Wang and Australian Securities and Investments Commission

Wang and Australian Securities and Investments Commission [2018] AATA 1405 (21 May 2018)

Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
)No: 2017/0941

TAXATION AND COMMERCIAL DIVISION )

Re: Yingjie Wang
Applicant

And: Australian Securities & Investments Commission
Respondent
CORRIGENDUM ORDER
TRIBUNAL:             Deputy President I. Hanger AM QC
DATE OF CORRIGENDUM:            21 May 2018
PLACE:             Sydney
Pursuant to section 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth), the text of the decision and reasons for decision in this application is to be altered as follows:

The name of counsel for the applicant at page 36 is corrected from “Mr D Hume” to “Mr D Cook SC with Mr R Glover” and

The name of counsel for the respondent at page 36 is corrected from “Ms K Stern SC” to “Ms K Stern SC with Mr D Hume”.

............................[sgd]..........................
Deputy President I. Hanger AM QC

Division:TAXATION & COMMERCIAL DIVISION
File Number: 2017/0941
Re:Yingjie Wang
APPLICANT

AndAustralian Securities and Investments Commission
RESPONDENT

DECISION
Tribunal:Deputy President I. Hanger AM QC
Date:21 May 2018
Place:Sydney

The delegate’s decision is affirmed.
...........................[sgd]..........................................
Deputy President I. Hanger AM QC
CATCHWORDS
CORPORATIONS ACT – banning order – permananent ban – where applicant involved in multiple business enterprises – applicant held position as director of multiple companies – Australian Financial Services Licence – whether applicant breached a financial services law – whether applicant was dishonest – whether applicant is of good fame and character – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – s 43(1)
Corporations Act 2001 (Cth) – ss 760A, 763A(1), 763B, 766A, 920A, 920A(1), 920A(1)(e), 920A(1)(d), 920A(1)(da), 920A(1A)(d), 920B(2), 989B(2), 989B(3), 1041G, 1041H, 1041H(1)
Tax Assessment Act 1997 (Cth)
CASES
Briginshaw v Briginshaw (1938) 60 CLR 336
Collins v Northern Territory [2007] 161 FCR 549
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 542
Re: Davis (1947) 75 CLR 409
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
REASONS FOR DECISION
Deputy President I. Hanger AM QC
21 May 2018
BACKGROUND

