The size of her crime might be very different to that of infamous US fraudster Bernie Madoff, but Melbourne woman Hazel Bucello officially joined the ranks of jailed Ponzi scheme operators yesterday after being convicted of tricking five investors out of $2.5 million.
Bucello was the sole director of Melbourne-based loan and mortgage broking business Victorian Finance Broking Services, located in the leafy inner Melbourne suburb of Kew.
The broker specialised in helping those who could not get loans elsewhere, including former bankrupts.
According to the Australian Securities and Investment Commission, between 2004 and 2006 Bucello convinced five individuals to invest $2.5 million by promising they would earn 4-5% per month on their capital, which was to be used to provide bridging finance to other VFBS clients.
While some investors did receive interest payments, they were actually being repaid with their own money.
“The scheme was reliant on new funds being invested to meet the promised interest payments,” ASIC said in a statement.
“Those who invested at the very beginning fared much better than the last investor, who received no interest payments.”
Bucello also failed to pay back the investors’ initial capital. She used this money for her “own purposes” and to keep VFBS running.
The business eventually collapsed in June 2006 and Bucello was charged in March 2008.
Yesterday, Bucello faced sentencing after earlier pleading guilty to five counts of obtaining property by deception and one count of obtaining a financial advantage by deception.
She was sentenced to four years and nine months in jail and will serve a minimum of two-and-a-half years.
Bucello was also ordered by the Court to pay $1,207,537 in compensation to the investors.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
