Lion Property Group in liquidation after 27 investors take it to court over $120m investment scheme

A property developer that spruiked projects in Melbourne, Brisbane and the Gold Coast is in liquidation, leaving investors millions of dollars out of pocket.

Lion Property Group directors Garry Pesochinsky and John Sader.

A luxury property developer is in liquidation amid staggering claims of millions of dollars in missing funds in a “nightmare” which has left scores of investors out of pocket.

Lion Property Group, along with 27 related companies, was placed into provisional liquidation on July 2 after action sparked by 27 investors in the Victorian Supreme Court.

Lion had advertised opportunities to invest in property development projects, including luxury homes and apartment projects in rizty suburbs across Brisbane and Melbourne, as well as at well-heeled Mermaid Beach on the Gold Coast.

The company had offices at Clayfield in Brisbane and in South Melbourne.

Screenshots from the Lion Property Group website.

Documents submitted for the case, said court-appointed accountant – and now provisional liquidator – John Lindholm of KPMG, found $120m of investor funds had been paid into special purpose vehicles (SPVs). SPVs are companies set up for specific projects.

Shares in the SPVs were sold to investors as wealth opportunities and were told their funds were secured against the properties.

But they allege they were never told about a web of loans between the Lion companies, or about hefty mortgages taken out against the properties.

In a hearing on the matter, the KC for the investors said Lion’s projects were “being operated as a giant Ponzi scheme”.

Lion Property Group director John Sader

Lion Property Group director Garry Pesochinsky

Lion and its directors were yet to respond to News Corp Australia’s questions but have previously rejected the investors’ claims.

“The suggestion that Lion is running a Ponzi scheme is absurd,” it told Nine Newspapers in June. “Lion does not intend to litigate allegations via the press and is continuing to work to complete developments, repay its creditors with a view to returning capital to its investors.”

Only $35m of the $120m investor funds could be verified as being paid towards development projects, many of which remained unfinished. Some were never started.

According to the court documents, $27m from the SPVs was loaned to Lion’s head company, and another $10m was paid to other related parties of directors John Sader and Garry Pesochinsky, the court documents said.

About $60m was unaccounted for, Mr Lindholm found.

Screenshots from the Lion Property Group website, which was still live this week.

One investor, whose name has been withheld from publication, said the saga had been a “nightmare” for investors.

Many investors, he said, were “left reeling – losing life savings, homes, and relationships, while confronting the grim spectre of substance abuse and mental health crises”.

“It is safe to say that all of us carry some level of PTSD as we navigate the aftermath of this nightmare,” the investor said.

“Many feel isolated and desperate, reaching out to organisations like Lifeline when they find themselves on the brink.

“The emotional scars left by this experience are indelible.”

Under the scheme, the individual project companies were supposed to pay management fees to Lion’s head company once completed projects were sold.

But, in some cases, fees were paid before they were due and far in excess of what was due, court documents said.

Under their agreements with Lion, investors were also meant to receive monthly payments – but these dried up around October and November last year, court documents say.

62 Toorak Rd, Hamilton was completed by Lion Property in 2023.

The investors claimed their agreements were breached because Lion did not use their funds to build the projects; failed to maintain proper accounts; and failed to keep them up to date with progress of the projects.

The investors claim Lion and its directors “engaged in conduct which was misleading or deceptive or likely to mislead or deceive, which has caused loss and damage to the plaintiffs,” the Judgment said.

As well as seeking to wind up the group, investors were seeking repayment of their money as well as damages and compensation.

Despite the liquidation, Lion Property Groups website was still live and advertising projects this week.

The proceedings were launched by three initial investors, but the number joined to the case had swelled to 27 by the time of the wind-up judgment.

Originally published as Lion Property Group in liquidation after 27 investors take it to court over $120m investment scheme