On 3 February 2017, a Delegate of the Respondent (ASIC) decided to permanently ban the Applicant (Mr Wang) from providing financial services under s.920A of the Corporations Act 2001 (Cth) (CA).
Section 920A(1) empowers ASIC to make a banning Order against a person if, relevantly:
(d) ASIC has reason to believe that the person is not of good fame or character; or
(da) ASIC has reason to believe that the person is not adequately trained, or is not competent, to provide a financial service or financial services; or
(e) the person has not complied with a financial services law (other than section 921E (relevant providers to comply with the Code of Ethics)); or
(f) ASIC has reason to believe that the person is likely to contravene a financial services law; or
(g) the person has been involved in the contravention of a financial services law by another person;
The Delegate found that each of s.920A(1)(d), (e) and (f) was satisfied in the case of Mr Wang.
On 17 February 2017, Mr Wang applied to this Tribunal for a review of the Decision on the ground that:
“The delegate erred in finding that Mr Wang has engaged in any dishonest conduct as found and in rejecting Mr Wang’s evidence in relation to the relevant communications. Consequently, the delegate erred in finding that Mr Wang contravened a financial services law, was likely to contravene a financial services law, and was not of good fame or character on the flawed grounds of dishonesty.”
Section 43(1) of the Administrative Appeals Tribunal Act 1975 (Cth) provides:
For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:
(a)       affirming the decision under review;
(b)       varying the decision under review; or
(c)       setting aside the decision under review and:
(i)        making a decision in substitution for the decision to set aside; or
(ii)       remitting the matter for reconsideration in accordance with any    directions or recommendations of the Tribunal.
The task of this Tribunal is to “do over again” what the original decision maker did.[1] This Tribunal is not confined to the evidence before the original decision maker. In this matter I had before me a great deal more material than was available to the Delegate.
[1] Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at 315.
Mr Wang
Mr Wang was born in 1977 in China. From 1996 to 2000 he studied shipping engineering and subsequently transferred to commerce law and engineering in universities in China. He graduated with degrees in economics and law. During his studies, he worked as manager for a subcontractor involved in the Three Gorges Dam project run by the Government of China and then worked for a firm of lawyers practising criminal law. From 2001 to 2002 he was employed as an accountant for State Power Company in China for a couple of days each month and also worked as an accountant in a construction company owned by his uncle.
In September 2002 he relocated to Australia. Prior to coming to Australia he had some basic English skills. Between September and December 2002 he completed intensive English language courses in “English for Business at upper-intermediate level” and “General English” at advanced level at RMIT University in Melbourne.
In 2003, he began studying professional accounting at RMIT University and completed the following subjects:
a.Accounting for Business Decisions;
b.Introduction to Financial and Management Accounting;
c.Economic Analysis for Business;
d.Commercial Law.
In September 2006, he was awarded a post graduate diploma in professional accounting by RMIT.
Between 2004 and 2006 he studied law at the University of New South Wales and on 4 May 2007 was awarded the degree of Batchelor of Laws. In 2006, he completed the College of Law course and was awarded a Graduate Diploma of Legal Practice. He was admitted as a solicitor of the Supreme Court of New South Wales in February 2007.
Between 2009 and 2013 he completed subjects in the following areas towards a Master of Laws degree:
a.Insolvency law;
b.Taxation law;
c.Compliance, theory and practice in the financial service industry; and
d.Regulation of financial products and services.
He did not complete the Master of Laws degree.
Between 2005 and 2008 he was employed as a paralegal prior to being admitted to practise as a solicitor. In May 2009 he established his own law firm, Wang & Associates. The practice of the firm was principally criminal law, but over time the practice areas developed into the financial services area, personal injury, professional negligence, property, corporate governance and risk. He remained a principal of Wang & Associates but over a period of time transferred the practice to his partner Mr Sun. That was completed in January 2016. He agreed in his evidence that he was well aware that as a director of a company he had obligations under the CA and obligations under the Income Tax Assessment Act 1997 (Cth). Having undertaken a responsible managers course in 2012 with the Australian Financial Markets Association, he was well aware of the obligations of a responsible manager of an Australian Financial Services Licence holder.
I concluded that to achieve all that he has achieved means that he is a very clever man.
One of the matters that I have been asked to take into account is that English is a second language for Mr Wang. On the first day of the hearing he gave evidence by an interpreter, but on the second and third days he gave evidence in English with an interpreter sitting beside him to assist where he had difficulty. I formed the impression that he has a good command of English. He had some difficulty, but overall he needed little assistance from his interpreter. I take into account the qualifications that he has obtained since arriving in Australia, which must have required a high level of English, but I am also satisfied that his English is far from perfect. This is to be seen from an examination of the transcript, but also from various emails that he sent. In assessing credit, I will take into account the fact that his English is far from perfect.
Mr Wang says that at the time that the events in question took place he was the director of a number of companies and employed over 200 people, as well as being the sole principal of a law firm employing 25 lawyers and support staff.
Mr Wang was also a director of seventeen financial service licensees holding an Australian Financial Services Licence (AFSL) between April 2012 and October 2016. He provided legal advice and legal assistance to companies wanting to acquire an AFSL. He said that he was a director of these companies for short periods of time to ensure that at least one director of the company was ordinarily resident in Australia to satisfy the requirements of the CA. The companies used the address of Wang & Associates as a contact address. He said that it was not his general practice to require those companies to pay him for his appointment as director, but it was his general practice to only agree to be appointed director of the entities where:
a.the company was not trading;
b.the company had no bank account or, if the company had a bank account, Mr Wang was a signatory of the bank account so that he could monitor the company’s financial transactions. He did this to ensure that the companies were not trading, or that there were no transactions in the company’s financial records that he considered to be unusual. He would be thus able to seek an explanation for the transaction from the Board of Directors and if an explanation couldn’t be given he intended to resign. He said those circumstances never arose.
In 2013 Mr Wang suffered from illness and as a result decided to pursue something less stressful than the legal practice. He chose foreign exchange trading. He realised that he had little experience in setting up such a business or building it from the ground up and although he had family financial support, he felt that he needed a business partner that had more experience.
Mr Guofei Chen
In about September 2013 Mr Wang met Mr Guofei Chen. Mr Chen approached Wang & Associates, Solicitors, seeking assistance with preparation and lodgement of applications for AFSLs for his clients based in Asia. Mr Chen told Mr Wang that he could introduce a number of clients to the firm for the purpose of applying for and acquiring AFSLs. Mr Wang began to work with Mr Chen on a plan that involved purchasing Australian companies that held an AFSL and selling those companies for a profit.
Mr Chen owned all the shares in a company called Forpro Group Pty Ltd (Forpro) and it was through that company that they agreed to buy and sell Australian companies that held AFSLs. Mr Wang says that the shareholding was changed so that they each held a 50% share in Forpro. Mr Wang became a director on 3 October 2013 and was its sole director from 21 January 2014 until 17 November 2015.
