How scammers are targeting your super

Melissa Clarke: Building a retirement nest egg takes decades of careful saving. But wherever there’s money, there are scammers. They’re targeting super accounts and with little more than a fake signature and a copy of your passport, they can clean out your life’s savings. Today, we speak to Michael Atkin, the ABC’s National Consumer Affairs reporter, about one man’s battle to get his money back. I’m Melissa Clarke in Canberra on Ngunnawal Country and acknowledging other custodians, this is ABC News Daily. Michael, it seems there’s a scam for just about everything these days. And you’ve been investigating a man who lost his entire retirement savings through an elaborate superannuation scam. Tell me about Lee.

Michael Atkin: Yes, Lee Braz is a guy who lives on the Gold Coast. He’s spent four decades working in the construction industry and like plenty of people entering the construction industry, he was thinking, gee, I really need to sort my super out and try and get the most out of it before I retire. And it was with those thoughts he got a phone call from what he was told was a Sydney company that was promising to help him set up a self-managed super fund and invest the money he had in that.

Lee Braz: Yeah, after several phone calls back and forth with them and sussing out their websites and so on, I decided to just sign up to get a self-managed super fund up and running.

Michael Atkin: And they sent him these sales documents that had pie charts, it had graphs with impressive returns saying that they were going to invest in tech and finance giants, big companies, places like Google and Visa, and, you know, it all looked above board when he checked it out. So he agreed to sign up and set up a self-managed super fund.

Lee Braz: I thought if I try $10,000 and I got those sort of returns, then great, and if I didn’t, I’d move on and I wouldn’t bother with that type of investing again.

Michael Atkin: He sent over his passport as well as some other personal details, not his actual passport, a photocopy of his passport. What he didn’t know is that really it was all part of this elaborate scam and the scammers used the documents he provided to fraudulently apply for his entire life savings, $180,000, and they were successful.

Melissa Clarke: Wow. So he has thought he’s done his due diligence, he’s checked that they’re registered, sees that they have a real physical address here in Australia, just having a bit of a test start with $10,000, but his super fund transferred the entire balance and without double checking with him? How does that happen?

Michael Atkin: Yes, that’s something Lee still wants to know, how on earth this really happened. But he had no idea this was going on in the background. He thought he was going to get a self-managed super fund and start investing this small amount of money. But he opened the mail one day and there was a letter from his super fund saying, we’ve rolled over all of your money into this bank account he’d never heard of, it certainly wasn’t his, and he started panicking, thinking, what is going on here? This is crazy.

Lee Braz: The first I’d really heard of it was when everything kind of had already transpired.

Michael Atkin: And he contacted his super fund, demanding to see the rollover forms that were used, and as soon as he saw them, he said he could tell that they’d forged his signature, but there was also all this fake or fraudulent paperwork that they hadn’t picked up upon, including that there was a dodgy bank account statement, certainly wasn’t his bank account, and that had been certified by an accountant in Sydney when he lived on the Gold Coast and there were still COVID restrictions in place when this was happening. According to the super fund’s rules, accountants aren’t allowed to certify documents, so they had missed all these problems with the paperwork and they’d paid out the money and they didn’t have multi-factor authentication in place. He didn’t get a text message or an email, as is often the case, and he believes simply, had he got a text message, he would have known what is going on here, stop, stop, stop.

Lee Braz: I hoped it wasn’t true and I thought, you know, what am I going to do if this has happened and how can I reverse this? Surely it’s just a mistake or a clerical error or something like that, so, you know, hopefully I can resolve it fairly simply, but, yeah, I guess when I realised it was fraud and, you know, a scam, that’s when I, yeah, I really started to feel horrible and a bit depressed, I suppose.

Melissa Clarke: But surely the super company would have picked up on some of those things that weren’t quite right, that a signature didn’t match or that an accountant had certified this and surely one of those things triggered something in the super company.

Michael Atkin: Yeah, they didn’t and I think this is what goes to the heart of the matter really is that this entire elaborate scam has been set up to target the superannuation industry. The scam is the criminals, organised criminals, international criminal syndicate behind it, clearly felt that there was a huge amount of money here in the super industry, trillions of dollars, and that the controls in place weren’t good enough and that they were going to be able to defraud people like Lee and certainly in his case they were successful. And his fund, InTrust Super, they didn’t notice anything was suspicious, they didn’t contact him prior to the rollover and InTrust is part of a massive super fund now. It’s owned by Host Plus which manages $110 billion for 1.8 million people and they have refused to pay Lee back saying, well we met our obligations despite paying out based on the fraudulent rollover.

Melissa Clarke: Lee did manage to get some of his money back but only a small amount. What happened? How did that come about?

Michael Atkin: Yeah, so first Host Plus refused to pay him and then he lodged a dispute with a financial ombudsman which is called AFCA and lost his AFCA matter and so he thought, well I’m not going to take this. So he got a lawyer and spent a fortune on legal fees appealing to the federal court and he won and the judge found strongly in his favour saying the original ombudsman decision, that is legally flawed, it has to be scrapped and you need to look at this case all over again and Lee had to pay to point that out.

