Melissa Caddick Victims Win $3.5 Million Settlement in Landmark Class Action

In a significant development, victims of Sydney fraudster Melissa Caddick have reached a $3.54 million settlement in a class action lawsuit against the auditors responsible for overseeing their self-managed superannuation funds (SMSFs). This settlement, approved by the Federal Court on April 1, 2025, marks a crucial step towards compensating those defrauded by Caddick’s elaborate Ponzi scheme.

Background: The Caddick Fraud
Melissa Caddick, a self-styled financial adviser, orchestrated a fraudulent investment scheme that deceived 72 clients, many of whom were close friends and family. She misappropriated nearly $24 million through their SMSFs, promising lucrative returns that never materialized. In November 2020, shortly after the Australian Federal Police (AFP) raided her Dover Heights residence amid an Australian Securities and Investments Commission (ASIC) investigation, Caddick disappeared. Her partial remains were discovered on a New South Wales south coast beach in February 2021, and a coroner officially declared her deceased in May 2023.

The Class Action Lawsuit
In September 2023, law firm Mackay Chapman initiated a class action on behalf of 32 of Caddick’s victims against the auditors engaged to conduct the mandatory annual audits of their SMSFs. The lawsuit alleged that these auditors failed to detect fraudulent documents prepared by Caddick and did not verify the existence of the purported assets, thereby enabling her deceptive practices to continue unchecked. The auditors named in the lawsuit included BPR Audit, GK & Co, Bladens Accountants & Tax Agents, Khanh Huynh, and Fin Corp Auditors. The claims against them encompassed negligence, misleading or deceptive conduct, and breaches of the Corporations Act and the ASIC Act.

Settlement Details
Federal Court Justice Brigitte Markovic approved the $3.54 million settlement, which was reached without any admission of liability from the auditors. Michael Chapman, director of Mackay Chapman, described the settlement as both fair and timely, noting that it was achieved within 18 months—a relatively swift resolution for a class action of this nature.

The settlement funds will be distributed among the 32 group members, with approximately half allocated to the victims and the remainder covering legal costs and litigation funding. Specifically, Mackay Chapman will receive about $1 million in legal fees, plus an additional $127,000 for distribution costs, while litigation funder Therium will be paid a commission of $492,000. These amounts represent a significant discount on the fees owed, ensuring that at least 50% of the settlement returns to the victims.

Compensation Breakdown
Prior to this settlement, victims had already been repaid $7.25 million through the liquidation of Caddick’s assets in 2023 and 2024. The additional $3.5 million from the class action brings the total recovery to approximately $10.75 million. This means that victims have recouped about 50% of their original investments, a notable achievement given the complexities involved in unraveling Caddick’s fraudulent activities.

Legal and Financial Implications
This case underscores the critical importance of rigorous auditing practices, especially concerning SMSFs, which require annual audits to ensure compliance and safeguard investors’ interests. The auditors’ failure to detect Caddick’s fraudulent activities over an eight-year period highlights significant lapses in oversight. While the settlement does not include an admission of liability, it serves as a stark reminder of the potential consequences of inadequate auditing standards.

Conclusion
The $3.5 million settlement represents a measure of justice for the victims of Melissa Caddick’s Ponzi scheme, providing them with partial restitution for their substantial financial losses. It also highlights the necessity for stringent auditing processes and regulatory oversight to prevent similar fraudulent schemes in the future. While the victims may never fully recover their lost funds, this settlement brings them closer to closure and underscores the importance of accountability within the financial auditing profession.