Mayfair 101 founder James Mawhinney hit with 20-year ban

James Mawhinney has been slammed by the court for lack of ‘contrition or remorse’ over his huge loss of investors’ funds.

3 Buccaneer St, South Mission Beach, was marketed in a release of Mayfair 101 properties. Picture: supplied.

Mayfair 101 founder James Mawhinney has been restrained by the Federal Court from fundraising and advertising financial products for 20 years.

In a judgement on Monday, Mr Mawhinney was found to have engaged in misleading and deceptive conduct through his investment schemes, while showing a “total disregard for the law”.

The Mayfair 101 group burst to prominence with a high-profile advertising campaign and built up holdings including Dunk Island Resort as its expansion was fuelled by the promise of high returns from its since crushed tourism projects.

The plans were derailed as Mayfair lost control of both the dilapidated island resort and more than 100 properties on the mainland, with the embattled company facing further legal claims from investors who in many cases lost their life’s savings.

In his judgement, Justice Stewart Anderson savaged Mr Mawhinney for a “total disregard for the Corporations Act and the ASIC Act”, noting he had “ no confidence that he will adequately comply with the obligations set out in the legislation in the foreseeable future”.

The judge also slammed Mawhinney for expressing “no contrition or remorse for the very significant loss of investors’ funds”.

“I have no confidence that Mr Mawhinney properly understands or appreciates the protective purposes of Australian financial services laws, or the importance of properly disclosing relevant and material matters to prospective investors,” he said.

Justice Anderson said he was satisfied that ASIC had established that Mayfair fund IPO Capital had contravened the Corporations Act and that Mayfair 101 had engaged in misleading and deceptive conduct.

The win for the corporate regulator comes after a long pursuit by the Australian Securities and Investments Commission, which had been chasing the failed financial figurehead for his role in the sale of misrepresented investment options.

Justice Anderson said he held serious concerns as to “what has become of the funds invested” in the various investment schemes and “whether Mr Mawhinney stands to benefit personally from those schemes”.

“However, the evidence does not currently enable me to make a finding that Mr Mawhinney personally benefited, or stands to personally benefit, from Mr Mawhinney’s failed investment products,” he said.

Justice Anderson declined to issue the maximum restraint period of 25 years, as ASIC had not alleged Mr Mahwinney engaged in conscious dishonesty.

But he found that although Mr Mawhinney was subject to no criminal conviction his conduct had been reprehensible.

“Mr Mawhinney accepted funds from new investors for the purpose of making interest and redemption payments to old investors, when there was a real likelihood that the subsequent investors would lose some or all of their monies,” he said.

“Subsequent investors were not informed that their invested funds would, could or might be

used to pay distributions to current investors.”

Mr Mawhinney, who was unrepresented in the court, was found to have not tendered any lay or expert evidence, nor challenged the evidence of the liquidators relied upon by ASIC.

“Mr Mawhinney has had every opportunity to participate, and indeed has participated fully, in this proceeding. Mr Mawhinney has made detailed submissions opposing the orders,” Justice Anderson said.

When making his order the judge found that if left free to act there was a “likelihood” that Mr Mawhinney “will engage in such conduct in the future”.

The 140-page-judgment found ASIC had been concerned about Mr Mawhinney for years, writing to him as far back as September 2016 noting they were concerned he was offering financial services without a license.

Mawhinney had been cautioned about his IPO Capital website, promising ASIC in December 2016 the website would be taken down and ads directing to it deleted.

However, the court found this website was swiftly replaced by another under the Eleuthera brand.

The judgement comes as a series of class actions are gearing up to claw back millions from the Mayfair 101 scandal.

Slater and Gordon are targeting Vasco Trustees, which oversaw Mayfair 101’s IPO Wealth Fund.

The law firm, which issued its class action on December 10 last year, will also be seeking to target DH Flinders, which provided Mayfair its authorised representative status.