Former customers of an Australian company claim they were lured into the high-risk world of foreign exchange trading under false pretences and subjected to high-pressure sales tactics which contributed to them losing huge sums.
Two men have spoken exclusively to ABC's 7.30 about the alleged conduct of TradeFred, which operated a foreign exchange trading platform.
Sales representatives allegedly told the men, who don't know each other, to download remote access software so they could control their computers and direct the trades they made.
7.30 has obtained recordings of phone calls between TradeFred sales representatives and the men, which they say expose unacceptable conduct.
At the time they had no idea the Australian operation had outsourced its sales and marketing to sales reps working for a company based in Israel and which had other business conducted from Cyprus.
The men believe Australia's corporate regulator ASIC was too slow to intervene to stop TradeFred, and fear they're unlikely to get their money back after the Australian operations went bust.
ASIC is suing TradeFred in the Federal Court, alleging the company engaged in unconscionable conduct towards its clients, with the case listed for trial this year.
As part of the proceedings, it is attempting to have the net deposits of clients refunded.
'A devastating effect'
The regulator alleges TradeFred was taking the opposite position on trades to more than 95 per cent of its customers, so the company was making money when its customers were losing and was therefore incentivised to have them keep losing.
Former TradeFred customer Geoff Moodie was very concerned to find out the company could have been betting against him.
"I'm losing all my money and someone is winning on my loss? That, to me, hurts," he said.
Mr Moodie is a retired grandfather who lives in Ipswich, Queensland.
He says had he known TradeFred could have been making money when he was losing, he never would have signed up.
Mr Moodie's retirement plans have changed forever.
He's lodged a claim for losses he estimates are over $140,000.
"It's had a huge impact. I think losing that sort of money in anybody's life would impact them," he said.
"I'm not a millionaire, I'm just the average Joe on the street, and that sort of money has had a devastating effect on the family both emotionally [and] physically."
The liquidator for TradeFred has told 7.30 there are over $10.5 million in claims for losses.
However, the Australian operation had over 2,000 customers and so far only a small number have submitted claims.
From Bitcoin to foreign exchange
In early 2019, Adrian Goddard was scrolling through social media and saw an advertisement for trading the cryptocurrency Bitcoin.
The ad, which was endorsed by a celebrity, said you could start trading with just $US250, and Mr Goddard decided to try it out.
The recordings reveal that on the first call with TradeFred the sales consultant said to Mr Goddard, "I understand you're looking to extend your income, maybe thinking about the future, retirement, stuff like that?"
"I can tell you you've definitely come to the right place."
The consultant began discussing automatic trading software for Bitcoin, which would be supported by a TradeFred senior account manager, and then a trading account for Mr Goddard was established.
ASIC alleges that TradeFred was mischaracterising the nature of its services by claiming to customers it had an automatic trading platform for Bitcoin, when it was not a service it offered.
During the phone call, the consultant then quickly shifted the conversation away from Bitcoin to making money trading foreign currencies.
TradeFred offered its customers access to the high-risk world of margin foreign exchange.
Mr Goddard said he made it clear to TradeFred that he didn't understand currency trading and they directed him on exactly how to trade.
"They would basically tell me what to do, tell me what to trade on, and I kept saying to them, 'Look, I've got no idea what I'm doing here, I don't understand the markets,'" Mr Goddard said.
"They had promised to teach me … but that never really came about."
'I was very naive'
Geoff Moodie also signed up after seeing what he believes could be the same social media ad Mr Goddard saw.
On his first call with TradeFred, Mr Moodie made it clear he had no understanding of financial markets and was a complete novice who needed education.
The consultant responded, "Wonderful, most of the clients, and I tell you honest [sic], 90 per cent of them, don't have any previous experience at all. This is the reason I still have a job."
He also promised they offer far more than Bitcoin trading.
"We are not just the cryptocurrency software … we are many other things," the consultant said.
The consultant then talked about how it's possible to make 10 to 20 per cent on a monthly basis with a "low-risk market", by trading in the foreign exchange, also known as the forex market.
