Betting with other people’s money: Jailed adviser’s gambling losses to hit CSLR

On Friday last week, the Compensation Scheme of Last Resort (CSLR) delivered a revised estimate for FY2025-26, which reduced the $70.11 million attributed to the financial advice subsector to $67.3 million.

While the most attention-grabbing updates contained in the new report were, unsurprisingly, those detailing the changes in the large financial failure space, it’s not just the likes of Dixon Advisory and United Global Capital that are going to cost advisers.

Grouped under the category of “Other Personal Financial Advice” is a list of six insolvent firms that have seen a combined 187 complaints lodged with the Australian Financial Complaints Authority (AFCA).

Looking at just FY26, the revised estimate for this category increased from 28 claims and $2.77 million to 101 at a cost of $9.13 million – almost as costly as the Dixon Advisory claims outstanding in FY26.

One firm that jumps out – for a few reasons – is Wealth Trail.

The first is that the licensee, which entered voluntary liquidation on 30 April, counted Anthony Del Vecchio among its authorised representatives.

Del Vecchio was employed as an adviser at Freedom Finance Australia – at the time a corporate authorised representative of Wealth Trail – from November 2016 until October 2023, when his employment was terminated.

In March this year, he pleaded guilty to 24 charges of obtaining financial advantage by deception, resulting in the County Court of Victoria handing down a sentence of seven years and six months’ imprisonment with a non-parole period of four years.

The case against Del Vecchio

Over the course of almost four years, from February 2020 to December 2023, Del Vecchio used his position as a financial adviser to convince family, friends and clients to transfer money to him under the pretext of investing their funds.

In some cases, he provided documents using the Freedom Finance letterhead to purport the terms of their investment in term deposits, bonds or shares, although no financial product was ever purchased.

The hit to victims spanned a wide range, from as little as $4,257 to a high of almost $1.2 million for a total of $4.48 million, which was deposited into his Commonwealth Bank of Australia accounts.

Why was Del Vecchio stealing the money? He had, as Judge Gabriele Cannon remarked, a “raging gambling addiction”.

Across a staggering 52 different betting companies, Del Vecchio was eventually making bets in the thousands of dollars multiple times a day as he attempted to chase his losses.

MintBet was the largest beneficiary of his addiction, profiting more than a million dollars from the former adviser.

“What is clear is that you were in the grips of a gambling addiction which you were prepared to feed by any fraudulent means that you could. The addiction explains your behaviour, but it does not excuse it or impact on your moral culpability,” Judge Cannon said during sentencing.

“The objective seriousness of your offending is high, as is your moral culpability.”

What does this have to do with the CSLR?

It seems hard to believe that a case such as this would be among those hitting the CSLR, but with no funds to recover from Del Vecchio himself, victims have invariably turned to AFCA.

At the time of publication, AFCA had published three determinations related to Del Vecchio’s conduct, all with broadly similar circumstances and findings.

The firm argued in all three cases that it shouldn’t be held liable for Del Vecchio’s actions.

According to the determinations: “The financial firm, under section 917A of the act, can only be responsible for Mr V’s conduct as its representative under section 917B where the conduct:

• Relates to the provision of a financial service, and
• On which a third person (the client) could reasonably be expected to rely, and
• On which the client in fact relied in good faith.”

Wealth Trail contended that the “limbs of section 917A have not been met” because the term deposit scheme was not a financial product or service, the victims were never clients of the firm and the terms of the term deposit were "so fictitious/absurd or absent in detail that a reasonable person would not have relied on them”.

After investigating the complaints, AFCA disagreed with the firm, finding that it is “responsible under section 917B of the Corporations Act for Mr V’s misleading conduct even though the conduct was outside the authority it granted to him”.

Ultimately, AFCA found that the issue of whether Del Vecchio’s conduct was within or outside the authority conferred by the financial firm is “irrelevant” due to the terms of section 917B.

The three determinations currently published awarded $74,010, $249,355.50, and $260,516.57.

Learning from the E&P Financial playbook

As noted earlier, Wealth Trail is in liquidation, and ifa understands it is highly likely that the CSLR will cop the cost of any current and future determinations.

This is far from where the issue ends.

Keen followers of adviser movement between licensees may have noticed an unusual occurrence in January this year.

Near the end of the month, Wealth Data analysis of the Financial Adviser Register showed that Endeavor Asset Management (EAM) had added 24 advisers to its ranks. A dramatic jump from the two it had prior to the influx.

In fact, the vast majority of EAM’s authorised representatives joined on the same day – 1 January 2025.

Wealth Data founder and director Colin Williams noted at the time that 23 of these advisers were still currently authorised at Wealth Trail, which he said “appears to have a common ownership link with EAM”.

Indeed, in October 2023, EAM announced that Chris MacEachern had come on board as a new equity investor.

MacEachern is the managing director at Melbourne-based Freedom Finance Australia – the firm that employed Del Vecchio – which has also moved its authorisation from Wealth Trail to EAM.

Coincidentally, this equity investment was announced just days after Freedom Finance became aware of Del Vecchio’s conduct.

Alongside his role at Freedom Finance, MacEachern is also listed as the chief executive of EAM.

While the potential compensation bill is orders of magnitude smaller than Dixon Advisory – and doesn’t involve a publicly listed company like Evans and Partners was at the time – it follows a similar blueprint.

In July 2024, ASIC confirmed that about 3,280 of the 4,100 Dixon Advisory clients had, by May 2022, moved to E&P.

Additionally, the regulator explained that between 1 January 2021 and 10 May 2022, E&P appointed 39 advisers who were Dixon representatives.

The issue reared its head again in August 2024 when a CSLR payment prompted ASIC to cancel the Australian Financial Services Licence (AFSL) of Sequoia Financial Group subsidiary Libertas Financial Planning.

Sequoia had put Libertas into liquidation in May 2023, which CEO Garry Crole told ifa last year had nothing to do with the CSLR.

“The Libertas AFSL was no longer viable to run, and we wrote to all advisers in February 2023, more than 18 months ago giving them a reasonable notice period the AFSL would be closed in 2023 and if they wished to join another of our AFSL they could do so but under new terms of engagement where the provision of a service was commercial,” Crole said.

“Once all advisers had transferred to a new AFSL and there were no complaints that we believed to be still open, we appointed a receiver and asked for the AFSL to be cancelled.”

At the time that the AFSL was cancelled, Financial Advice Association Australia general manager policy, advocacy and standards Phil Anderson took to his LinkedIn to say that the Libertas licence cancellation highlights the “ongoing issues with listed companies walking away from advice subsidiaries and placing them into administration”.

“Whilst at present, it is only one case that has been paid out by the CSLR, potentially there will be more. AFCA data demonstrates a history of complaints for this licensee over recent years,” Anderson said.

“Will the advice profession now be expected to pick up the cost of a bunch of these complaints? Why did Sequoia Financial Group put Libertas Financial Planning into liquidation and why did they avoid paying out on this AFCA determination? Does this suggest that we should expect a lot more CSLR payments to follow?

“This is not right and should not be allowed to be repeated.”

However, Crole insisted that Sequoia did nothing wrong.

Advisers may have more sympathy for Wealth Trail and MacEachern given the unusual circumstances that appear to have led to the decision to transfer advisers to a new licensee; however, covering the costs for outright theft will be a hard pill to swallow.

ifa reached out to Endeavor Asset Management, Freedom Finance Australia, and Chris MacEachern for comment, but did not receive a response by the time of publication.