On 11 October 2013, a company called “Cfmoto Australia Pty Ltd” changed its name to “Easy Capital Pty Ltd” (Easy Capital) and on the same day all of the shares in the company were transferred to Forpro. Mr Wang therefore (via Forpro) was the 50% owner of Easy Capital.
On 30 October 2013, Mr Wang took his shareholding in Forpro to 51%.
The registered office for Easy Capital was at the office of Wang & Associates. It applied for an AFSL on 31 March 2014. Mr Wang was a director from 11 November 2013 to 6 January 2014 and from 12 February 2014 to 31 March 2014. On a share acquisition form for Easy Capital, Mr Wang is listed as the contact person.
Pursuant to the plan to acquire companies with an AFSL, between Mr Chen and Mr Wang, on 11 December 2013 Easy Capital acquired the shares in AIFA Global. Mr Chen was appointed as a director of AIFA Global and the name of that company was changed to Easy Capital Global Pty Ltd (Easy Capital Global).
On 8 May 2014 Easy Capital transferred its shares in Easy Capital Global to Australian SIV Funds Management.
The business relationship with Mr Chen came to an end in the middle of 2014. Mr Wang says that Mr Chen was not producing the business from the Chinese clients that he had promised to produce and the relationship ended amicably. Mr Chen resigned as a director of Easy Capital Global and in November 2014 his shares in Forpro were transferred to Australian SIV Fund Management. The shares in Australia SIV Fund Management were owned by Mr Wang’s mother. Hence Mr Wang owned 51% of Forpro and his mother owned 49% through Australia SIV Fund Management.
Dealings with Jerry and Alvin
Mr Wang says that in late 2013 Mr Chen introduced him to Chia Wee Keat (Jerry) and Heng Swee Boon (Alvin) as potential clients of Wang & Associates. Mr Chen told Mr Wang that Jerry and Alvin were interested in applying for an AFSL. Mr Wang met them and discussed the process involved in making an application for an AFSL.
Mr Chen had informed Mr Wang that Alvin and Jerry had a large sales team in Malaysia and that Jerry was responsible for training and employing many of its brokers. Mr Wang decided to visit Jerry in Malaysia to see his sales team first hand. He was impressed and after he had returned to Australia Jerry contacted him and asked whether he would like to start a foreign exchange (FX) business in Australia with him. Mr Wang agreed to do so. They went on holidays together and developed a good relationship consistent with Chinese custom. This occurred in August 2014.
Jerry and Mr Wang decided to use Easy Capital Global, which already had an AFSL, as the corporate vehicle to conduct the FX trading business. Mr Wang says that they had general discussions concerning the amount of cash that would be required to establish the FX trading platform, IT infrastructure and an office. They reached an agreement to the effect that the initial contribution by Mr Wang would be the corporate entity, Easy Capital Global and its AFSL, and that Jerry would contribute funds towards the establishment of the infrastructure. An amount of USD $100,000 to $150,000 dollars was discussed. They did not finally agree as to whether Jerry’s investment would be treated as a capital investment or treated as a loan and nothing was in writing.
Jerry was introduced to Mr David Batten who was the responsible manager of the AFSL held by Easy Capital Global and it was agreed that Mr Batten would continue to act as the responsible manager.
Dr Cuntai Guan
Dr Guan is a Professor in the School of Computer Science and Engineering in Singapore. Dr Guan’s evidence is he had a conversation with a friend in early October 2014 who said he had invested with Easy Capital Global and had been receiving interest for some months. The friend pointed out that he did not know the salesman Mr Chu very well and that the interest rate might be unsustainable. (The reference by the friend to Easy Capital Global cannot be correct as it was not trading at the time. Easy Capital however was trading).
Dr Guan thereafter met Mr Chu, who said words to the effect “Easy Capital Global is registered and regulated by ASIC in Australia. Easy Capital Global is monitored by ASIC and if anything happens you can seek help from ASIC”. He showed company information for Easy Capital Global evidencing that it was registered by ASIC in Australia.
Dr Guan’s affidavit indicates that Mr Chu, in the course of the conversation, also referred to Easy Capital as well as Easy Capital Global. Mr Chu provided Dr Guan with a business card which referred to Easy Capital. That business card also contains a web address of and gives the address of the company as Level 22, 31 Market Street, Sydney, which is the address of Mr Wang’s firm. Mr Chu also had a laptop computer with him and said words to the following effect: “Easy Capital Global has an online portal you can access at I can open your investment accounts for you straight away. After your money has been received by Easy Capital Global, your accounts will be activated”.
Mr Chu then showed him how to access the website and how to access online accounts which would be activated upon his investment. He decided to invest USD $100,000 with Easy Capital Global in two USD $50,000 instalments. Mr Chu then sent him details of the Easy Capital Global bank account and he took a screenshot of that. On 27 October 2014 he transferred USD $100,000 to the Australian bank account provided by Mr Chu. Easy Capital Global Pty Ltd, National Australia Bank Account. He received confirmation that the transaction was completed on 30 October 2014. Converted from US dollars to Australian dollars the sum of money was $111,112.69.
I am satisfied that Chu, who was the salesman for Jerry and Alvin, was pretending to represent Easy Capital Global and that he used the names of the two companies Easy Capital and Easy Capital Global in such a way as to confuse his audience. Mr Wang says, and I accept, that he had never met Mr Chu and that he was never employed by Easy Capital Global and had no authority to act on its behalf.
Shortly after Dr Guan had made his investment, he introduced his relative Ms Hong and with her attended a further meeting with Mr Chu. Ms Hong said that she also wanted to invest USD $50,000 with Easy Capital Global.
Within a week of the transfer of the funds by Dr Guan, he obtained access to two online accounts with what he believed was the Easy Capital Global website. The accounts were in the following names:
·CTGUAN numbered 8812900; and
·GUAN_CUN_TAI numbered 84101006
In December 2014 when Dr Guan was due to receive his first interest payment, it did not arrive. He accessed what he believed was the Easy Capital Global website which apologised for non-payment of interest by Easy Capital Pty Ltd and provided an excuse. In January, he viewed his account to see that the interest payment had still not been made. He contacted Mr Chu and was again reassured that there would be no problem and the interest would be paid immediately. He again accessed the website on 18 January 2015 and there was another apology saying that the company was currently under ASIC investigation, but that was just a normal procedure and the company was temporarily unable to dispense Australian dollars. He then created a Wechat group message to people who had invested in Easy Capital Global. Mr Chu responded to the inquiry saying that he was trying to contact Easy Capital in Australia but had not got a reply.
Dr Guan decided to do further searches on the internet and found some discrepancies. He realised for the first time that that there were two companies, Easy Capital Global and Easy Capital Pty Ltd with different ACNs and that one did not hold an AFSL. He also found another website that appeared to relate to Easy Capital Global. Mr Chu had said that his boss was Mr Heng (Alvin). Dr Guan joined an online group of investors using Wechat. When the Wechat group met with Alvin on 8 February 2015, Alvin kept reassuring investors that their money was safe and that they would receive their interest. He said words to the effect that he would go to Australia to find out what was happening.
Where did the money go?
Dr Guan’s deposit of AUD $111,112.69 was received into the Easy Capital Global account on 30 October 2014, and it comprised the whole of the money in that account less 1 cent. The account had at most held a maximum of $10.00 prior to the deposit. The bank statements identify the particulars of the deposit as “proceeds of overseas inward transfer”. The address on the bank statement was the address of Wang & Associates. That was also the registered office for Easy Capital Global. At the time Mr Wang was the sole signatory to the bank account and the sole director of Easy Capital Global. For all intents and purposes this was the first transaction on the bank account and quite a large one. It is clear that this was not an account that had been paying interest to Dr Guan’s friend.