Mr Moodie said in hindsight the sales pitch was very slick and he believes he was misled.
"They were able to change my thought pattern from Bitcoin to forex, as they call it, without me realising it, or questioning. I thought maybe the Bitcoin would come at a later date, so, you know, I was very naive at that stage," he said.
Both Mr Goddard and Mr Moodie said TradeFred instructed them to install remote access software on their computers so the sales reps could monitor what was happening on their screens and direct their trades.
This type of software is usually used to fix tech issues from an external site, but is open to abuse.
ASIC alleges TradeFred account managers were using the software to find out how much money customers had available for transferring to trading accounts, and would show the customers what trades they should place.
According to Mr Goddard, sales reps would make sure he was logged in to the software before showing him exactly what to trade on his screen.
"The two main software items that we were using was AnyDesk and TeamViewer, which allows them to get access, obviously, to your computer and therefore they will be able to scroll around with their mouse and show you what they generally wanted … you to do in regards to trading," he said.
Trader was 'absolutely panicked' at losses
While he was prepared to accept some risk, Mr Goddard became increasingly concerned about the extent of those risks and made that clear on a recorded phone call.
Mr Goddard said to the sales consultant, "What I'm saying, I'm not an expert in trades."
The consultant replied, "No, no you don't have to be, that's the beautiful thing.
"That's for anyone."
Mr Goddard replied, "I'd rather learn slowly rather than being thrown into what I'm looking at now."
The consultant persisted and Mr Goddard was pushed to keep trading.
Mr Goddard was trading in a high-risk area known as contracts for difference, where you speculate on movements in foreign exchange rates.
The loss or gain depends on the price when the contract starts and ends, and if the price moves against you it can result in heavy losses.
He estimates having spent more than $130,000 with TradeFred and mounting losses made him feel out of control.
"[It was] devastating, [I was] absolutely panicked about what was going on," he said.
Mr Goddard's trading put him in a tough situation where he was suddenly struggling to pay his bills.
Mr Moodie claims that after suffering losses he was then encouraged by sales reps to trade back into the black.
He now believes these were high-pressure sales tactics used on him when he was vulnerable.
"These guys were well trained … and the pressure was, 'Well, we can get around this, if you put more money in, we can trade this way, and we can trade out of the situation you're in,'" he said.
"Again, [it was] still new to me, [I was] still learning and I listened to what I thought I was being guided [to do]."
Links to controversial company Union Standard
According to ASIC, TradeFred was aware of customer complaints and made "aware of misconduct that USG (Union Standard) had identified during its reviews of telephone calls", but the company took inadequate steps to stop the misconduct.
TradeFred was acting as an authorised representative of a controversial Australian company which ran a global foreign exchange empire called Union Standard International Group.
Union Standard is under investigation by liquidators after it collapsed with hundreds of millions of dollars owing to overseas investors and the liquidators have serious doubts about the true identity of a Burmese man, Soe Hein Minn, believed to be its ultimate owner.
Jason Ward is an analyst with the Centre for International Corporate Tax Accountability and Research.
He's looked at the company structures of TradeFred and Union Standard and believes there is a concerning lack of transparency over who ultimately benefits, especially with Union Standard.
"The links between TradeFred and Union Standard seem to run pretty deep. TradeFred was operating under a financial services license of Union Standard. For one, they share a common director [John Carlton Martin]," Mr Ward said.
"We don't know who is behind Union Standard. On paper, there's a Burmese individual, we don't know if this person truly exists … and who is benefiting from this."
Mr Ward argues there is an urgent need for a beneficial ownership register, something currently being considered by the Albanese government.
"Australia's far behind global standards in terms of public beneficial ownership information," he said.
Call centres outsourced
The TradeFred sales calls to customers were outsourced to a company based in Israel.
The company Capital Unit Media operated from an office block in Tel Aviv, however its website is no longer active and when 7.30 went to the office the building appeared empty.
