Peter Wood, a smooth-talking salesman, trusted Shawn Richard with more than just his money. He gave the Trio Capital chief a place to stay when ASIC investigators closed in on him, shut down his company and froze the fraudulent fund he controlled. Wood stood by his mate, not believing for a second he could have been running Australia's biggest superannuation fraud. But five years on, he concedes he was duped by the "best liar" he's ever met. He doesn't buy the official story that US-born Jack Flader was the man in charge. CYDONEE MARDON reports.
Peter Wood thought he’d been pranked for his 50th birthday when police officers burst into Trio Capital’s Sydney offices one Tuesday morning in 2009 and ordered staff to stop work.
The sales manager for Astarra Strategic Fund was impressed by how well his mates had done him over.
‘‘I just thought at the time this is a joke, ‘who has done this? I like it’ because I didn’t even recognise the faces.
‘‘So I’m sitting back thinking ‘this is great, fantastic, yeah, yeah I won’t touch my computer, I won’t use my phone, not a problem at all’.’’
Then Mr Wood saw the AFP badges and the guns.
He found out later that officers were simultaneously raiding the Sydney home of his close mate and colleague, Trio CEO Shawn Richard.
Acting on a tip-off that dodgy deals were being done, ASIC and APRA had issued stop orders on the Astarra Strategic Fund.
The scam was over, but the regulators were too late to stop the disappearance of $176 million.
In an exclusive interview with the Mercury, Peter Wood - the man who convinced financial advisers around the country to invest in Astarra - said he had no knowledge of any criminal behaviour.
He trusted completely his mate Richard, who was later jailed over the country’s biggest superannuation fraud.
But now he’s come to realise, he says, that he was duped by the ‘‘best liar’’ he has ever met.
He claims ASIC gave police orders to raid every office of Trio Capital’s Martin Place headquarters - except his own office.
That’s because ‘‘they already knew a lot about me’’ and knew he had ‘‘nothing to hide’’.
Trio Capital was the responsible entity for an array of managed investment funds. Among the largest funds under its control was Astarra Strategic Fund.
Mr Wood first came across Richard in 2005 through a business associate when his own company was looking to raise some capital.
‘‘I didn’t know him from a bar of soap, but my first impressions of the guy I trusted him,’’ Mr Wood said
Richard invested money in Mr Wood’s company and some four months later asked Mr Wood to join his own company.
‘‘He wanted me to start building his company for him … so I went through as much as I could to find out about him. I hadn’t said yes or no to it.
‘‘We couldn’t find a damn thing about him apart from he was Canadian, he was 30 years of age, and how the hell did he get to own a licence of which there was only 15 in Australia?”
Mr Wood said the full licence was ‘‘to do anything you want, so in terms of running anything, hedge funds through to managed investment schemes, to property developments, you name it, this company had the licence to do anything’’.
Richard’s licence was ‘‘exactly the same licence as a bank has’’, he said, and that was a massive factor influencing his decision to do business with Richard.
‘‘We knew he had dealings with ASIC so that was sort of a tick, but the fact that APRA was regulating the business, the biggest regulator in Australia, we made the decision that it was fine.
‘‘I was head of distribution. Sales manager but there was no sales people, just me. I just honed the market and did what I do well.’’
Mr Wood travelled the country, locking in advisers from Cairns, Rockhampton, Townsville, the Sunshine and Gold coasts and Brisbane. In NSW he focused on Coffs Harbour, Port Macquarie, Sydney, Newcastle, Wollongong and Albury.
He also had success in Melbourne, Adelaide to Port Lincoln, Perth and Alice Springs.
‘‘Advisers that invested were small to large independents, some of the largest advisory firms in the country, some of the groups were offshoots of banks.’’
When asked how he convinced advisers to put their faith in Astarra, Mr Wood said ‘‘we had a good story to tell, I was very aggressive in the marketing’’.
Mr Wood said the perception that hedge funds were a high risk was damaging and incorrect.
‘‘That’s a really important part of this whole thing. The perception was, and still is in many areas, that a hedge fund is very, very dangerous. It’s actually quite the opposite.
‘‘The reason why they call them hedge funds, is to offset them [hedge] against any mitigating dangers that might exist.
‘‘So my role more than anything else was to sell the Astarra Strategic Fund to particular individuals or companies that understood diversification.’’
Mr Wood said Trio had internal and external legal departments, internal and external auditors, a board of directors and a separate investment board.
‘‘It’s not fly-by-night … these things supposedly are researched thoroughly by the investment committee and they guide everything that happens. To me, it’s supposed to be fool-proof.
‘‘What the market doesn’t seem to fathom is that the hedge fund is just a structure. You can have a structure of a superannuation fund that can be far riskier than a hedge fund.’’
Mr Wood said Richard was a man who people felt they could trust. “I think it’s important to understand that butter wouldn’t melt in his [Richard’s] mouth.
‘‘He was a non-smoker, non-drinker, non-gambler that we knew of, not a womaniser.’’
Much has been made of his Facebook alias ‘‘Shawny Cash’’.
‘‘His nickname has nothing to do with money,’’ Mr Wood says. ‘‘It’s to do with Johnny Cash, the music, he was his favourite artist. Nothing to do with money at all.’’
Richard was well known for keeping to himself.
