`Truth is coming out' Storm founders still say they were not to blame

`Truth is coming out' Storm founders still say they were not to blame

26 February 2010

STORM Financial founders Emmanuel and Julie Cassimatis are still living with the hope they will be absolved of blame in the collapse of the financial planning empire and the ruin of its former clients.

``The truth is starting to come out,'' Mr Cassimatis told the Townsville Bulletin this week although he declined to elaborate.

He told other news outlets the Commonwealth Bank's decision to compensate clients vindicated them and proved the bank was responsible.

If the bank believed Storm rather than the bank had responsibility for making margin calls to investors who had taken margin loans through Storm to buy shares, the bank would not have made the settlement offer, he is reported as saying in The Australian newspaper.

One of the key points in the collapse of Storm concerned who had responsibility for making margin calls to Storm clients.

Storm and the Commonwealth each claim the other was responsible.

Damian Scattini, lawyer for Slater & Gordon who negotiated the Commonwealth's offer to clients, said the bank had not admitted responsibility for margin calls and continued to argue that Storm, as the licensed adviser, was responsible.

He said Slater & Gordon's position was that the bank and Storm were in it together.

Both Mr Scattini and Ipswich Labor MP Bernie Ripoll, who chaired a parliamentary inquiry that investigated the Storm collapse, both believe the Cassimatises are not clear of legal action.

Stewart Levitt of law firm Levitt Robinson, which is also representing Storm clients, said the Cassimatises were not crooked in the sense of a Bernie Madoff where they were were getting people to do things they weren't prepared to do themselves. However, they and the Commonwealth were at fault, he said. ``They were running a scheme where you were putting in equity, loaning up to the hilt and kept churning loans through to make more money in lending commissions while the whole world economy was in freefall,'' Mr Levitt said.

``In late 2007, 2008 you couldn't even get an overdraft but if you were a Storm client they were throwing money at you.''

Mr Levitt said the Storm product was like alcohol, good in moderation but dangerous when used in excess.

``They drank their own poison,'' Mr Levitt said.

``They are not as blameworthy as you would hold somebody who was making recommendations to do something that they weren't prepared to do themselves.

``They were following their own advice, it might have been foolish or negligent, they might have given bad advice but that's not to say they were crooked.''

Corporate regulator the Australian Securities and Investments Commission has said it will give an outline of its investigation into Storm next month.