Ms Hong’s transfer of USD $50,000 was described as “Easy Capital Global Pty Ltd” with account number 844902493, but the amount was ultimately paid into the account number “EACAP/USD/01” in the name of Easy Capital Global (Easy Capital Global US account). The bank statement for the account sent to Easy Capital Global at Office 2202, Level 22, 31 Market Street (the office of Wang & Associates), identifies as the particulars of the deposit “Refer CR. Advice DET-Quin Hong”. On 27 October 2014, the National Australia Bank also sent a credit advice to Easy Capital Global to the same office. The deposit comprised the whole of the amount in that account.
From the above it is clear that the people to whom Dr Guan had been talking had banked the money in Easy Capital Global. Whether Dr Guan and Ms Hong had intended to invest in Easy Capital Global foreign exchange business is open to doubt. I suspect that they had intended to invest in Easy Capital. Its bank records do show a history of making interest payments at about the time the investments were made, whereas Easy Capital Global had no trading whatsoever.
There are two companies that bear the name, Vivid Quark Technology Pty Ltd, one in the Seychelles and one in Australia.
Vivid Quark Technology Pty Ltd (Vivid Quark Technology) is a company incorporated in Australia on 25 February 2014 by Mr Wang. Mr Wang was its sole director. Its principal place of business was at the premises of Wang & Associates. Mr Wang was signatory to its three bank accounts. The sole shareholder was Australian SIV Funds Management Pty Ltd, the shares in which are owned by Mr Wang’s mother. Mr Wang said that it was he who had arranged to put the Australian SIV Funds Management Pty Ltd shares in his mother’s name. Mr Wang’s mother lives in China. I am satisfied that Mr Wang controlled and was the beneficial owner of Australian SIV Funds Management Pty Ltd and Vivid Quark Technology. For example In relation to another company, he was asked “and that’s the company you own through Australian SIV Fund Management, don’t you -- Yes”. (My underlining).
Vivid Quark Technology pty Ltd (Vivid Quark Seychelles) is an entity domiciled in the Seychelles. The ultimate owner of the Seychelles entity is Mr Wang’s cousin’s husband. I am satisfied that there is a very close relationship between Mr Wang and that company. He was asked whether he used it as a vehicle to contribute money from the Seychelles company to acquire share capital in Easy Capital Global. His answer was equivocal. He said, “maybe to a certain extent but I’m not sure”. I do not conclude from this answer that he actually used it to contribute capital, but the equivocal nature of the answer shows that it was certainly not out of the question, and hence my conclusion that there was a close relationship between the two Vivid Quark companies and Mr Wang. He also used Vivid Quark Seychelles as a vehicle for his family to make investments in Australian companies. On 28 January 2015, Vivid Quark Seychelles deposited $249,094.07 into a Bank of China account held by Mr Wang’s mother. Mr Wang is signatory for the bank account. Vivid Quark Seychelles also had dealings with Vivid Quark Technology; for example on 5 November 2014 Vivid Quark Seychelles transferred USD99,983 to Vivid Quark Technology.
I am satisfied that Mr Wang had very close family connections with Vivid Quark Technology and Vivid Quark Seychelles.
On 18 November 2014 and 19 November 2014, amounts of $35.00 and $91,761.19 were withdrawn from the Easy Capital Global account. The particulars on Easy Capital Global’s bank account identifies the withdrawal as “Rent Vivid Quark Technolo”. This withdrawal represented the bulk of Dr Guan’s money. The transaction was done with Mr Wang’s authority. It was not for rent.
On 14 November 2014, an amount of USD $49,900 was transferred from Easy Capital Global account with the account number EACAP/USD/01 to the account of Vivid Quark Seychelles. This reflected the amount that had been invested by Ms Hong. The telegraphic transfer identifies “rent” as the purpose of the transfer. The transfer document bears Mr Wang’s signature. That was also not for “rent”.
On 17 February 2015, Easy Capital Global Pty Ltd transferred the balance of Dr Guan’s money (AUD $21,442.91) to Vivid Quark Seychelles. The Easy Capital Global Pty Ltd account in which Dr Guan’s funds had been received was then closed. The timing of decision to close the bank account is significant and is discussed further at [106].
All of the money deposited by Dr Guan and Ms Hong had ultimately been paid to Vivid Quark Seychelles.
The evidence of Mr Wang
The only witness called in the case was Mr Wang and he was cross examined for the best part of three days. The case turns simply on his credit and the documents before the Tribunal. Before turning to the particular facts, I make three observations as to his credit.
He gave evidence that he has in the order of 200 employees, doubtless spread across various businesses, plus about twenty-five in his legal practice. The precise numbers don’t matter. On numerous occasions he used the excuse that he couldn’t possibly remember or deal with everything that went on in his various businesses. I accept that, but when confronted with important issues which one would expect him to know about, he claimed ignorance. I do not accept that he was unaware of important issues.
The second observation relates to some documents originating from Ms Tang, his paralegal. She is the author of a number of emails. One can accept that she would make straightforward decisions. I do not accept that she would be making very serious decisions or dealing with critical matters without first getting instructions in relation to them from Mr Wang. Indeed, she frequently copies him in on emails. Ms Tang was not called as a witness and, given Mr Wang’s alleged reliance on her, one would expect her to be called by him.
A third observation that causes me concern is that Mr Wang says he did not read emails carefully or did not read the entire email. He said he only read them on his mobile phone and when he was tired. Each of these excuses can be used sometimes, but I find it hard to accept the repeated use of one or other of these excuses when confronted with important matters relating to his credibility.
Mr Wang’s involvement with the Dr Guan’s transaction
Dr Guan was the victim of what has been described by Counsel for the applicant as a “scam”. That would appear to be the case. He invested money which he was informed would give him a high rate of return. The money was never invested on his behalf but was transferred as outlined above.
It is the respondent’s case that Mr Wang was involved in that scam.
Mr Wang gave evidence that he did not know Dr Guan, had never met him and did not know of Dr Guan’s deposit or Ms Hong’s deposit into the Easy Capital Global account until receiving Dr Guan’s first email which I will deal with later.
The first transfer into the Easy Capital account was made by Alvin on 26 March 2014 while Mr Wang was a director. After that date, the company bank accounts contain records of many transactions. There is no evidence of Mr Wang being involved in any dealing with Easy Capital after ceasing to be a director in March 2014 until issues arose relating to its application for an AFSL. He ceased to be a director on 31 March 2014. Through Forpro, he and his mother continued to beneficially own shares in Easy Capital. I accept his evidence that he was not aware of the transactions involving Easy Capital at the time, but the fact that he is unaware of his interest in an active trading asset says little for his competence. He regarded it as Jerry’s company.
Other than involving peripheral issues of credit, I do not think much turns on dealings in Easy Capital. It does appear to be a company used by Jerry. It is on the periphery of this dispute insofar as I am not sure whether some investors thought they were investing in Easy Capital or Easy Capital Global, but the point is that Dr Guan and Ms Hong made their payment into the Easy Capital Global bank account and lost it.
Deposit into Easy Capital Global account and payment to Vivid Quark
Between 22 and 26 October 2014, Jerry visited Mr Wang in Australia and a few days later the Dr Guan and Ms Hong deposits were made into Easy Capital Global’s bank accounts. Mr Wang says that at that time Easy Capital Global was not trading. It was still in its formative stages and had acquired no software for FX trading and no one had authority to attempt to market Easy Capital Global. He maintains that the only injection of funds that Easy Capital Global was expecting were from Jerry in accordance with the agreement that Jerry would contribute USD $100,000 to $150,000 towards the establishment of the FX trading business. Mr Wang admits that he became aware of the transfers of approximately $100,000 and $50,000 into the accounts of Easy Capital Global. He was the signatory to the account. He believed that they were Jerry’s promised contributions. He did not know they came from Dr Guan or Ms Hong. He maintains that Jerry at some point told him that he had transferred money to Easy Capital Global. He says that on 18 and 19 November 2014 the bulk of those funds were transferred to Vivid Quark Seychelles. He can not recall making or authorising those transfers but accepts that he did make them. He maintains those transfers were made in respect of the IT services required to establish the FX trading business of Easy Capital Global. That is not how they were recorded. Vivid Quark Seychelles was a company allegedly involved in the acquisition and creation of the relevant FX software and hardware.
The respondent submits that this version of events is improbable. It points to the fact that:
a.Easy Capital Global wasn’t just a company in which Mr Wang had a passing or professional interest. It was effectively his company; I am satisfied that is correct.
b.the two transactions into the accounts were the first transactions and amounted to large sums of money; that is correct.
c.by the time of the deposit, Jerry and Mr Wang had agreed to set up an FX business using Easy Capital Global Pty Ltd; that is correct.
