Investment Law

Ponzi Schemes in Australia – The Mayfair 101 Investment Schemes

Ponzi schemes are a sure-fire way for investors to lose money.

They work this way: Investors invest their hard-earned money on the promise of high investment returns. Later, the investors find their money has paid for the lifestyle of the promoter, and is all gone.

Were the Mayfair 101 investment schemes Ponzi schemes?

Click here to find out.

Bad news for investors in Mayfair 101 debentures

The Provisional Liquidators of Mayfair 101 estimate a nil return to creditors from $63.5 million of investor funds invested. They considered that Mayfair 101 ‘has been insolvent since inception’. It was a Ponzi Scheme.

For more click

Bendigo Bank - Great Southern Investors

The Bendigo Bank - Great Southern Plantations – Investor Loan Saga has taken an unexpected turn.

The Banking Code Compliance Committee has found serious and systemic conduct by the Bendigo Bank when it aggressively collected loans from investors between February 2015 and February 2019. Some were bankrupted. Others were forced into onerous payment arrangements.

This exposes the Bendigo Bank to penalties if ASIC decides to prosecute.

Legally, this conduct is called using ‘undue harassment and coercion’ and its use to pursue recoveries contravenes the Australian Consumer Law and the ASIC Act. Financial penalties of up to $360,000 per offence are available.

In this case, complaints should be made to ASIC as it is the responsible regulator.

For more see Bendigo Bank ‘named and shamed’ for systemic mistreatment of Great Southern borrowers

The news is all bad for Timbercorp investors

Timbercorp investors lost their investments when Timbercorp collapsed in April 2009.

But the investors did not lose their liability to repay their loans with Timbercorp Finance. The loans remained due and payable with interest.

For a while, KordaMentha who were appointed receivers of Timbercorp Finance took no recovery action, as they waited for an investor class action to be concluded.

Then, when the class action failed, they took recovery action, but were stayed pending a High Court Appeal which found that the investors could still defend the recovery claims.

But now, the Supreme Court of Victoria has shut the door on those defences, and the investors will have no choice but to pay up or go bankrupt.

For my case note, click - Timbercorp investors have failed in their ‘no loan’ defences to loan recovery claims

Good news at last for Great Southern Plantations Investors - Bendigo Bank loan recovery claims can be beaten!

Not a lot has gone right for investors in the 43 Agricultural Investment Schemes promoted by the Great Southern Plantations Group between 1998 and 2008.

This is a summary of the calamity:

They invested in timber, beef cattle, wine grapes, almond and olive projects. Yes, their investment was tax driven - the money invested was tax deductible immediately. But it was also an investment - they expected to receive their money back and good profits on their investment over the 10 to 12 year term of the project.
Many investors used borrowed money to fund their investment. They took out a loan from Great Southern Finance (another group company), which then on-sold their loan to the Bendigo and Adelaide Bank.
It all came to an untimely end in 2009, when the Great Southern Group collapsed and the projects were wound up because they had run out of money to continue.
22,000 of the 52,000 investors joined in a class action against the liquidator and the Bank to be compensated for their failed investment and to be relieved of their loan obligations. The class action failed and a settlement was approved on 11 December 2014 in which the loan deeds were acknowledged as valid and enforceable.
Now, the Bendigo and Adelaide Bank is pursuing the investors through the courts for repayment of their loans plus default interest (at 14.5% pa), even though the projects have failed and all money invested was lost. This is causing hardship and distress for many investors.
The good news is that the Bendigo Bank can be beaten. In August last year, an organic olive grove investor successfully defended a loan recovery claim. The investor was pursued for a debt of $24,490 plus interest of $42,079.32. He decided to fight the claim, and succeeded because the Bank's documentation was deficient. The Court found that there was no evidence that the Bank had paid anything to purchase the loan from Great Southern Group, and many other deficiencies besides.

If you would like to read a full account of the decision, click - What is the best way for a Great Southern Plantations investor to defeat a loan recovery claim by the Bendigo and Adelaide Bank?