What happened: The founder of three funeral funds doubled the premiums they paid to his own offshore insurer and was penalised $250,000 with a 15-year management ban
Who's involved: Three ACBF funeral fund entities, Crown Insurance Services Limited (Vanuatu), ASIC
What's at stake: $250,000 penalty, 15-year disqualification from managing corporations, and $50,000 costs contribution
Why it matters: Directors who sit on both sides of an insurance arrangement and fail to manage the conflict face serious consequences - even without a finding of dishonesty
Where it stands: Final orders made on October 30, 2026; proceedings against co-defendants ongoing
Sixteen years of premiums flowed from three Australian funeral funds into a Vanuatu-based insurer. The insurer's majority owner and the funds' founder were the same person.
The Federal Court of Australia has penalised the founder and former director of the ACBF group of funeral fund companies $250,000 and banned him from managing corporations for 15 years. The court found he failed in his duties of care, good faith and proper use of position - sitting on both sides of an insurance arrangement and doing nothing to manage the conflict.
The case, ASIC v Pattenden [2026] FCA 1616, was decided on October 30, 2026, after the founder admitted to nine breaches of the Corporations Act across three entities. The matter was resolved on agreed facts without a contested hearing.
The three funds - ACBF 2, ACBF Funeral Plans and Community Funeral Plans - provided funeral benefits and were marketed predominantly to Indigenous communities. Each was required to maintain a life insurance policy covering its members. Since 2002, all three had insured with Crown Insurance Services Limited, a company the founder registered in Vanuatu. Crown was not subject to any Australian prudential or regulatory requirements.
The founder and a co-director were the ultimate owners of both Crown and the holding company above the ACBF group. Crown had no other clients.
On September 4, 2017, the founder directed that Crown double the monthly premiums payable by one of the funds, ACBF 2 - backdated to August 1. The fund's own financial controller had flagged the danger months earlier, writing in an email that the doubling would produce a loss of "around $360K" and "could pose problems of insolvent trading."
The hike went ahead anyway. ACBF 2 went from a $9,794 operating profit in the year to June 2017 to a $198,779 loss the following year. The court accepted that the doubling put the fund on a path to insolvency within four years.
That was not the only exposure. The two other funds were equally dependent on Crown to pay members' claims and had no alternative source of money. The court accepted that if Crown had raised their premiums by any amount at all, both would have become immediately insolvent.
The numbers across Crown's lifetime tell the story of just one fund. Between 2002 and November 2018, ACBF 2 alone paid Crown $16.3 million in premiums. Crown paid back $8.1 million in claims and $2.3 million in profit share - keeping a net $6 million.
The second fund, ACBF Funeral Plans, paid Crown approximately $22.6 million in premiums over a similar period. Crown returned about $7.5 million in claims and $4.6 million in profit share, netting roughly $10.5 million.
None of this was hidden. The founder received monthly spreadsheets showing premiums, claims and profit share for each fund. In one email, his financial controller noted the numbers "look horrible." In another: "I know you will be bitterly disappointed in these."
He admitted he never considered alternatives to the Crown arrangement at any point during the 14-month period under scrutiny - not renegotiation, not a different insurer, not self-insurance, not winding up the funds.
All three entities eventually went into liquidation. ACBF 2 entered administration in November 2021; ACBF Funeral Plans and Community Funeral Plans followed in March 2022. The court accepted that there was a substantial risk fund members would be left without funeral cover and unable to recover cancellation benefits.
In setting the penalty, the court noted it sat "towards the lower end of the permissible range." The theoretical maximum across nine breaches was $1.8 million, based on the $200,000 per-breach cap that applied at the time.
The 15-year ban reflected the founder's role in building the conflicted structure over more than 15 years, his position as the ultimate decision-maker, and the fact that all other directors acted on his instructions. The court also credited his cooperation with ASIC, his admissions, and the three weeks of trial time saved.
The court accepted the conduct was deliberate - not inadvertent - but no allegation of dishonesty was made.
Cases like this put a marker down for directors who control both sides of an insurance arrangement: the Corporations Act's duty-of-care and conflict rules apply in full, even where the arrangement has run unchallenged for years.
The contraventions were established by agreement between the parties and accepted by the court. Proceedings against four co-defendants in the same matter remain ongoing.
