In 2016, Janette* was at a Christmas soiree at the Sydney Opera House, enjoying a soft drink with her investment group to celebrate another year of strong returns, unaware she was on the precipice of catastrophe.
The mood was festive. The company director, Tony Iervasi, liked to invite his clients to a get-together once a year and Janette, now 70, had previously been to a company party at Sydney’s Star Casino, and a day at the races in a roped-off area with free-flowing champagne and canapés.
These gatherings made investors feel as if they were part of something but, Janette says, they weren’t ostentatious or extravagant.
“It’s not like he hired out the Joan Sutherland Theatre; it was just in the lobby area,” she says of the Opera House event. “Yes, it’s a bit flash to fork out for that,” Janette supposes, but mostly she felt Tony was a “down-to-earth” kind of guy. “He was very nice. Ordinary,” she says.
“He wore jumpers and trousers to the office. No flashy jewellery. No chains, nothing.” He took the time to take his investors out for coffee. His office was unremarkable. “It was very plain. Computers in the background. A secretary on his floor,” she says.
Though she did note there never seemed to be much on his desk, Janette’s point is she had no reason to suspect she was being scammed.
Yet, within months, the Bondi-based investment group, Courtenay House, would be shut down, its accounts frozen and its directors forbidden from leaving the country. The company that had promised, and delivered, strong, consistent profits, turned out to be the biggest Ponzi scheme Australia had, at the time, ever seen.
Which is to say, the investment group was not an investment group at all. All of the money that people like Janette, and nearly 600 others, had handed over to be traded on the foreign exchange market was being paid to other investors, so they would believe they were earning a profit.
Photographs emerged of Tony living the high life he’d promised his victims. His face was splashed across The Daily Telegraph, smiling and snug in the soft leather seat of a first-class flight; grinning and relaxing in Vegas; lying across a bed in a plush hotel with shopping bags from high-end designers, including Armani and Hugo Boss, spread around him like Midas’ gold. They called him “The Wolf of Oxford Street”.
The Courtenay House victims bankrolled his high-flying life by investing a combined total of $189 million, and Tony, who has pleaded guilty to running the con, is facing a lengthy prison term.
The fraud has caused untold suffering. Janette is full of remorse and blames herself for not seeing the truth. But Ponzi schemes are designed to hide their wrongdoing, and as long as more people kept signing up, earlier investors remained none the wiser.
That was how Sutherland Shire Mayor Carmelo Pesce found himself embroiled in the scandal. Several of his friends had invested, and he’d watched their balances grow for 12 months before deciding it was a solid proposition.
“They fooled people smarter than me,” he tells The Weekly. “I know people who mortgaged their homes and sold businesses and homes to do this. They’re the people I feel sorry for.”
When Janette signed on, she believed she was making a smart decision. Her life was at a crossroads. She had cared for her mother from 2001 until her death in 2007, and was looking for somewhere safe to put her money.
She had never married, supporting herself through a combination of hard work (first as a teacher, later in public relations) and careful spending. Now, she was hoping to enjoy life a little.
“Basically, it came from a point of needing to do something with money and perhaps not being as wise,” Janette says. “I don’t want to rely on anyone else for money. I was just someone who, after many years of being a carer, was trying to do something.”
Tony made her feel like she was in safe hands. “He wasn’t pushy,” she says. “That’s what I liked about Tony.”
She never felt pressured, and she was shown a presentation on how the Courtenay House trades were done.
“I kept saying, ‘Oh, I don’t know. I’d rather be safe, go with the banks.’ Then, in the end, I agreed … My first investment was for $300,000. When, over the months, results began to show, I agreed – slowly at first – to invest further. And with significant interest payments every month, I kept re-investing over the years until what we thought was trading was forced to stop.”
Tony Iervasi’s house of cards
Experts say financial crimes thrive in times of economic strife. The world was in the grips of the Global Financial Crisis when Courtenay House opened for trade in 2008. Tony had previously worked in property and claimed he wanted to try his hand at forex trading. Except he didn’t.