d.Mr Wang gave evidence in his section 19 interview that he was expecting Jerry and Alvin to be marketing in Southeast Asia sometime in the future.
e.On 5 August 2014 Will Woo of Maximilian Management Pty Ltd sent an email to Jerry which was copied to Mr Wang. The email is titled “Re-Easy Capital Global Teleconference”. It deals with arrangements for company signage, banners, new logos, a computer and TV running real-time CFDS trading; all consistent with the establishment of a new office. When cross-examined about this Mr Wang suggested that it probably related to Easy Capital, rather than Easy Capital Global. Mr Wang denies reading the email. I am of the opinion that the email is equivocal in terms of the repsondent’s submission that Easy Capital Global was trading at the time that Dr Guan and Ms Hong made their payments.
f.On 28 August 2014 the respondent wrote to Easy Capital indicating that the company was representing to the public, via its website that it had an AFSL when it did not have one and that the AFSL quoted on the website is in fact licensed to Easy Capital Global.
g.On 19 September 2014 Wang and Associates wrote to the respondent saying:
i.the business is currently not operating and has no intention to operate until such time as it is granted an AFSL;
ii.there has been no agreements of any nature between Easy Capital and Easy Capital Global. There is no relationship of any nature between Easy Capital and the website and
iii.Easy Capital has not permitted Easy Capital Global to trade under the name “Easy Capital” and the ACN number of Easy Capital.
Mr Wang denied that he authorised the letter, although it was sent using his initials as a reference. However when asked about this letter, he did say “we do send a letter on behalf of Easy Capital some time to ASIC and tell them OK this is not our website”.
In or about December 2014 Mr Wang had decided to end the relationship with Jerry because he didn’t consider that Jerry was “as good a sales manager as he had expected”. The only company in respect of which Mr Wang was expecting Jerry and Alvin to be a good sales manager was Easy Capital Global.
The respondent thus submits that the Tribunal should conclude Jerry, Alvin and Mr Chu were acting on behalf of Easy Capital Global and with Mr Wang’s authority.
Mr Wang’s response is to this effect:
a.Jerry and Alvin did not have authority to market the business run by Easy Capital Global anywhere at that time. The business of Easy Capital Global was intended to be an FX trading platform and there is no evidence that Jerry and Alvin ever marketed such a business. The business Jerry and Alvin were marketing (albeit under the name Easy Capital Global) was a fixed investment deposit business which was the kind of business of Easy Capital (but not Easy Capital Global) conducted.
b.the marketing material, such as it is, makes it clear that the business Jerry and Alvin were conducting was being conducted through Easy Capital and not Easy Capital Global and Easy Capital did in fact have trading activities beginning in April 2014;
c.the business contemplated by Mr Wang for Easy Capital Global could not begin to trade until the FX trading platform had been created. It had not been created.
d.The actual documentation provided to Ms Hong was executed electronically by a fictitious person, Mr Simon Robert, as managing director. The document is replete with errors. It is mistyped. The abbreviated name Easy Capital Global is mistyped “Easy Capita”. It bears the logo of Easy Capital.
It is important to the respondent to establish Mr Wang’s participation in the scheme to sell investments in Easy Capital Global in October 2014 when the two investments were made. It therefore relies heavily on Mr Wang’s suggestion that he terminated the relationship with Jerry because he was not as good a salesman as expected. What was Jerry selling if it wasn’t an investment in Easy Capital Global? It is necessary to examine the evidence on that point. The evidence of Mr Wang is as follows:
“Jerry was not a very good business partner, he promised a lot but he can’t do it, and you know in a business transaction he always promised this and that, which really surprised me and also gives me a lot of suspicion that he is not a genuine businessman, he shouldn’t be a good business partner”.
Elsewhere the topic was again addressed and the following evidence was given:
“Question: Why was it that you decided to terminate the relationship?
Answer: Privilege. Let me think about it. Because it is a business relationship, the relationship and everything surrounding the business it gradually changes. Let me think about it. Privilege. I do aware that website Easy, I can’t remember exactly the website’s name, the domains name, Easy FX or Easy Trading or something, was operated by Jerry. And if my memory is correct, I remember that we received a letter from ASIC asking for, you know, whose ownership about that website, but I do write to ASIC about it and show them it’s not owned by the company where I am the director. And I don’t remember whether I had that discussion with Jerry, whether he acknowledged is his website or not, but I really suspect that it is his website. I think this is the main reason I terminate the business relationship with him. There’s another reason is that he was not from the business part, I gradually found out he was not a good sales manager or good sales person as I expect. He seemed to me he doesn’t have too knowledge about FX trading and also, privilege. I think that when I introduced David Batten to him, David Batten also asked me to, I think David Batten did have a conversation about Jerry with me, but I don’t remember exactly what in that conversation. After I introduced them together, they became more closer than I had with Jerry, yeah.
Question: So at that time that you decided to terminate the business relationship ---?
Answer: Privilege. Yes, there’s not a reason I just think about, I just recall. Jerry lied many times to me. So, I don’t see him as a proper business partner I can go ahead with someone who lied to me more than twice.
Question: What lies did he tell you?
Answer: Privilege. He promised to contribute more money to finish the proper website, finish the back office work, but he refused to put more money. Privilege. I can’t remember too much but I do remember he let me down a number of times, he promised things, and then for any reason can’t wait, just leave me in nowhere”.
I am not prepared to conclude from this evidence that it shows Jerry legitimately was marketing for Easy Capital Global in 2014 or that the relationship was terminated because he was not doing a good job marketing Easy Capital Global. The conclusion about not being a good sales manager could simply have been what he had been told about Jerry in respect of his other business.
I am however satisfied that at about the time of the respondent’s letter in September, Mr Wang became aware of concerns about the actions of Easy Capital appearing to pass itself off as Easy Capital Global.
Bearing in mind the Briginshaw[2] test on the balance of probabilities, I am not satisfied that Mr Wang was involved in a scam with respect to Dr Guan and Ms Hong. I am satisfied that Easy Capital Global had not commenced its FX trading activities but was actively involved in preparing such activities. There is simply no evidence that Jerry or Alvin or Mr Chu were authorised to market Easy Capital Global at the time that they did. I accept the evidence of Mr Wang that he became aware of the transfers into the Easy Capital Global bank account when they were made and that he believed the transfers were from Jerry pursuant to the agreement they had reached – because he knew at that time Easy Capital Global was not trading. Jerry on the other hand was using the details he had about Easy Capital and Easy Capital Global for his dishonest purposes and deliberately and successfully interchanging the terms Easy Capital and Easy Capital Global to confuse investors at that time.
[2] Briginshaw v Briginshaw (1938) 60 CLR 336.
Events occurring after Dr Guan’s investment but before he sent his emails
The payment out of Easy Capital Global to Vivid Quark Seychelles was recorded as “rent”. Mr Wang accepts that this payment was made with his authority, but can give no explanation why it was categorised as “rent”. Nor can anyone else. It was not for rent. It has been suggested the categorisation as rent was made for the purpose of confusing auditors who were making enquiries a day or so after the transactions as to what they were for. However, according to Mr Wang, the transaction was made in respect of computer software and hardware being purchased for the establishment of a FX trading business.
There is no doubt that a FX trading business would require substantial computer technology. It would come as no surprise that expenditure had to be incurred for that purpose. Therefore, there is no reason for the expenditure to be classified as “rent” rather than as for computer software and hardware. It is also submitted that Mr Wang may well not have been aware of the precise nature of the transaction because of his busy lifestyle.
For present purposes, little turns on the point. It demonstrates incompetence within Mr Wang’s organisation, but it does not demonstrate dishonesty on his part. It was not an entry directed by him.
Furthermore there is no supporting evidence, such as an invoice or quotation, from Vivid Quark Seychelles to Easy Capital Global for the work apparently performed or to be performed in mid to late 2014. That should be contrasted with the fact that there is evidence of invoices from Vivid Quark Seychelles in other instances. This has to be considered against the background that Mr Wang said that as a company director he would ensure that appropriate invoices were always issued in respect of major expenditures. This was a major expenditure. While one may have doubts about the matter, there is no evidence that Vivid Quark Seychelles was not working on technology for Easy Capital Global. But the failure to obtain a quotation or pay on an invoice demonstrates incompetence and irresponsibility on the part of Mr Wang.

