Mayfair CEO hails courtroom questions, defends Mission Beach and Dunk Island strategy 

James Mawhinney’s Dunk Island and Mission Beach investment strategy was blown up by misunderstanding by ASIC, the Federal Court was told.

Mayfair 101 founder James Mawhinney has said his Mission Beach and Dunk Island investment scheme was like the De Beers diamond company.

Mayfair 101 CEO James Mawhinney has welcomed his questioning in the Federal Court on Thursday as the first time it had ever called on him to explain his investment decisions.

Speaking in a penalty hearing before the court on Thursday the controversial head of Mayfair 101 rejected assertions he transferred investors’ funds to the British Virgin Islands, calling the funds an investment.

Mr Mawhinney said the $19.46m purchase of 21.25m shares in Accloud PLC was made on behalf of investors.

But lawyers for the Australian Securities and Investments Commission presented the transactions as among a litany of questionable deals that destroyed investor funds.

Mr Mawhinney compared his investment plan to the De Beers diamond mining operation, saying it aimed at “controlling demand and supply” by snapping up 230 properties in the area.

But he laid the blame for the collapse of the investment scheme at the feet of ASIC, saying the regulator had never bothered to interview but noting he had also failed to “beat down someone’s door”.

“ASIC misunderstood our business and misunderstood me and thought I was someone I’m not,” he said.

“It’s very apparent the regulator has taken a dim view of our advertising. I would never wish to be in this position again.”

The showdown between ASIC and Mr Mawhinney comes as the corporate regulator seeks to slap Mayfair 101 and its founder with $12m in penalties for a long list of breaches of corporate law.

Mayfair 101 offered investors better yields than term deposits, in an advertising campaign that attracted the ire of the corporate regulator.

Mr Mawhinney and Mayfair burst on to the scene after the high profile purchase of Dunk Island with plans to rebuild its trashed resort, launching it and the Far North Queensland town of Mission Beach as tourism meccas.

Mr Mawhinney had offered several fixed income products, including M and M+ Core Fixed Income Notes, raising more than $200m.

Justice Stewart Anderson, who in a separate matter banned Mr Mawhinney from promoting financial services for 20 years, found Mr Mawhinney and Mayfair 101 had engaged in misleading or deceptive conduct in relation to financial services in March this year.

Mr Mawhinney compared his investment plan to the De Beers diamond mining operation, But ASIC’s senior counsel Jonathan Moore, QC said Mr Mawhinney had never expressed remorse for the failure of his investment scheme and had blamed ASIC for its failure.

Mr Moore showed Mr Mawhinney a Mayfair infographic from February 2020 that blamed ASIC and the media for the failure, encouraging members of the public to file complaints.

Michael Pearce SC, representing Mr Mawhiney and Mayfair 101 said ASIC had attempted to bring new matters into the penalty hearing.

Mr Pearce SC said the penalties should be “set aside”.

The case, originally set down for two days, is set to return on Monday.