The Aboriginal Community Benefit Fund, owned by collapsed insurance company Youpla, sold junk funeral policies to Indigenous people across the country for decades, including targeting communities where English wasn't the first language and with low literacy levels.
On Friday, Federal Court Justice Geoffrey Kennett found former Youpla Group chief Bryn Jones breached his directorial duties following a contested liability hearing in February.
Mr Jones denies having knowledge of premium increases.
The company's director Ronald Pattenden acknowledged his breach in a claim settlement with Australia's financial watchdog, the Australian Securities and Investments Commission (ASIC).
Mr Pattenden has been ordered to pay a quarter of a million dollars and has been barred from managing corporations for 15 years.
Mr Jones' penalty will be determined at a hearing at a later date.
Decisions in respect of the other three directors; Jonathan Law, Michael Wilson and Geoffrey Clayton, are yet to be determined.
ASIC launched proceedings against five of Youpla's directors in August 2023, alleging serious governance failures prior to the group's March 2022 collapse.
It's alleged directors of Youpla groups maintained insurance arrangements with Crown Insurance Services Limited, a Vanuatu-based insurance company owned and controlled by Mr Pattenden and Mr Law, Â for personal benefit.
ASIC alleges insuring with Crown left Youpla's entities vulnerable to unaffordable premium increases between September 2017 and November 2018.
ASIC Chair Sarah Court said the breaches went to the heart of trust and responsibility in the First Nations community.
'ASIC has taken decisive action to ensure those responsible for serious governance failures and director misconduct that harmed First Nations people are held to account," she said.
Youpla was exposed during the 2018 banking royal commission but not before thousands of people paid for inappropriate plans, including through Centrepay, where money is automatically deducted from social security payments.
The Federal Court handed Youpla a $1.2 million fine in September 2023 for misrepresenting junk funeral policies, finding it 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 $97 million federal government support package was announced in February 2024 to help more than 13,000 victims recover from financial loss.
The government's payments to remaining victims will continue to be processed until December 1, 2026.