While travelling to conferences, he would spend his free time in his hotel room, working through the night on overseas business deals. But he was also socially awkward, according to Mr Wood.
‘‘To me he was someone totally sheltered from the rest of the world because he was a good investment manager.
‘‘One of the things about Shawn was he certainly had an answer for absolutely everything.
‘‘And I can generally see through a real liar, you don’t tend to believe a bullshit artist cause you take it with a grain of salt, but he was a liar, the best I’ve ever seen in my life.
‘‘He had the licence the size of the four big banks to back it up. To us he was a financial guru.’’
Mr Wood, who lost 75 per cent of his worth in Astarra-related investments, has had years to theorise about why his world came crashing down.
He says ASIC and APRA have a lot of questions to answer.
‘’I don’t think the regulators really have an idea of what happens in the market,’’ he said.
‘‘ASIC are effeminate cardigan-wearers, government employees, and from the very start I don’t know how they allowed Shawn to have a licence,’’ he said.
‘‘We now know he didn’t even have a university degree, so how could he have this licence?’’
Mr Richard said that when ‘‘everything went to shit’’ he couldn’t believe Richard was involved.
‘‘He was stressing out quite a lot, what I knew at the time was this whole thing is falling in and he seems to be being blamed for this and I didn’t believe that he could do anything wrong,’’ Mr Wood said.
He didn’t see Richard on the day of the raid.
‘‘I’d spoken to him once and he said something along the lines ‘look say what you’ve got to say [to investigators] if you know anything, don’t worry, everything is fine’. ‘‘I saw him the next morning. I wanted answers. He said he’d done nothing wrong.
‘‘He blamed Jack Flader. That was being bandied around very quickly, but the problem with him blaming Jack Flader with me and a few others at the time was we didn’t know who Jack Flader was.
‘‘Jack Flader to us was someone we had just heard the name Jack, we didn’t know his last name.’’
According to the 2011 Parliamentary Joint Committee inquiry into the collapse of Trio, Jack Flader was ‘‘one of the masterminds of the fraud’’.
‘‘My real thoughts on Jack at the moment are that he had nothing to do with anything,’’ Mr Wood said, ‘‘except in the fact that he was a receiver of various monies in Hong Kong for distribution to other managers, that he just played a legitimate role.’’
After pressure mounted on Richard to spill the beans on his involvement in the fraud, Mr Wood noticed his friend was struggling.
‘‘After the whole thing hit the fan I said to Shawn, probably in a month of this all happening, he probably wasn’t going to survive this mentally.
‘‘And I firmly believed he couldn’t have done anything wrong, so I said come and live with me in Manly.’’
Mr Wood said Richard was generally a laid back sort of guy but became irritable as the investigation hotted up.
‘‘He did talk about Flader a lot … ‘Flader’s done this, I’ve been set up,’ you know. This is when he started bringing up Matthew Littauer, who had been murdered in the red light district of Tokyo.’’
Littauer, who died just prior to Mr Wood joining the company, was Richard’s ‘‘mentor’’.
‘‘My understanding was Matthew had bequeathed the company to his wife and that Shawn was running it on behalf of Matthew Littauer’s wife.
‘‘After about three months of him being with me, I said to him, ‘this is not doing me any good’ cause I’m fielding more phone calls as a result of him being with me and protecting him from everyone,’’ Mr Wood said.
‘‘I said, ‘listen mate, it’s probably best you go somewhere else’. He’d met a girl that I didn’t know about, and he went and lived with her.
‘‘That’s when Shawn changed, because that’s when he decided he wasn’t going to tell me anything.’’
Richard moved out and by February 2010 the pair’s relationship had waned.
‘‘For the next four months I think I only saw him once and spoke to him a few times.
‘‘He wouldn’t return phone calls, he was changing his phone numbers quite regularly ... I thought, well okay, there’s more to this but I can’t find anything out.’’
In 2011 Richard was jailed for dishonest conduct and served two and a half years jail. During his time behind bars he called Mr Wood twice.
‘‘That was towards the end of him being there … He sounded normal, absolutely normal, happy and in control. He talked about his future, then wanted to know what I was doing.’’
Richard hasn’t contacted his old mate since being released on parole in January this year.
‘‘When he got out I didn’t hear from him. I fully expected a phone call, for two reasons.
‘‘One was an apology, because obviously by then he would have known that I knew the truth, that he was actually behind it.
‘‘And the second thing I would have thought he would have contacted me for was because we became friends. He took my network and that’s not something I’d give out lightly.’’
Mr Wood, pictured right, insists there is no way advisers could have known Astarra was a fraud.
‘‘Even our team and the investment board were clueless as to what was going on,’’ he says.
‘‘Everyone involved in my team worked on the basis that we relied on the information supplied by an investment board, internal and external lawyers, research experts, a chief investment officer and two CEOs, not to mention the fact that this fund had been given the tick of approval by ASIC, APRA and external auditors.
‘‘The number of levels of security as far as we were concerned far outweighed the notion that the fund could have been fraudulent.’’
Not even with the benefit of hindsight would he have done things differently.
‘‘The fund wasn’t shooting any lights out in its performance and was just doing its job as a steady performer,’’ Mr Wood said. ‘‘It has literally sickened most of us involved. What’s been done by Shawn has left many ruined … most employees of Astarra were also investors and like others with self-managed superannuation funds, we still haven’t been compensated.’’