Fallen Gold Coast millionaire Michael King’s failed MFS group leaves tangled web

FALLEN Gold Coast millionaire Michael King and four others are being pursued by ASIC over the collapse of the MFS Group.

“YOU the man” is how fallen Gold Coast millionaire Michael King casually signed of emails to the blokes in his finance empire when they found a few extra hundred million dollars.

But King and four others at the head of the tangled web left behind by the collapse of the MFS Group are the men, and a woman, now being pursued by ASIC.

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Seven barristers, 25 solicitors or clerks and about 25,000 documents have filled a Supreme Court room in Brisbane for weeks making up surely one of the largest civil prosecutions this year.

At the centre are allegations by the Australian Securities and Investments Commission that King as CEO acted dishonestly in his dying days at MFS in late 2007 and early 2008 when money was needed to repay a pressing $150 million loan.

At the time MFS had gone from a small Southport business with lawyer King at the helm to a sprawling publicly listed company with about $2 billion of investor funds under management and a share price heading towards $5.

Much of ASIC’s case is focused around November 2007 when it alleges King knew the large loan was due and discussed ways to repay it emails.

Unable to find the money from appropriate administration accounts, King and his inner circle orchestrated a way to pay it using investor funds instead, ASIC alleges.

A string of disastrous events then followed leading to what King described as Black Friday when the share price plummeted to $1 much to the ire of thousands of investors who faced sudden, large losses.

King yesterday told the court he had limited memory about how the loan was repaid.

In defending the case his legal team tendered several emails showing how King left it to his deputy to come up with the money, didn’t ask for details and just congratulated him later.

“You the man. You definitely the man. Thank you very, very much,” the email said.

King also disputed he was the top man with the power to control the company’s finances.

“I had delegated authority to deal with set amounts up to $25 million I think and we are dealing with a $2 billion company so I don’t think so,” he said.

The case continues.

HOW IT UNFOLDED

2000: Gold Coast lawyer Michael King and a partner start MFS as a small mortgage company.

By 2006: MFS Group expanding into tourism, hotels, finance and fund management.

Mid-2007: Financial reports estimate about $5.4 billion assets under management.

November 2007: Loan of $150 million is repaid.

January 2008: King makes announcements to ASX about splitting up the company. Share price crashes to about $1. King resigns as CEO.

December 2009: ASIC files Supreme Court case alleging misappropriation of funds.