Falcon, First Guardian to be wound up as ASIC probes Sequoia subsidiary Interprac
The Federal Court has appointed liquidators to wind up the failed entities, as the corporate regulator extends its investigation.
The Federal Court has appointed liquidators to wind up Falcon Capital and the First Guardian Master Fund, as the corporate regulator extends its investigation of the failed managed investment scheme to Sequoia Financial subsidiary Interprac Financial Planning.
The court on Wednesday approved the Australian Securities & Investments Commission’s application for Falcon and First Guardian to be wound up after hearing the investment firm may have traded while insolvent. Falcon’s lawyers had argued for a more informal wind-down.
Falcon was the responsible entity for the failed First Guardian fund, which invested hundreds of millions of dollars in companies associated with former managing director David Anderson and paid $45m to advisers and marketers to promote the fund, according to the regulator.
As revealed exclusively by The Australian in March, ASIC alleges Falcon kept pumping money into illiquid investments even after suspending the fund in May last year. Its 6000 investors had invested around $580m into the fund in recent years. Much of the money is now feared gone.
Fund updates from Falcon to investors through last year described cash receivables (or money owed) from a string of asset sales. The purported source of funding for all of these sales and a series of rolled-up loans – totalling $274m – was a single US-based investment fund set up a year ago which has yet to receive SEC approvals, according to ASIC.
Liquidators Ross Blakeley and Paul Harlond of FTI Consulting will now work to wind up Falcon and First Guardian, as well as its subsidiary funds, including the First Guardian Global Income Fund, First Guardian Australian Development Fund and the First Guardian Global Equity Fund.
The court also appointed receivers to the property of former First Guardian managing director David Anderson. He is alleged to have been using investor money for his personal benefit, including paying the mortgage on his lavish Hawthorn home.
Between June 2020 and September 2024, $5.6m was deposited into Mr Anderson’s personal ANZ account “without any legitimate basis for payments in that amount being apparent to ASIC or disclosed to investors”, ASIC said in court documents seen by The Australian.
Separately, the regulator has launched an investigation into Interprac Financial Planning, a subsidiary of ASX-listed Sequoia Financial. Interprac authorised representatives Venture Egg and Ferras Merhi to put thousands of clients into the First Guardian funds.
“ASIC has commenced an investigation into suspected contraventions of the Corporations Act and ASIC Act 2001 by Interprac and/or its representatives,” Sequoia said in an ASX update this week.
Sequoia, whose chief executive Garry Crole is also CEO of Interprac, said the firm was co-operating fully with ASIC.
It was also “assisting ASIC so that the interim freezing orders have not been, and are not, breached by Mr Merhi and/or his associated entities,” the firm said.
According to ASIC, former VFL ruckman Mr Merhi is linked to at least 2440 clients who invested $179m in First Guardian funds.
Mr Merhi’s own figures say his advisers recommended First Guardian to 3600 clients between 2021 and 2024, with these advisers alone accounting for $192m of money flowing into the fund.
While advising clients to invest in First Guardian, Mr Merhi was also being paid to market the fund.
Falcon lobbed at least $13m to Mr Merhi’s Cornerstone Strategic Management firm and lent the firm a further $6.3m. The loan is yet to be repaid.
The firm also handed a further $21m to Osama Saad’s Atlas Marketing – over just nine months – and $5.7m to Rashid Alshakshir’s Indigo Group. At least $23m of the payments to these marketers was taken directly from investor funds, according to the regulator.
The assets of Mr Merhi, Mr Saad and Mr Alshakshir have been frozen by the Federal Court in connection with ASIC’s investigations concerning the Shield Master Fund and the First Guardian Master Fund.
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