Foreign exchange, or forex trading, sometimes called FX trading, involves buying and selling foreign currencies with the goal of making a profit by predicting the value of one against another. It’s regarded as complex and risky, and according to liquidators, Tony had never intended to trade his clients’ money legitimately.
“Mr Iervasi had little or likely no knowledge of the foreign exchange (FX) market,” a Supreme Court decision from 2020 says. However, he was very good at winning business. Investors were introduced through Tony’s friends and acquaintances.
He’d meet with them and sell his unique approach to generating profit. Investors were offered three “product” options: Swing Trading, with an estimated return of 1.5 per cent per month, or 18 per cent annually; extreme trading, with an estimated 4 per cent return per month, or 48 per cent annually; and Live/Elite Trading, with an estimated 7.5 per cent return per month, or 90 per cent annually.
The minimum spend was $25,000, an amount that later increased to $50,000. Carmelo, a business owner and father of three, says he was cautious. He ran the numbers past a friend who had trading experience. The friend assured him, “Those figures they’re quoting you can be achievable. Maybe not all the time, but if you’re working on an average, they’re not unrealistic.”
To enhance the ruse, the company even purchased insurance against fraud to protect investors from outside Ponzi schemes. A lot of victims of schemes like this are reluctant to speak publicly. They’ve been burned and often they’re ashamed.
One father and small business owner who put money into Courtenay House would speak only on the condition of anonymity, and so we will call him John.
John said a friend encouraged him after having success himself. “I kept saying, ‘No, no, no, it sounds too good to be true’,” he tells The Weekly.
“My friend had been in there for a year and a half. He said, ‘Here’s my statement, I’m just trying to spread the love’.”
John saw a different side of Tony. He says Tony paraded the gilded trappings of success. “He wanted people to see how well-off he was, and how successful he was. When you see someone driving a Ferrari, you think he must know what he’s doing.”
So John invested too. Janette never had any real suspicion there was something unorthodox about Courtenay House, but she did ask questions. “I did a couple of times say, ‘Tony, where are your traders?’ And he said the traders were in the other office.” Another time she asked the question he told her they were trading from home.
“You want to find out things, but you can’t because they hide them very well. They were very diligent in their formal process.” She pauses for a moment, and sighs. “All I was interested in was looking after some money I had and trying to do some nice things. My radar was out but maybe it wasn’t a good enough radar. He was always so charming. People began to tell people – and tell people – and tell people. The money flowed in.”
The house falls
Ponzi schemes collapse when there aren’t enough new people funnelling money in to keep profits flowing to the original investors. This may be what happened in late 2016 when Courtenay House began offering “specials”. These one-off deals were tied to global events, like the US election special to coincide with the Trump-Clinton showdown, the inauguration the following January and the Brexit Special in May 2017.
Liquidators said this tactic was to create the perception there would be, “for a very limited period of time, an opportunity to make a super return”. To amp up the pressure, these specials were billed as only open to the first 100 people to sign up. The minimum spend was $50,000.
Janette’s faith in Tony began to waver around this time too. “The only other thing where I felt things were wrong was when Tony started taking trips overseas. That’s when my radar went up,” she says. “Where’s Tony? ‘Oh, he’s overseas. He’s got business interests’.”
The high-pressure specials suggest Tony was starting to panic. Investigators were circling. Then one day, all those who had clinked champagne glasses at the Courtenay House Christmas celebrations received a rude shock.
“They sent us an email saying that ASIC [the Australian Securities & Investments Commission] had just put a hold on things. ‘Don’t stress! It’s temporary. We’re going to clear it all up’,” Carmelo says. The email assured him, “‘They’ve just got to clarify their licences. It will be all okay.’ That’s when I went, ‘Oh, here we go.’ And everyone just totally disappeared.”
