ASIC Winds Up Illegal Australian Investment Scheme

ASIC Winds Up Illegal Australian Investment Scheme - Australian Securities & Investments Commission (ASIC)

Thursday 3 May 2007 LAWFUEL- The Law Newswire - The Australian Securities and Investments Commission (ASIC) has obtained orders by consent from the Supreme Court of Queensland in Brisbane against Mr Russell John Whitchurch of Sorrento, Gold Coast, and nine companies under his control including Civic Capital Ltd (Civic). These orders follow an ASIC investigation into an illegal managed investment scheme operated by Mr Whitchurch, wherein the companies under his control obtained loans from retail and sophisticated investors, which were pooled and then on-lent to borrowers who were looking for loans to fund the purchase or construction of property, or the refinancing thereof. Investors were promised returns of between 10 per cent and 20 per cent per annum, payable monthly.

Lifecare Services Australia Pty Ltd (LSA) was one of the borrowers. ASIC had, on 13 September 2006, obtained injunctions against LSA and its directors, namely Messrs Colin Francis, David Stoyakovich and Robert Adcock, from dealing with an unregistered managed investment scheme known as the Varsity Lodge Scheme. The Court declared that, by reason of conduct described in an Agreed Statement of Facts signed by all parties, Mr Whitchurch and Civic had operated an unregistered managed investment scheme, carried on a financial services business without holding an Australian Financial Services Licence (AFSL), and failed to provide clients with the required disclosure documents.

The Scheme was wound up by the Court on 2 May 2007, with Ms Julie Williams of Insolvency & Turnaround Solutions appointed to supervise the Scheme’s winding up. Mr Whitchurch was previously the Financial Services Manager for Sovereign Capital Ltd, whose AFSL was cancelled by ASIC on 5 January 2007. This action followed findings by ASIC that Sovereign’s activities had been well below the standard a reasonable person would expect of a financial services licensee. Background ASIC is concerned that investors in the Scheme may not have been provided with the appropriate information required by the Corporations Act or afforded the Act’s statutory protections. ASIC is also concerned to ensure that the unregistered schemes are wound up in a manner that is in the best interests of all investors.

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