‘$1bn wiped out’: First Guardian Master Fund, Shield Master Fund accused of operating Ponzi scheme

Lawyers are investigating a potential class action lawsuit against two collapsed super funds, saying Aussies could lose more than $1bn in superannuation.

Lawyers are investigating a potential class action on behalf of investors in First Guardian Master Fund and Shield Master Fund, alleging they operated a Ponzi scheme with thousands of Australians’ superannuation savings.

Slater and Gordon Lawyers say more than 12,000 Australians could be affected, with fears Aussies could lose more than $1bn to the collapsed funds.

Slater and Gordon are investigating a possible class action lawsuit against two super funds. Picture: NewsWire / Luis Enrique Ascui

Slater and Gordon principal lawyer in class actions Andy Wei alleged investors were advised to put their savings into “largely unreliable funds”.

“What we’re seeing here is potentially deliberate misleading of investors, many of whom are

everyday Australians looking to secure their nest eggs,” Mr Wei said.

“They were repeatedly assured that their superannuation would flow into diversified portfolios with steady returns.”
He said despite this assurance, “recent information shows that these funds were largely illiquid with their values grossly overstated”.

Slater and Gordon’s Andy Wei said more than $1bn could be “potentially wiped out”. Picture: NewsWire / Nicholas Eagar

Illiquid assets are investments that cannot be converted into cash or easily sold without significant loss in value.

This includes property developments, private loans or unlisted securities.

Mr Wei said there was a chance that more than 12,000 Australians could be left out of pocket, with more than $1bn in superannuation “potentially wiped out”.

“These are people’s savings, and they deserve far better than this,” he said.

“Superannuation is meant to be tightly regulated, and many investors likely believed their

money was safely managed by trusted, blue-chip superannuation companies.”

More than 12,000 Australians could be out of pocket, Mr Wei said. Picture: NewsWire / Simon Bullard.

A Slater and Gordon spokesman alleged the investment funds were operating a Ponzi scheme with thousands of Australians’ superannuation, based on conduct issues “observed” by FTI Consulting liquidators.

“Slater and Gordon understand that the liquidators of First Guardian have observed issues arising from co-mingling of investor funds, such that investors’ monies were mixed up and used to pay for other investors’ redemptions, or investment commitments and management fees, when ordinarily those redemptions, commitments and fees should have come from income generated through investment activities,” they told NewsWire.

“Conduct of this kind is common to that seen in Ponzi schemes, and how this was allowed to occur forms a part of our investigation.”

Mr Wei said he was particularly concerned for those who invested in the First Guardian fund, as the FTI Consulting liquidators had now confirmed they expected “a substantial shortfall of recoverable assets”.

He encouraged investors who had been affected to come forward and contact the Slater and Gordon firm, saying more information would help them assess the “best path for recovery”, including whether a class action is viable.

The liquidators said it would take more than 12 months for their investigation to be completed. Picture: NewsWire / Nicholas Eagar

First Guardian Master Fund collapsed earlier this year, leaving thousands of customers in the lurch and unsure if they will ever see their funds again.

FTI Consulting liquidators Paul Harlond and Ross Blakely, who released their preliminary report into the fund, said they “intend to undertake further investigations”.

These included the determination of “whether any breaches of the Corporations Act or any other laws have occurred by any party … or any other circumstances exist, which may give rise to a potential claim by investors”.

In the report, the liquidators said they were “seeking compensation on behalf of members of the fund for losses suffered”, which could be as much as $446m.

FTI Consulting’s assessment found the overall recoverable value of the investments was likely to be “considerably less than their combined book value”, and a “substantial shortfall of recoverable assets to outstanding investor funds” was therefore likely arise in the liquidation.

The liquidators said it would take more than a year to complete their investigation and wind up the business due to the “complexity and number of outstanding matters” in the liquidation.

“The liquidators consider that the liquidation and the winding up of the funds will continue for and take some time to complete,” the report read.

ASIC has launched an investigation into First Guardian and Falcon, the entity responsible for the scheme. Picture: NewsWire / Luis Enrique Ascui

Corporate watchdog Australian Securities and Investments Commission (ASIC) launched an investigation into the failed management investment scheme and Falcon Capital Limited, the entity responsible for the scheme.

Without commenting on the Slater and Gordon claims and, separate to the Ponzi scheme allegation, an ASIC spokesman said its “first priority has been to preserve any remaining assets of the scheme so they can be recovered for investors”.

“Following concerns raised by ASIC, the Federal Court appointed liquidators to Falcon Capital and ordered the wind-up of First Guardian and its related funds in April,” they said.

“The court also restrained David Anderson, a director of Falcon, from dealing with his assets and appointed a receiver to his personal property.

“ASIC’s investigation suggests that potential consumers were called and referred to personal financial advice providers who advised consumers to roll their superannuation assets into a retail choice superannuation fund, and then to invest part or all of their superannuation into First Guardian.

“While ASIC’s investigation is ongoing, the Federal Court has made interim travel restraint orders against Falcon Capital director David Anderson on ASIC’s application.

“The Court also made interim orders freezing the assets of another Falcon director, Simon Selimaj and restraining his travel.”

Those orders are in place until February 27, 2026. No charges have been laid.

Originally published as ‘$1bn wiped out’: First Guardian Master Fund, Shield Master Fund accused of operating Ponzi scheme