Carmelo immediately realised he’d been swindled. For Janette, the email marked the beginning of a nightmare that continues to this day. “We were constantly reassured by the staff there that trading would eventually continue,” she says. “They said the company was in a good state and there was no need to worry.”
They referred to the anti-fraud insurance policy. She was told everything would return to normal and, desperate, she believed it.
“I felt I was in a horror story,” Janette says. It was only when investors were told the company was in “deep, deep trouble” and that no further trading would be allowed that she realised how deep a hole she was in.
While many investors had been withdrawing from their accounts and spending real cash they believed they’d made legitimately, Janette had rolled her “dividends” over. Her earnings had only ever been on paper, so when Courtenay House went down, her money went with it.
“And yet I kept thinking, surely this couldn’t be true!” she says.“I was totally destroyed when I learned that my hard-earned invested money was now to be tied up with liquidators. I didn’t know where to turn.”
Liquidators were appointed in May 2017. Janette says that sitting in front of the liquidators with all the other people who had been duped brought the truth home with a devastating blow.
“The place was packed. It was pretty awful. It’s a crushing realisation that you may never see this money again.”
All up, 585 Australians invested in Courtenay House. Some got some of their money back. Some even benefited from the so-called success of the early days. But many were left devastated.
De-identified accounts of the harm wrought by Courtenay House, made to a Senate Inquiry, is a Greek chorus of woe. “Since losing the $750,000 capital … my marriage broke down,” says one.
“I can’t believe I have made life more difficult for the person I am supposed to be supporting and loving most in this world,” says another.
“I was so scared, shocked and constantly upset, so my mental health went downhill,” says a third.
John, shaken, summarises the hopelessness he feels: “We’re just businesspeople. Mums and dads. Now everyone’s a scammer in my eyes. I just want to go back to who I was before. I just want it to be over.”
Tony Iervasi has admitted to his crimes, pleading guilty to four dishonesty charges relating to Courtenay House, each carrying a penalty of up to 10 years in prison. He has also admitted to operating a financial service without a licence, which could cost him a further two years behind bars.
One of his offsiders, Athan Papoulias, is already serving a two-year community corrections order for his role, though the court accepted that he did not realise the service he was promoting was a Ponzi scheme.
A third man was charged for his part in Courtenay House earlier this year. He is accused of using devious and misleading tactics to get personal information from investors, though prosecutors say he too was unaware it was a Ponzi scheme. At the time of writing, he had not entered a plea.
That the financial watchdog accepts two senior members of the company didn’t cotton on to the full extent of Tony’s criminality shows how maliciously insidious a Ponzi scheme is.
Investment scams have become such a big threat to the financial safety of Australians that ASIC and the ACCC [Australian Competition & Consumer Commission] have recently announced that they have formed an unprecedented “fusion cell” to bring together banks, telcos and online platforms to fight this type of fraud.
Investment scams cost Australians $1 billion last year, and the ramifications of being snared in one of these money traps can reverberate for decades, and break families apart. As a financial crimes investigator says, it is a generational crime.
“If a person invests 50 per cent of their life savings into an investment that they believe is real, that is typically an investment that they will leave to their children,” he says. “If that money is lost, it’s not going to be there for their kids.”
Janette is now hoping and waiting to learn if she’ll see any of her money again. In the meantime, she wants people to hear her cautionary tale and keep it in mind when they’re considering investing.
“People need to know,” she says. “I’m not that important, but I’m part of a process that went wrong. I know how easy it is to get pulled in.
“It’s normal to try to get your money into something that’s going to produce results. So that’s what we did. That’s what everybody did. They wanted to keep sending their kids to private school. They wanted to pay their mortgages. I wanted to maybe move. And then everything came to that crashing halt.”
Even though Janette understands that she didn’t do anything wrong, and that she is the victim of a crime, her choices weigh heavily on her. The final sentence of her Courtenay House victim impact statement shows the damage fraud like this does to people’s psyches and sense of self-worth.
“I’ll never forgive myself,” she wrote.
* Name changed for privacy.