The respondent submits that as further evidence of dishonesty on the part of Mr Wang, it has never been made clear whether Jerry’s supposed monetary contribution was to be categorised as a loan or a capital contribution. I see little significance in that fact at the early stage of the relationship between the parties. Doubtless they would take accounting advice as to how the supposed contribution of money should be treated.
Invoice re: Telemarketing Services
In December 2014, Linda Chen of Maxmillian Management Pty Ltd sent an email to Mr Wang seeking payment of an invoice from JWLC Pty Ltd. The body of the email requested that Mr Wang make a payment to JWLC for “telemarketing fees for 10/12/14 to 9/1/15”. The invoice was addressed to Easy Capital Pty Ltd at the address of Mr Wang’s office. It was for 160 hours of “onsite telemarketing services” for the period December 14 to January 15. I have been asked to infer that Mr Wang would have read this email as it was addressed to him. The respondent submits that this email shows that telemarketing was going on in late 2014 and that Mr Wang must have known Easy Capital was trading in late 2014. However at the time Mr Wang believed Easy Capital was Jerry’s company.
The response of Mr Wang in cross examination in relation to this email is consistent with his evidence on other matters. On 10 December, Mr Wang requested Nikki Yang to “get Jerry to pay the invoice”. That is consistent with his belief that Jerry was the operative mind behind Easy Capital. A later invoice from the same organisation sought payment for telemarketing from Vivid Quark Technology at its address at Mr Wang’s offices. Mr Wang’s answer again was that Jerry had refused to pay so Mr Wang told Linda Chen of Maxmillian Management that he would pay the fees himself. Mr Wang’s explanation for this is that when Jerry refused to pay, he, Mr Wang, was prepared to pay given that he had introduced Jerry to Ms Chen.
The applicant submits that far from being a matter which undermines Mr Wang’s credit, this evidence shows him to be a man of good character. It shows the chaotic nature of Mr Wang’s organisation and the blurring of lines between entities. In agreeing to pay the fees “himself” he uses Vivid Quark Technology. For a man with his extensive training, his business practices are very lax.
The email chain
On 12 December 2014 an investor, Mr Hoong, sent an email to Ms Tang with the subject “Easy Capital Global Pty Ltd. E-wallet withdrawal request delay”. The subject of the email is that he has been unable to make withdrawals. He says the processing time should be five working days. He asked that the matter be resolved. Ms Tang replied asking him how he got her email address. He advised that it had been obtained from the Financial Ombudsman Service. She replied saying, “We are only the legal representative for the above. We will contact the client to advise of your situation”. Mr Hoong had probably invested in Easy Capital and not Easy Capital Global. She forwarded the email chain to Mr Wang. To a prudent company director this would have sounded an alarm. It didn’t. Mr Wang says he didn’t read it. This is one of the occasions when he sought to justify his conduct by reference to the size of his company on the number of employees and the fact that he had a complaints department. The email was sent to him alone and indicated Ms Tang’s concern. His failure to deal with it indicates a lack of competence.
In frustration at the lack of payment of interest, Dr Guan began an email chain and it is necessary to set the emails out at some length.
On 26 January 2015, Dr Guan wrote:
“Dear Mr Jay Wang,
I am an Easy Capital customer. I invested US $100K in your company last Oct/Nov. Since the opening of the accounts in your company, I never received any investment interests from your company. I got your contact from ASIC, Australia.
Therefore, I request your company to return my deposit of US $100K, and I reserve the right to demand for the interests your company owes me so far.
Your response is appreciated”.
This email was addressed to Mr Wang and forwarded to him by his paralegal, Ms Tang. The significant point in this email is that Dr Guan at that point thought that he had invested his money with Easy Capital rather than Easy Capital Global. This shows the confusion that had arisen in the mind of investors and certainly in his mind as to whether the company in which he had invested was Easy Capital or Easy Capital Global.
Mr Wang cannot recall getting this email. I am satisfied that he did because while it is understandable that Ms Tang would deal with many emails herself, she would know that this was an important email that dealt with USD $100,000 involved in a company bearing the name Easy Capital (whether or not it was Easy Capital or Easy Capital Global) and raised a matter of great concern. Furthermore, it comes after Mr Wang had received and replied to emails of concern from ASIC with respect to financial services licences and representations that appeared to have been made by Easy Capital that it had a licence. In other words, the alarm bells were ringing and Mr Wang was aware of it – or should have been aware of it.
On 28 January 2015 Dr Guan sent a further email reminding Mr Wang to reply to his earlier email.
On 29 January 2015 Ms Tang sent an email to Dr Guan saying “[T]his company has never had any trading last year, how did you trade with us? We are planning to start to provide financial service this year of 2015. However, we haven’t started yet”. Such a statement is consistent with Mr Wang’s evidence that Easy Capital Global had not started trading as yet. However, I note that Ms Tang’s response is headed “Re Request from an Easy Capital Customer”. Her response presumably was intended to respond on behalf of Easy Capital Global and not Easy Capital. She also seems to be confused between the companies.
Later in the day Dr Guan replied to Ms Tang’s email indicating that he had found the details on the Financial Ombudsman’s website which helped him to launch his complaint to Mr Jay Wang. He also said, “could you confirm that this company (Easy Capital Global Pty Ltd), website has never started any trading last year”.
Ms Tang forwarded that email to Mr Wang and Mr Wang replied to Dr Guan personally saying “I don’t know where you got that website but that has never been ours. I will get my assistant [M]s [P]uimen [T]ang to assist you”.
The statement “I don’t know where you got that website” is somewhat misleading. Mr Wang admitted in evidence that he believed that the website was a website which Jerry was using and was passing off Easy Capital as Easy Capital Global. Mr Wang, when that was put to him, suggested that because Jerry was his client he was not authorised to disclose Jerry’s privileged information. I do not accept that argument.
On 29 January, Dr Guan replied to Mr Wang’s email saying:
“Thanks very much for your reply. Ms Puimen has responded to my email too. Thanks to her.
It looks [sic] your company [sic] got exactly the same name as another company, whose website I sent to you.
A group of investors are launching a complaint to ASIC for this company due to its cease [sic] of paying interest (it was suspected that this company violated laws) ...”.
A reasonable inference from the text of this email is that Dr Guan was confused and did not link Easy Capital with Easy Capital Global in any way. This confusion and the apparent belief at this point that the two companies were not connected would have been clear to Mr Wang. He should have enlightened Dr Guan.
On 2 February, the auditor of Easy Capital Global sent an email wanting to know where the deposits of USD $111,112.69 (Dr Guan) and USD $49,990.00 (Ms Hong) had come from and to whom the withdrawals had been paid. Jenny Li, the accountant, responded and copied in Mr Wang with the following information:
“The deposit of $111,112,69 was by Jerry Chie, a business partner, for technology services including data centre, server, network, website, MT4 software license, technology department and maintenance in order to set up a FX business. A withdrawal of $91,761.19 was made to Vivid Quark Technology for technology services on 19 November 2014.
The deposit of USD 49,990 made by Jerry Chie as a business partner, however it was returned on 18 November 2014.
…”.
The first paragraph supports the evidence Mr Wang has given.
The second paragraph of the email is not correct. The USD $49,990 was not returned to Jerry on 18 November 2014. It was transferred to Vivid Quark Seychelles. This could mislead the auditor and indicates either dishonesty or incompetence. In his examination by the respondent pursuant to s.19 of the Australian Securities and Investments Commission Act 2001 (Cth), Mr Wang had said that he suspected that this money was paid to Vivid Quark for an IT service. In the evidence before this Tribunal he said that Jerry had borrowed money from Vivid Quark Seychelles and therefore in paying the money (which he thought had been contributed by Jerry to Easy Capital Global) to Vivid Quark Seychelles, he was thus paying off part of the loan by Vivid Quark Seychelles to Jerry. Hence, this payment has been categorised by Mr Wang and/or his organisation as rent, repayment of a loan, and payment for IT services. I am not prepared to find that he was dishonest about this, but again it shows Mr Wang in conducting the operations of his business is highly unreliable. The movement of money to and from Easy Capital Global was essentially two deposits and two withdrawals. It was a very simple matter to find out where the money had gone.
On 8 February 2015 Dr Guan sent a letter addressed to Mr Simon Robert of Easy Capital Global Pty Ltd. The address on the letter was 2202/Level 22, 31 Market Street, Sydney, NSW 2000 – the address of all of the companies already mentioned and the address of Mr Wang’s legal office. The letter stated:
