From Dunk to Junk:
Mayfair 101 promised investors secure income, left them with
The Provisional Liquidators
estimate a nil return to
creditors from $63.5 million
of investor funds invested in
Mayfair 101 (M101). They
considered that Mayfair 101 ‘has
been insolvent since inception’.
The Federal Court of Australia has analysed the
advertising which attracted the investors to invest, the
unsustainable business model and the resulting breaches of
the Corporations Act 2001 (Cth) and the Australian
Securities and Investment Commissions Act 2001 (Cth).
The decision is Australian Securities and Investments
Commission v Mayfair Wealth Partners Pty Ltd (No 2)
 FCA 247 (23 March 2021) (Anderson J). The key points
The Mayfair 101 Group
Mayfair 101 Group engaged in an internet advertising
campaign using sponsored links from 3 July 2019 for its M+
Notes and Core Notes. Later on, it advertised in the print
media and sent emails to subscribers on various marketing
lists (from 22 November 2019 to 18 December 2019).
These are the details:
Sponsored link advertising on the internet
Mayfair 101 paid for these keywords on Google and
Microsoft - related platforms: “best term deposits”, “Bank
of Melbourne term deposits”, “National Australia bank term
deposit”, “term deposit” and “term deposit rates”.
Members of the public who used these search terms were
led to the Mayfair 101 websites which promoted its M+ Notes
and Core Notes. The Mayfair 101 websites had labels
(meta-title tags) which included words such as “best term
deposit” to attract searches.
Newspaper advertisements and marketing emails
Mayfair 101 placed advertisements in the Australian
Financial Review, the Cairns Post, The Courier Mail
(Brisbane), The Sydney Morning Herald and The West
Australian. This is a sample.
5.45% P.A. 12 MONTHS FIXED RATE
Introducing M Core Fixed Income
The Mayfair 101 Group is delighted to announce the
release of a new investment product that caters to investors
seeking a strong yield from a secured investment product.
With interest rates at record lows and investor sentiment
shifting away from traditional financial institutions
towards non-bank fixed income providers, Mayfair Platinum is
delighted to make this new product available to Australian
wholesale investors (not available to retail investors).
The advertisement continued:
M Core Fixed Income provides a fixed monthly income at
competitive interest rates backed by dollar-for-dollar
security over assets held by the Mayfair 101 Group of
Members of the public were invited to visit the Mayfair
Platinum Website and to obtain the M+ Notes brochure and the
Core Notes brochure which contained more information.
For example, this information appeared on the Mayfair
Mayfair Platinum offers income-producing investment
opportunities for wholesale investors involving exposure to
opportunities that are typically reserved for investment
banks, stockbrokers, family offices and the ultra-wealthy.
Qualified investors can access term-based investment
options starting from AU$100,000 and ranging from 3 months
to 5 years, with the option of monthly interest
Current Rates: 3 months 3.65%; 6 months 4.75%; 12 months
5.45%; 24 months 5.75%; 36 months 6.00%; 60 months 6.45%.
(M+ Notes product)
The M+ Notes brochure stated:
M+ Notes is a smart and effective way of earning
competitive rates of return
The Core Notes brochure stated:
M Core Fixed Income is a secured, asset- backed
term-based investment product
The advertising campaign was very successful – the
websites received over 13 million visits and more than $200
million in investor funds was raised.
Why did the Mayfair 101
investment scheme fail?
The investor funds raised on the Core Notes product were
- purchase Dunk Island on vendor terms;
- purchase 119 real properties in the Mission Beach
region of Queensland which were settled for cash
- pay deposits on contracts to purchase 111 real
properties in the Mission Beach region ($5,852,387)*;
- provide loans to related parties ($9,515,433);
- pay unspecified operating expenses ($21,700,000).
*Mayfair 101 did not have the funds to settle the 111
Mission Beach properties when settlement fell due in
December 2019. Naplend Pty Ltd, a private lender advanced
the funds for settlement ($86,483,036) and took a first
ranking mortgage over all properties and a PPSR security
over the companies. The interest rate was 24% pa, the
default rate was 40% pa and the term was 4 months.
On 16 April 2020, ASIC obtained a Court order that
Mayfair 101 Group cease advertising its investment products.
In June 2020, distributions to the Core Note holders ceased.
In July 2020, interest payments due to Naplend and to the
vendor financier of Dunk Island ceased.
In August and September 2020, provisional liquidators
were appointed to the entities in the Mayfair 101 Group.
Approximately $211 million is owing to Mayfair 101 Group
The liquidators reported that:
- The investor funds were channeled through a
‘treasury company’ (Eleuthera).
- M101 Nominees did not have any income-producing
assets in its own right and was highly dependent on
Eleuthera for cash injections. Eleuthera was itself
reliant on intercompany loans which were used to fund
investments in illiquid and/or for the most part,
non-income producing assets.
- The provisional liquidators concluded that M101
Nominees had been trading insolvent since incorporation
on the basis that it did not have a sustainable business
model. That is, noteholders were investing predominantly
for periods of 6 or 12 months, however the loan
agreement with Eleuthera had a maturity term of 10
years. On this basis, M101 Nominees would not have
adequate funds to repay Core Notes noteholders as their
debentures matured or fell due.
Misleading or deceptive
conduct, false or misleading representations
The Federal Court findings and declarations were that in
the period from 3 July 2019 to 16 April 2020, the Mayfair
101 Group companies –
- Represented that its promissory notes called ‘Fixed
Income Notes’ were comparable to, and of similar risk
profile to, bank deposits. The Court declared this was
false or misleading because they exposed investors to
significantly higher risk than term deposits, including
the lack of prudential regulations that apply to term
deposits. (‘Bank Term Deposit Representations’)
- Represented that the principal would be repaid in
full on maturity of the promissory notes. The Court
declared this was false or misleading because Mayfair
had the right to elect, and did elect, to extend the
time for repayment to investors for an indefinite period
of time. (‘Repayment Representations’)
- Represented that the promissory notes were
specifically designed for investors seeking certainty
and confidence in their investments and therefore
carried no risk of default. The Court declared this was
false because there was a risk that investors could lose
some or all of their principal investment. (‘No Risk of
- Represented that the promissory notes were fully
secured financial products. The Court declared this was
false because the funds were lent to an associated
company, Eleuthera and were not secured by
first-ranking, unencumbered asset security or on a
dollar-for-dollar basis or at all; were used to pay
deposits on properties prior to any security interest
being registered; and were used to purchase assets that
were not secured by first-ranking, unencumbered asset
security. (‘Security Representations’)
The contraventions of the law were:
- Misleading or deceptive conduct under s 1041H(1) of
the Corporations Act 2001 (Cth) and s 12DA(1) of
the Australian Securities and Investments Commission
Act 2001 (Cth) (the ASIC Act);
- False or misleading representations as to standard,
quality value or grade under s 12DB(1)(a) of the ASIC
Act; and false or misleading representations as to
performance characteristics or benefits under s
12DB(1)(e) of the ASIC Act.
The Court stood the case over to consider penalty and
Refer to my case note
Were the Mayfair 101 investment
schemes Ponzi schemes? for an analysis of the hearing on the
application for disqualification of James Mawhinney to act
as a director.
ASIC Media Release (23
ASIC Deputy Chair Karen Chester said ‘ASIC’s success in
Court today demonstrates firms need to do the right thing by
their investors, even when they are wholesale investors.
They need to make sure they accurately describe their
products when advertising. The Court has shown that Mayfair
101 engaged in misleading and deceptive conduct by claiming
its products were comparable to bank term deposits, when
they were not.’