Sterling First rent-for-life scam ‘gatekeeper’ slapped with $2m penalty

A ‘gatekeeper’ who played a big role in a rent-for-life scam which ripped people off and left some homeless has been slapped with a huge penalty.

A financial services firm has been handed a huge penalty for its major role in a rent-for-life scam that ripped off more than 100 cash-strapped retirees, forcing some out of their homes and milking their life savings.

Sterling First marketed itself as pairing up “smart property investors that are looking to get a better rental return with retirees that are looking to sign a long-term lease”.

Dozens of retirees involved in the scheme sold their homes to free locked-up capital, then moved into rental properties with the expectation they would stay there for the rest of their life.

But Sterling First went into liquidation last year - allegedly after trading while insolvent for months - and many of the lessees were forced out while others are still fighting to keep a roof over their heads.

On Thursday, Theta Asset Management and its managing director Robert Patrick Marie were ordered to pay $2 million and $100,000, respectively, for authorising the issue of five product disclosure statements for the Sterling Income Trust and failing to ensure they did not contain misleading or deceptive statements.

But the Australian Securities and Investments Commission says it will not seek recovery of the penalty, as doing so will decrease the funds available for distribution to creditors.

Sterling First ruthlessly targeted cash-strapped retirees.

Mr Marie will also be disqualified for four years from managing corporations.

The dodgy product disclosure statements raised almost $17 million from investors between May 2016 and April 2018, losses Justice Neil McKerracher described as catastrophic.

ASIC commissioner Cathie Armour said the penalty sent a strong message to “those entrusted to act as gatekeepers” to comply with their legal obligations.

Of the 101 people who entered into Sterling New Life leases, 63 invested in the Sterling Income Trust to generate funds to cover their rental expenses.

The remaining 38 lessees invested in preference shares offered by companies within the Sterling Group.

In its latest update, liquidator KMPG said it had reasonable grounds to believe Sterling First shareholders would not get a cent back.

ASIC’s investigation into the Sterling Group of companies, which operated in WA, Queensland and Victoria, is ongoing.

Originally published as Sterling First rent-for-life scam ‘gatekeeper’ slapped with $2m penalty