7.30 attempted to contact Alex Mishiev, the man who is listed on the Israel company documents for Capital Unit. He did not respond to an interview request or reply to a list of questions.
Mr Mishiev is also linked to a United Kingdom company which owned TradeFred's Australian operations as its sole shareholder.
He is listed as one of three directors and the person with significant control of TradeFred Holdings Limited.
Another director is Fred Done, the co-founder of gambling giant BetFred. Mr Done declined to comment on the allegations against the Australian operation, saying via a spokesperson: "I do not want to prejudice an ongoing legal claim so cannot comment at this stage."
7.30 does not suggest that Fred Done had any involvement in the Australian TradeFred business.
The liquidator of TradeFred is Glenn Livingstone from WLP Restructuring.
He is continuing to investigate millions of dollars in payments by the Australian company to two related UK companies which could constitute a practice known as transfer pricing.
Analyst Jason Ward said transfer pricing is a concerning practice.
"There's … alleged transfer pricing issues and transfer pricing is used to avoid paying tax on money earned in Australia by multinationals and companies," he said.
"That reduces taxable income in Australia and reduces revenue to pay for public services here in Australia."
7.30 sought an interview with John Carlton Martin, the sole director of the Australian TradeFred operation, and sent him a list of questions but he did not respond.
ASIC banned Mr Martin from providing financial services for 10 years and from managing corporations for five years.
It found his "lack of understanding or regard for compliance was so serious it justified the making of significant banning and disqualification orders".
It also said he had failed to address misconduct by TradeFred.
According to the liquidator, Mr Martin advised him he was "responsible for compliance, dealing with customer complaints and monitoring of telephone calls".
However, he said it appears Mr Martin was not a signatory to the company's bank accounts.
Third party offers to recover funds
For TradeFred's customers, the nightmare didn't end when it collapsed.
Geoff Moodie says he received a phone call and emails from a company called Funds Recovery which said it would help him get his money back from TradeFred.
It proposed charging him more than $6,000 upfront and 10 per cent of any funds recovered, but Mr Moodie decided against going ahead.
He maintains he did not provide his contact details to Funds Recovery.
"[I am] very concerned that they knew about me, they knew about my trading, they knew basically everything about me, which surprised and annoyed me and worried me," he said.
Liquidator Glenn Livingstone told 7.30 in a statement they had "been made aware from numerous sources that there are third parties approaching customers directly offering to provide refunds or assist in the recovery of money on their behalf.
"Any creditor who is contacted by these parties is advised not to provide any information and to immediately report this to the liquidator."
'I feel I've let myself down'
After Adrian Goddard made repeated complaints, his TradeFred losses were refunded.
But in about April 2020 he claims he received an unsolicited call from another company called EverFx.
According to Mr Goddard the sales rep claimed that EverFx was taking over from TradeFred.
EverFx, which is now trading under the name Axiance, disputes this, saying it has no association with TradeFred and Mr Goddard must have started trading after seeing its marketing material.
According to his financial counsellor Rachna Bowman, he would eventually lose more than $51,000 with EverFx.
Ms Bowman said she was alarmed by what had happened to Mr Goddard.
"Where was the role of the regulator … to step in and put a stop on things that were happening?" she said.
"It just continued on and on and on, till there was no money left in the pot.
"I'm absolutely appalled that something like this could happen."
In a statement, Axiance said Mr Goddard was warned about the high risk on the EverFx website and an internal review of his trading did not find any evidence of misconduct.
It also states that EverFx offered Mr Goddard a lump-sum payment which he rejected.
Mr Goddard says he rejected the offer because it was far short of his losses.
Mr Goddard says he regrets ever getting involved in trading foreign currencies.
"It's not a game you want to play … it's not worth it," he said.
His modest dream of buying a small property has been crushed.
"For me, the money meant an opportunity … I'd buy a house for myself and have something to leave for my kids in the future," he said.
"I feel I've let myself down and I feel I've let my daughters down."
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