“On behalf of a group of Easy Capital clients who invested in Easy Capital Pty Ltd, I am writing to you to request to withdraw our deposit from Easy Capital Pty Ltd.
Each of us clients invested fund ranging from US$50,000 to US$100,000 in Easy Capital, since November 2014, and Easy Capital Pty Ltd is obligated to pay monthly interests to us clients. However, since November 2014, Easy Capital Pty Ltd ceased to pay and interest to us clients (some new clients who invested since October 2014 did not receive any interest ever since transferring fund to Easy Capital Pty Ltd). For that reason, Easy Capital Pty Ltd has infringed the agreement between Easy Capital Pty Ltd and us clients. Furthermore, we understand from the easy capital website that Easy Capital Pty Ltd in [sic] currently under investigation.
We are extremely concerned about the money we invested. The fund we invested is our hard-earned money, some of which was the lifesavings of some of us. The loss of the investment fund would put some of us in great distress and hardship. Under the agreement between Easy Capital Pty Ltd and us clients, our initial capital is under protection. Therefore, we would like to withdraw our deposit from Easy Capital Pty Ltd immediately and reserve the right to demand for compensation for the loss of the interest that Easy Capital Pty Ltd owes us so far”.
The first comment that should be made about this letter is that there is no such person as Mr Simon Robert. However, while the letter is addressed to Easy Capital Global Pty Ltd, the contents of the letter again show the confusion that has arisen between the companies because the body of the letter refers only to Easy Capital. There is no evidence that Mr Wang received this letter, but I assume he did since it is addressed to his office and to Easy Capital Global, his proposed FX company of which he is the sole director.
On 10 February 2015 Dr Guan sent a further email to Mr Wang stating:
“Dear Mr Wang
Could you confirm if the following bank account belongs to your company:
Bank Name: National Australia Bank
Bank Swift Code: nataau3302S
Bank Account Holder: Easy Capital Global Pty Ltd
Beneficiary USD Account No. 944902493
Bank Address: Lvl 15, 680 George Street, Sydney NSW 2000”.
Mr Wang replied saying:
“It is our account and we do receive that payment from you. However, at that time, a person called Jerry Chia told us he wanted to send money to us to set up a joint business with him including buying mt4 having a website etc.
I am investigating the matter now.
Could you tell me:
1.        do you know mr jerry [sic] Chie?
2.        what’s your relationship with him?
3.        Do you believe that mr chie [sic] in any way deceived you?”
Two observations should be made about this letter. The first is that obviously Mr Wang at that point accepts Dr Guan’s claim that he has paid $100,000 to Easy Capital Global. The second is that he mentions Jerry for no apparent reason, but one may now deduce that he mentions Jerry because at the time he did in fact believe that Jerry was contributing money to set up the joint business.
On 11 February 2015 Dr Guan replied to Mr Wang’s email stating:
“I do not know any Jerry Chie. The persons approaching me to enter into investment with Easy Capital Global were Mr Leo Chu and Mr Heng Swee Boon.[3]
In this case, could you advise how I can get back my money transferred to your company’s account”.
[3] Mr Heng Swee Boon is Alvin who is the partner of Jerry.
I find as a fact based on all the evidence and in particular on the evidence of Dr Guan that Jerry, Alvin and Mr Chu were working together.
Mr Wang replied saying:
“We are currently investigating this matter. We will notify you within two weeks”.
On 12 February 2015 Dr Guan emailed Mr Wang informing him of Ms Hong’s transfer of $50,000 to Easy Capital Global and of transfers from three other friends to Easy Capital Pty Ltd. It asked if Mr Wang’s company had also received the payment. Mr Wang replied:
“This becomes very serious now. Please give us 14 days to investigate the matter and we shall promptly update you in the meantime”.
As has been submitted by the applicant, this email supports other evidence that the scam was being conducted principally through Easy Capital rather than Easy Capital Global, and that the deposits into Easy Capital Global by Dr Guan and Ms Hong were anomalous, doubtless for the purpose of enabling Jerry to make his contribution to the venture with Mr Wang. The deposits of the three other friends to which Dr Guan refers did not find their way into Easy Capital Global’s bank accounts.
On 17 February 2015, amid the alarm caused by the emerging email chain, Mr Wang chose to transfer the balance of Dr Guan’s money from the Easy Capital Global bank account to Vivid Quark Seychelles. The amount was $21,442.91. Following the transfer the Easy Capital Global Pty Ltd account into which Dr Guan’s funds had been received was closed.
This was an incredible step by Mr Wang. He knew that people were alleging that two investors had paid approximately $150,000 into Easy Capital Global, and at that point it had been reported to him (albeit incorrectly) that there were others. They were seeking information about their money and its return. They were getting no satisfactory answers and yet he paid what little money remained to his cousin’s husband’s company.
The submission on behalf of Mr Wang is that one should be careful when drawing inferences based on first impressions of the transfer of the remaining money of Dr Guan and the closing of the account. The submission is that the old accounts of Easy Capital Global were meant to be closed in late 2014, but that did not happen. By 17 February 2015 Mr Wang had moved on and changed the name of Easy Capital Global to New Zealand Global Financial Trading (NZGFT). NZGFT was to open a new bank account to conduct a FX trading business with Mr Wang’s new business partner. It is submitted that the new entity had lots of money in its accounts and therefore it could pay any debt that might be due to Dr Guan. Regardless of whether this is true, it would certainly give the appearance to Dr Guan that his last $21,442.91 had disappeared. Indeed it had disappeared to an overseas company – Vivid Quark Seychelles.
Mr Wang has not given a satisfactory explanation why the payment was made to Vivid Quark Seychelles. In his s.19 examination, he said that he didn’t remember the purpose of the transfer. In his written statement to the Tribunal he said that it was because Jerry had borrowed between $200,000 and $300,000 from the company and had repaid some but not all of the debt. Therefore he was paying off some of Jerry’s debt. There is no suggestion Vivid Quark Seychelles demanded it. Mr Wang raised this explanation for the first time in this Tribunal. In cross examination he agreed he was speculating as to the purpose of the transfer.
I do not accept Mr Wang’s explanation for transferring $21,442.91 from Easy Capital Global to Vivid Quark Seychelles. The transfer was a dishonest act. He had lost trust in Jerry before he knew of Dr Guan’s existence. He had lost more trust since he had learned of Dr Guan’s concerns. It is highly improbable that he would be gratuitously paying Jerry’s debts. Furthermore, assuming the debts existed, they were the debts of what Mr Wang regarded as Jerry’s company, Easy Capital and not Easy Capital Global. The transfer was made by Mr Wang to a company ostensibly controlled by an extended family member.
I can only conclude the payment was made to ensure that Dr Guan could not recover the balance of moneys originally deposited – or to make it appear to Dr Guan that he could not recover them. Mr Wang has at times said that he was not sure that Dr Guan invested the money at all, or had any entitlement to claim the money even if it was his. One can argue about the merits of Dr Guan’s claim against Easy Capital Global, but the simple fact of the matter is Mr Wang knew Dr Guan had a claim on the money but regardless proceeded to pay the money out of the Easy Capital Global account to a family company. He then closed the account.
On 25 February 2015, Mr Wang sent an email to Dr Guan saying:
“I have investigated the matter. I found the reason and issue. I also get mr jerry [sic] Chie and [m]r [sic] Alvin Heng to agree to solve the issue.
Due to the Chinese New Year, It [sic] may take longer.
I will write to you next Wednesday as I am taking my holiday this week.”
Mr Wang argues that this email is consistent with the fact that Jerry and Alvin were running a separate business. It is further submitted that the fact Jerry and Alvin told Mr Wang that they had business dealings with Dr Guan and had resolved the issue, provides context for Mr Wang’s decision to close the NAB account. It doesn’t. He had long since learnt to distrust them and had terminated his business relationship with Jerry for reasons which I set out earlier.
On 5 and 6 March 2015, Dr Guan followed up with Mr Wang seeking the return of his money. He was not advised that it had now all been transferred to a family company.
After these emails from Dr Guan on 6 March 2015 there was an email from [email protected] to Dr Guan copied to Mr Wang saying:
“After our clients investigation we found out the following:
1.        Mr Chia Wee Keat approached our client in early 2014 offering certain                   amounts of money to develop the Malaysian market for our client. Our   client did receive the money including your $100k.
2.        However, Mr Chia Wee Keat has already taken the money for himself.
3.        Our client has never been aware of your transfer at all. As such, we    suggest you take relevant action in Malaysia which would be the most   appropriate jurisdiction and we enclose Mr Chia Wee Keat identification   and contact details for your information”.
Mr Wang said he was not sure whether he authorised the email to be sent. That is most unlikely given the importance of the dealings with Dr Guan at this time and the fact that it was copied to him. The email is inaccurate

