Three directors were fined a combined $90,000 in federal court judgement and disqualified from managing a corporation for between five and 10 years
Three directors of a collapsed funeral fund that marketed insurance to Aboriginal families have been banned from managing corporations for at least five years and ordered to pay a combined $90,000 after being found to have breached their duties to clients.
On Wednesday, federal court Justice Geoffrey Kennett ordered the former director of the insurance company Youpla Group, previously the Aboriginal Community Benefit Fund (ACBF), Jonathan Law, to pay the Commonwealth $50,000 and disqualified him from managing corporations for six years.
Michael Wilson, also a director, was ordered to pay $20,000 and disqualified from managing corporations for 10 years, while director Geoffrey Clayton was ordered to pay $20,000 and disqualified from managing corporations for five years.
The trio were also ordered to pay a combined $17,000 towards plaintiff’s costs. Kennett found they had failed to perform their duties with the degree of “care and diligence” expected, failed to manage conflicts of interest, and caused a detriment to the ACBF members.
It followed a judgementlate last month where the founder of the company, Ron Pattenden, was ordered to pay a quarter of a million dollars and barred from managing corporations for 15 years. Pattenden acknowledged he had breached directors’ dutiesin a claim settlement with financial watchdog, the Australian Securities and Investments Commission (ASIC).
During the same judgement, the former Youpla Group chief, Bryn Jones, was found by Kennett to have breached his directorial duties following a contested liability hearing in February. He denied having knowledge of the fund’s insurance premium increases. Jones’ penalty will be determined at a hearing at a later date.
Youpla sold junk funeral policies to Indigenous people across Australia for decades, including targeting communities where English was not the first language, and communities with low literacy levels.
It collapsed in March 2022, leaving more than 13,000 Aboriginal people, some elderly and in palliative care, without the means to pay for funerals. Families had to resort to crowdfunding and some were forced to leave their loved ones’ bodies in the morgue while they raised the funds.
In August 2023, Asic commenced proceedings in federal court against the five former directors and officers for breaches of their duties, alleginggovernance failures and director misconduct that impacted the First Nations people who were members of the funds.
It alleged the directors and officers maintained insurance arrangements with Crown Insurance, a Vanuatu-based company owned and controlled by Pattenden and another director, Law, and did not act in the best interest of the ACBF entities and members.
Breaches of directors’ duties can attract a maximum penalty of $200,000 for each breach that occurred between 2017 and March 2019.
Youpla targeted Indigenous people using marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag, including stuffed toys and colouring books for children, turning up to community events and by conducting door-to-door sales.
It was investigated by various regulators over the years but it was not until 2018, when its conduct was exposed in the banking royal commission, that its licence to sell new products was withdrawn.
In 2021 Asic questioned its solvency, and the company’s directors finally pulled the plug.
The Federal Court handed Youpla a $1.2m fine in September 2023 for misrepresenting junk funeral policies, finding it had told plan holders they would receive a lump sum payment when in fact they would only be reimbursed for expenses they could prove had been incurred.
Youpla avoided paying millions more in fines handed down by the Federal Court in July 2025 because it was in liquidation.
A $97m federal government support package was announced in February 2024 to help thousands of mostly low-income Aboriginal families recover from financial loss.
The government’s payments to remaining victims will continue to be processed until 1 December this year. Eligible recipients have the choice of a funeral bond or a cash payment worth 60% of the value of their policy.
- with Australian Associated Press.
