Foster to investors, such as Pieter de Klerk, who invested AU$450,000 in STC and paid an additional US$1 million to obtain the “South African rights” to conduct the STC scheme over there, Dixon said. Johnson is also alleged to have allowed misleading information to be sent to journalist David Murray who wrote about STC for the Courier Mail in 2013.

 

Foster is alleged to be a serial conman, twice facing action by the Australian Competition and Consumer Commission over weight loss scams. In 2005, his company Chaste Corpoation was fined $600,000 and Foster another $150,000 for selling bogus diet pills. He was also banned from any involvement in the weight loss industry for five years.

In 2011, the ACCC filed proceedings against another of Foster’s companies, SensaSlim, again for selling dodgy weight loss products. In May 2016, SensaSlim was fined $3.55 million. Foster was penalised $600,000 and banned for life from working in the weight loss industry.

Foster was jailed for three years in October 2013 for contempt of court after violating the 2005 ban. He was released from prison two years later, in October 2015, only to find himself back in jail over the STC scam.

The class is represented by Nelson McKinnon Lawyers.

The case is Ian Henry Mackinnon (formerly Paul Baker) as representative plaintiff of 153 group members v The partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Ltd trading as USG Partner and Leigh Johnson, trading as “STC Sports Trading Club”.

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Miklos Bolza

Miklos Bolza has been a journalist for three years. He has written for a variety of publications, including NZ Lawyer, HRD Australia, and Australian Broker. He is currently the Sydney court reporter for Lawyerly.