First Guardian liquidators recover just $1.6m from $450m fund collapse
Of the $450m invested into First Guardian over its short life, more than $94m was allegedly pumped into related-party investments, with a further $166m sent to management-related parties, liquidators say.
Liquidators have recovered just $1.6m from the $450m invested in the collapsed First Guardian Master Fund, including $336,000 from the sale of a Lamborghini allegedly bought with investor money.
In a bleak update detailing attempts to recover the hundreds of millions of dollars invested in the fund by 6000 Australians before it was suspended in 2024, liquidators FTI Consulting warned any potential distribution, if it comes, is at least 18 months off.
Underscoring the dire position of the recoveries to date, liquidators revealed the money left in the fund isn’t even enough to pay their fees, which they estimate will climb to about $5m.
In order to continue working on the case, the liquidators have already put in a request with the Australian Securities & Investments Commission for access to government funding reserved for liquidators of companies that have few or no assets.
Of the $450m invested into First Guardian over its short life, more than $94m was allegedly pumped into related-party investments, with a further $166m sent to management-related parties, most of which had no formal agreement with Falcon, liquidators said in the report released late on Tuesday.
Close to $12m was allegedly moved to directors’ personal investment vehicles, as well as family members of the directors.
Of this, $10m was allegedly sent to a handful of Falcon founder Simon Selimaj’s companies, including $8m in loans and investments that were later written off. A further $1m was advanced to Mr Selimaj between late 2018 and 2022, the liquidators’ report said.
A 2023 Lamborghini Urus, found in Mr Selimaj’s possession earlier this year, is also alleged to have been bought with money from the fund. Liquidators sold the vehicle in July for a little over $336,000, with this money contributing to the proceeds recovered to date.
Liquidators also found that, from 2020, more than $130,000 was allegedly advanced to Falcon director David Anderson’s wife, while a further $160,000 was sent to their joint bank account.
Giving a taste of what investors are up against in recovering their retirement savings, the liquidators said that across five of First Guardian’s investments that had a combined book value of $59m, just $500,000 had been recovered, with little to no prospect of further recoveries from these holdings.
These investments included $29m in loans to craft brewery Fox Friday and millions more used to purchase a development site in the inner-city Melbourne suburb of Richmond.
Fox Friday went into liquidation earlier this year, with Falcon liquidators recovering just $450,000 of the $29m invested. They expect only another $50,000 will come from the brewery holding. Mr Anderson was a director of Fox Friday until March this year.
The Richmond development site had a $14m loan on it and was sold by mortgagee Millbrook in September for $13.2m, meaning investors will get nothing back from this investment.
Even worse, liquidators identified three investments, worth a further $32m, that were not disclosed by the directors of First Guardian’s responsible entity Falcon Capital. These directors, Mr Anderson and Mr Selimaj, ran the First Guardian fund.
The three investments uncovered by the liquidators include $20m sent to an OpenMarkets trading account between 2017 and 2021. The account has since been closed, but liquidators gave no indication they know where the money went.
Aside from these eight investments, which liquidators say are crystallised with limited scope for recovery, there are 16 further investments with a book value of $453m they class as “open” with the potential for some recoveries.
Seeking to temper investor expectations, the liquidators warned there would likely be “substantial” shortfall in any funds recovered.
Despite First Guardian purporting to invest client money in defensive, diversified and growing assets across a number of funds, the liquidators said the allocation was arbitrary, with no difference between the different classes or the assets held in each class.
The “open” investments include at least $32m handed to mezzanine property lender Kanun Capital, of which liquidators have so far recovered just $860,000.
Falcon invested a further $17m in Scott Pickett’s Rogue Traders Group, which is currently in administration.
All up, liquidators found $242m had been sent offshore. Much of it appears to have gone to two Singaporean and Indonesian entities: Maleo and Briix Group. Both are associated with First Guardian’s former head of private equity, Conrad Warren, who is understood to reside overseas.
According to the liquidators, Maleo and Briix previously held a property portfolio of undeveloped land lots within Indonesia valued at $30m. There was no indication given on whether these property holdings remain.
In September, the liquidators demanded $80m owed to Falcon Capital by Maleo.
“Maleo Singapore’s solicitors asserted that Maleo Singapore would not be making any payments to (Falcon),” the liquidators said in their report.
As they seek answers on where much of the investor funds went, liquidators are preparing to conduct public examinations of Falcon directors Mr Selimaj and Mr Anderson in court this month. Both directors have so far avoided giving any comment or explanation of the fund’s investments or its collapse.
Investigations by The Australian revealed how investors were often put into the First Guardian fund without their consent, and that the fund paid millions of dollars to lead generators and marketing companies to drum up investment in the fund.
One of the marketing companies was owned by the adviser at the centre of the scandal, Ferras Merhi, who allegedly put the retirement savings of thousands of Australians into First Guardian.
ASIC is investigating Falcon Capital and its directors for allegedly mismanaging investor money in the fund. The corporate cop has also previously alleged Mr Anderson may have used investor money for his personal benefit, including to pay the mortgage on his lavish $9m Hawthorn home, though there was no mention of this in the liquidator’s report.
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Originally published as First Guardian liquidators recover just $1.6m from $450m fund collapse