Melissa Clarke: That sounds like a really good outcome. The ombudsman has to go back and take another look. So is there a happy ending here for Lee?

Michael Atkin: There’s not. So where this ends is he’s left worse off after legal fees. So in the second decision the ombudsman says, all right, well we think we did make a mistake. We’ve seen the judge’s findings but we’re not going to give you all of your money back. We’ll give you 30 per cent back which is a bit over $54,000 but after legal fees that means he’s worse off. So I guess he’s concerned that that second decision is also incorrect but he can’t afford to appeal again.

Melissa Clarke: That’s a completely unsatisfactory outcome for someone who’s been fleeced of so much money. Have you been in touch with the ombudsman about the outcome of this and what about the super fund? What have they had to say? 

Michael Atkin: The ombudsman says he can’t say much about this. I tried to interview them. I put detailed questions but it says they have strict confidentiality rules. It says that they carefully decided the second case and did take into consideration the legal findings in the federal court matter but at the end of the day it matters little for Mr Braz and the super fund didn’t tell me too much either. It also did not want to be interviewed and said that it doesn’t contest how this occurred in terms of the fraud occurring and the super fund being tricked but it says that this happened before InTrust merged with Host Plus.

Melissa Clarke: So let’s just go back to what’s at the heart of this. Lee never asked his super fund to transfer his money but because he’d handed over his passport and documents to the scammers for something else, it’s ruled that it’s his fault?

Michael Atkin: That’s right. So he’s decided according to the ombudsman he’s the one who should bear the bulk of the loss but I’ve interviewed a lawyer by the name of Josh Mennen who’s with a firm called Maurice Blackburn who specialises in superannuation disputes and although he didn’t represent Lee Braz he represents people in similar situations and he’s had a look at all the ombudsman decisions and the federal court decision and he says that what happened to Lee is manifestly unfair.

Josh Mennen: Well it’s not unusual for successful appeals against AFCA decisions to occur. What is I think unusual is that in this case the ultimate outcome is such so manifestly unfair and unreasonable for Mr Braz and that’s because he’s been so substantially left out of pocket as a result of holding the ombudsman and the trustee to account for their errors in rolling over these funds and determining the matter in the first instance incorrectly.

Michael Atkin: He takes particular issue with the ombudsman using this phrase called apparent consent in the second decision and it’s used apparent consent to say that the super fund could rely on the assumption that Lee had signed the rollover request because of the scam even though he hadn’t and he didn’t consent to it and so Mr Menon says that that’s a seriously flawed argument. He believes it’s legally incorrect and had it been appealed he believes that Mr Braz would have won on appeal but as I’ve said he can’t afford to. You know this has already cost him so much money and it’s just not worth the gamble to try and keep going.

Josh Mennen: Mr Braz would have no doubt expended large financial resources setting the law straight. He shouldn’t have had to have done that and I believe that if AFCA were serious about doing what is fair and reasonable in all of the circumstances it would have accounted for some sort of compensation in relation to those legal fees.

Melissa Clarke: Michael, as we know scams are becoming more and more sophisticated. What should the ombudsman be doing to protect people when they’re caught up in them?

Michael Atkin: The reason why I keep doing these stories is because it goes back to the heart of the matter of how financial services companies are not doing enough to protect people. There are better protections that could be in place such as multi-factor authentication where you get a text message or an email before a huge amount of money is rolled over in Mr Braz’s case and that could be another step that maybe could have prevented this from occurring.

Melissa Clarke: Where does that leave people? Does it mean that really we just have to try and make sure that we do everything we can ourselves not to fall victim to these scammers? Is it down to the individual?

Michael Atkin: I think in too many cases it still is down to the individual and, you know, everybody should be incredibly vigilant about this sort of stuff. You should try and make sure that you do have things like multi-factor authentication on your bank account, super funds keep going down the list and if your institution isn’t offering that demand that they do. The Assistant Treasurer, Stephen Jones, has told me he thinks that this is a terrible case, that it shows the need for the super industry to do much better and it shows the need to change the law.

Melissa Clarke: And where does that leave Lee? Where does he end up now?

Michael Atkin: Well, it means that he’s going to have to work for much longer simply and he told me, you know, it’s one of these things that’s really hard to hear, you know, that your superannuation is down to zero. That’s a daunting prospect for anybody and he just says the system needs to change to better protect people so that this is so much harder than it is at the moment.

Melissa Clarke: Michael Atkin is the ABC’s National Consumer Affairs reporter. This episode was produced by Bridget Fitzgerald, Sam Dunn and Oscar Coleman. Audio production by Anna John. Our supervising producer is David Coady. I’m Melissa Clarke. I’ll be back with ABC News Daily on Monday. To get in touch with the team, email us. Thanks for listening.