Putting aside the errors in the first paragraph about the timing and who made the approach in 2014, the greater concern lies with paragraph 2, which says Jerry had taken the money for himself. The email did not say that Mr Wang caused the money to be transferred to the company of a relative. It may well be that Mr Wang was not aware of where the money came from when it was received, but a frank answer to the enquiry would have been to advise that he did not know where it came from and that at Jerry’s request he had transferred the money in three tranches to Vivid Quark Seychelles on particular dates, the latest date being 17 February 2015. Easy Capital Global had no other significant transactions.
If the email was not approved by Mr Wang before it was sent, he should have caused corrections to be made after he received it so that the recipient would not be misled.
Each of the dealings with Dr Guan were very important to Easy Capital Global and to Mr Wang. I do not accept that he was not personally involved in the sending of these emails to Dr Guan. Nor am I prepared to accept in relation to this email that it is in any way influenced by language difficulties. As is pointed out by Mr Wang’s Counsel, the email comes from Ms Tang who is Australian born. She copied it to him, and I am satisfied that he must take responsibility for it, either for approving it or not correcting the contents when he saw the email. As previously noted, Ms Tang was not called to give evidence. Furthermore, there is ample evidence that on the important matters Mr Wang’s staff sought his instructions. It is clear that it was Ms Tang’s practice to forward important emails to Mr Wang when he was not otherwise copied in on them. The email is factually incorrect – Jerry had not taken the money; Mr Wang had caused it to be paid. Nor was it accurate to say it was later “for himself”. It was taken to further the venture of Mr Wang and Jerry – a venture in which Dr Guan had no interest whatsoever.
On 6 March 2015 Dr Guan replied to the last email saying, inter alia, it was “your fault to allow else [sic] (without my consent and permission) to take my money from the account”. It is obvious from this statement that the half-truths told by Ms Tang and Mr Wang misled Dr Guan about who was responsible for the transfer from Easy Capital Global. Dr Guan was not yet aware that it was Mr Wang who was responsible for the transfer.
On 7 March 2015 Dr Guan emailed Mr Wang saying, “[y]ou told me Chia Wee Keat has taken our money away. Can you provide evidence on when and how he did so.”
On 7 March 2015 Mr Wang replied saying “[y]es we can. I will write to you Monday next week.”
On 11 March 2015 Dr Guan emailed saying “could you kindly advise the evidence that indicates Mr Chia Wee Keat took away our money from your company account and the date he did.”
On 12 March 2015 Mr Wang replied saying, “[p]lease give us time to allow us to fully investigate the matter and I’m thinking to report to police. And then you may contact police.”
On 14 March 2015 Dr Guan wrote in an email
“I did an investigation, out of the US $300,000, which I mentioned in an email to you dated Thursday 12th February 2015 6:49 am, US$150,000 was transferred to your account (including my US$100,000 and Qin Hong’s US$ 50,000). The other US $150,000 was transferred to another account which may not have something to do with you. I have bank proof that the above mentioned US $150,000 was received by your account above. Please see attachment. Therefore, I request you to return the US $150,000 to me and Ms Qin Hong. If I do not receive the money in 2 weeks’ time, I will report your company to police and take legal actions.”
Ms Tang sent a reply copied to Mr Wang saying “for the US $150,000 you mention was transferred to our client’s bank account (including US $100,000 and Qin Hong’s US $50,000). Please provide a transfer receipt accordingly please of this deposit.”
On 27 March 2015 Mr Wang sent an email to Dr Guan claiming to be a victim and that Easy Capital Global was also a victim. Relevantly the email said:
“It is very serious, Easy Capital Global is also a victim of mr [sic] Chie. We need more time to find out where the funds went. Easy Capital Global is currently trying to find from Mr Chia what he did. I hope that you understand the situation. You were deceived by Mr Chia to deposit the money and Mr Chia used your money to claim it was his to come into a negotiation with easy capital global”.
This is partly but not entirely true. While I have accepted that there was deception by Mr Chie in relation to the deposit of the money, I do not accept that by this time Mr Wang did not know where the funds went. Furthermore Easy Capital Global was not a victim of Mr Chie. It was a beneficiary and continued to be a beneficiary if it received the software on which it asserts the money was spent. In response to a query from the auditor, Mr Wang had advised on 2 February 2015 the deposit of $111,112.69 had come from Jerry and had been paid to Vivid Quark Technology. He had told the auditor that the USD $49,990 (which had come from Ms Hong) had been returned to Jerry. He had paid the balance of Dr Guan’s money to Vivid Quark Seychelles. He had been the person who made or authorised the three payments, each of them to Vivid Quark Seychelles.
Mr Wang’s evidence was that he doesn’t recall the transfers and points to the fact that after the 27 March 2015 email he sent an email the following day to Ms Yang which said “please help to find out where the $150,000k went” and on the same day an email to Ms Tang stating, “I need to find out where the money went”.
Given these internal emails I am not prepared to find that his last email to Dr Guan is dishonest – rather it merely confirms the impression he has given that he is not competent.
Legal matters
The power to make a banning order is to be found in s.920A of the CA. The objects of s.920A of the CA are contained in s.760A which states:
“The main object of this Chapter is to promote:
(a)       confident and informed decision making by consumers of financial products   and services while facilitating efficiency, flexibility and innovation in the   provision of those products and services; and
(b)       fairness, honesty and professionalism by those who provide financial                     services; and
(c)       fair, orderly and transparent markets for financial products; and
(d)       the reduction of systemic risk and the provision of fair and effective    services by clearing and settlement facilities”.
Competence under S 920A(1)(da)
Section 920A(1)(da) of the CA provides that ASIC may make a banning order if it has reason to believe that the person is not adequately trained or is not competent to provide a financial service or financial services.
While I have found that up until the time of Dr Guan’s emails Mr Wang was to a large extent a victim of Jerry, it is also true that he showed substantial incompetence in his handling of business matters. He was unaware that Easy Capital, which was owned by Forpro in which he had an interest and his mother had an interest, was a company which was actively trading. He had a paralegal whose job it was to attend to routine matters and who forwarded him matters of importance. Even though he proudly asserts that he had a couple of hundred employees and 25 people in his legal firm, he didn’t read important emails, or didn’t read the whole email, and relies on that assertion as a means of avoiding responsibility.
He caused large sums of money to be paid out of Easy Capital Global bank account without having any recollection of doing so. Transactions are incorrectly recorded, whether by Mr Wang or his employees, as being payments for rent when they clearly were not. When Dr Guan raised what could only be described as alarming matters which called for immediate action, Mr Wang did not take immediate action. When the respondent wrote to Mr Wang about its concern regarding some actions of Easy Capital, he provided a proper reply, but did not investigate the matters raised which he should have done given the concerns expressed were relevant to Easy Capital and to Easy Capital Global. Mr Wang made the first two payments to Vivid Quark Seychelles without any quotation or invoice for goods or services. He gave instructions to auditors not to send anything to ASIC. He cannot answer straightforward questions such as whether Vivid Quark Seychelles contributed money to enable him to invest in Easy Capital Global. Even after three months of inquiries he was unable to ascertain what happened to two amounts of money that were spent. His emails in response to Dr Hoang are not forthright and are somewhat misleading.
Section 989B(2) and (3) of the CA imposes obligations on an AFSL holder to lodge profit and loss statements and a balance sheet with ASIC. There is no dispute that Mr Wang contravened these provisions in relation to AFSLs linked to Vitas, Easy Capital Global, Vitas Fund and Forbes Wealth. Mr Wang accepted that he was the person responsible for ensuring compliance with the obligations imposed under 989B(2) and (3) and knowingly failed to to ensure the statements were filed.
I am satisfied Mr Wang is not adequately trained and is not competent to provide a financial service or financial services.
CONCLUSION
Good fame or character under S.920A(1)(d)
Section 920A(1)(d) of the CA provides that ASIC may make a banning order against a person if ASIC “has reason to believe that the person is not of good fame or character”. Subsection 1A(d) provides that in considering whether at a particular time there is reason to believe that a person is not of good fame or character, ASIC must have regard to, inter alia,... “any other matter ASIC considers relevant.”
The phrase “reason to believe” has been said to involve a “relatively low threshold”.[4] There must of course be objective facts sufficient to support the relevant belief.[5] Dishonest conduct is incompatible with the qualities of good fame and character.[6]
[4] Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 542 at paragraph [130] per Callinan J.
[5] Collins v Northern Territory [2007] 161 FCR 549 at paragraph [65] per French J.
[6] Re: Davis (1947) 75 CLR 409 at 420 per Dixon J.
I have found that Mr Wang’s emails to Dr Guan are in some instances misleading but I have not found them to be dishonest.
I am satisfied that his payment to Vivid Quark Seychelles of the balance of Dr Guan’s money at a time when he knew that Dr Guan was claiming the money was a dishonest act. It cannot be regarded otherwise when one considers the high educational level and qualifications of Mr Wang and the fact that he was, or had been, the principal of a firm of solicitors. He had to know that he should not have paid that money to a company controlled by his family and out of the local jurisdiction. Furthermore he has made no effort to repay any money from Easy Capital Global or its successor, even though the first two payments made by it was to acquire software and hardware for use in the FX business. Easy Capital Global has benefited at the expense of Ms Hong and Dr Guan, not Jerry. That indicates poor character.
In assessing good fame and character for the purpose of s.920A(1)(d), it is irrelevant whether the questionable behaviour or actions of the individual involved took place in the course of operating a financial services business or in contravention of or in relation to any provision of the CA. As it happens Mr Wang’s actions may directly contravene provisons of the CA. However I do not intend exploring whether each possible contravention of a provision of the CA by Mr Wang gives rise to a finding that he is not of good fame and character because I am satisfied that Mr Wang is not a person of good fame and character by reference to his act of dishonesty in regards to the transfer of Dr Guan’s remaining funds from Easy Capital Global to Vivid Quark Seychelles. This finding is further supported by his failure to cause Easy Capital Global or its successor to repay some or all of the money of Dr Guang and Ms Hong in addition to his other conduct which I have decribed as misleading.
Failure to comply with a Financial Services Law Sect 920A(1)(e)
The respondent also relies on the s.920A(1)(e) of the CA. This provision deals with non-compliance with a financial services law. Section 1041G and 1041H are financial services laws.
It is not necessary for me to deal with s 1041G because I have already found Mr Wang’s conduct to be dishonest in relation to the third payment to Vivid Quark Seychelles.
Section 1041H(1) provides:
“(1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service that is misleading or deceptive or is likely to mislead or deceive”.
Section 766A provides that a person provides a “financial service” if they engage in any of the conduct set out in sub-sections 766A(a)-(f). The applicant submits that at the time that the Dr Guan and Ms Hong deposits were made into the Easy Capital Global accounts, the company was not at that point in time in the business of carrying on a financial service within the definitions in s.766A(a)-(f). It was preparing to do so but had not commenced trading and therefore not carrying on a financial service.
763B of the CA provides that
“a person makes a financial investment if the investor gives money …to another person and….. the investor intends that the other person will use the contribution to generate a financial return….. and the investor has no day-to-day control over the use of the contribution to generate the return.”
The respondent argues that at all relevant times Easy Capital Global held a financial services licence and that Dr Guan and Ms Hong provided “money to the company intending that the company would use the money to generate a financial return” for them and relies on section 763B. The section therefore seems to apply to the transactions of Dr Guan and Ms Hong. Therefore there was a “financial service” within the meaning of sub section 766A(1).
The conduct to be considered is the conduct involved in the email chain. At that time Mr Wang was involved in Dr Guan’s efforts to recoup his investment.
I think the better interpretation of the legislation is to apply the definition to which s.1041H refers, which is to look at the definition of “financial service”. Neither Mr Wang nor Easy Capital Global actions fell within that definition.
Banning Order
Since I have found that Mr Wang is not of good fame and character, the provisions of s.920B(2) require that any banning order is permanent.
I affirm the delegate’s decision.

I certify that the preceding 148 (one hundred and forty-eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President I. Hanger AM QC

................................[sgd]..........................................
Associate
Dated: 21 May 2018

Dates of hearing:
6 December 2017;
7 December 2017;
8 December 2017

Date final submissions received: 9 February 2018

Counsel for the Applicant: Mr D Hume

Solicitors for the Applicant: Clayton Utz

Counsel for the Respondent: Ms K Stern SC

[2018] AATA 1405

21 May 2018

Key Legal Topics

Areas of Law

Administrative Law

Commercial Law

Legal Concepts

Judicial Review

Dates of hearing:	6 December 2017; 7 December 2017; 8 December 2017
Date final submissions received:	9 February 2018
Counsel for the Applicant:	Mr D Hume
Solicitors for the Applicant:	Clayton Utz
Counsel for the Respondent:	Ms K Stern SC