James Mawhinney’s Venice dream haunts Mayfair, as ASIC opens new front

A small muddy island, close to the mouth of the Venetian lagoon, now haunts Mayfair 101 boss James Mawhinney as he seeks to fight off a long-running legal battle with ASIC.

James Mawhinney bought Isla San Spirito in 2018 in an almost €9.8m ($16m) deal.

The latest showdown between Mayfair 101 boss James Mawhinney and the corporate regulator comes almost eight years after the two sides first crossed paths over an investment scheme that came to buy a private island off the coast of Venice.

Mr Mawhinney found himself dragged before the courts last week in a marked escalation of his fight with the Australian Securities & Investments Commission.

ASIC opened the new front in its long running legal battle with Mr Mawhinney – who has also taken legal action against the regulator – laying four criminal charges against the Melbourne man.

The two sides have been skirmishing since 2016 as the regulator pursued Mr Mawhinney over his respective business interests, but the conflict only burst into prominence after ASIC launched legal action against Mayfair in the wake of the group suspending redemptions in early 2020.

ASIC has pursued Mr Mawhinney through the courts over his company’s debt-funded scheme, where investors lent cash to his company rather than directly investing in the Mayfair group. Mr Mawhinney’s Mayfair 101 group raised more than $210m from 128 investors as part of its efforts to fund the investment scheme, something ASIC claims was an exercise in false and misleading conduct.

A freeze on funds came soon after Mr Mawhinney revealed his purchase of the former resort on Queensland’s Dunk Island and plans to turn the sleepy town of Mission Beach into a tourism Mecca.

The plan, greeted with enthusiasm by the north Queensland locals, was trumpeted across the press.

But as the scheme unravelled, administrators stepped in to undo the tourism dream and sell the houses into a bubbly real estate market, buoyed by pandemic homebuyers keen on a beach getaway.

Mayfair 101 CEO James Mawhinney leaving the Melbourne Magistrates Court on last week. Picture: Luis Enrique Ascui

Mission Beach Real Estate principal Steve Wiltshire, one of several agents selling properties to Mr Mawhinney in the sleepy town two hours south of Cairns, says many people were keen to sell to Mayfair 101.

“It was a slow market. However, there were a few people who lost money due to the activities of Mayfair,” he said.

“We sold a lot of property to Mayfair – all agents did. It really gave the town a little boost.”

Mr Wiltshire said he grew concerned after his first meeting with Mr Mawhinney, after asking the prospective tourism mogul: “What’s your endgame?”

“He didn’t answer,” he said.

“It was like a pipe dream. They purchased $80m worth of property and there was another $120m under contract, including Dunk Island which was sold to Annie Cannon-Brookes.

“It was like a dreamtime. It’s hard to talk about. I think it would have made a movie.”

Locals at Mayfair’s earlier luxury island tourism venture, off the coast of Venice, were similarly sceptical, telling The Australian’s Mansion editor Lisa Allen the proposed redevelopment would struggle due to its distance from the Most Serene Republic, almost an hour’s ride from St Mark’s Square by water taxi – a figure questioned at the time by Mr Mawhinney.

Mr Mawhinney bought Isla San Spirito in 2018 in an almost €9.8m ($16m) deal, well down on the €28m Colliers had touted the oblong-shaped outcrop for in a sales campaign first launched in 2012.

Mr Mawhinney snapped up the island through the IPO Wealth business, his earlier foray into fundraising before expanding his horizons with the massive Mayfair 101 venture.

Liquidators seized the island in 2020 after the Victorian Supreme Court tipped IPO Wealth into receivership.

Mayfair had touted plans to turn Isola San Spirito, which was abandoned by its former religious order inhabitants in 1965, into a self-sustaining, five-star resort and luxury residential apartment complex.

This would have marked a significant transformation of the island, which was home to several scattered and ruined buildings.

Judge Ross Robson took aim at the Isola San Spirito deal in a judgment, noting that despite assurances the island was held by two companies controlled by IPO Wealth, liquidators could not find shares in them after inspecting company records.

Instead of an IPO Wealth special-purpose vehicle taking control of the companies, the court found a British business associated with Mr Mawhinney was instead handed the shares in the Italian company.

“The best Mr Mawhinney could do in justifying this transaction was to suggest that Italy was closer to the UK than to Australia and that this would make future fundraising activities easier,” Justice Robson said.

“The IPO Wealth Group will not have the benefit of any increase in the value of the property, but any increase in value will accrue for the benefit of Okto Holdings, and therefore for Mr Mawhinney. I accept that this loan is of questionable validity.”

ASIC’s latest case centres on this transaction, with the regulator alleging Mr Mawhinney provided documents to Vasco Trustees, which acted as trustee for IPO Wealth, showing the group owned the two Italian companies “when it did not”.

ASIC alleges the holding company had been substituted by another company as the purchaser of shares in the island, in breach of the Corporations Act.

However, Mr Mawhinney contests this.

ASIC had previously taken aim at Mr Mawhinney over IPO Wealth, warning him in 2016 he was operating without a financial licence.

Robert Richter KC, acting for Mr Mawhinney, claims ASIC’s case amounts to malicious prosecution of the businessman.

Sources close to Mr Mawhinney’s camp claim the matters ASIC is pursuing are overblown.

Mr Richter KC told The Australian he would seek a discontinuance of ASIC’s case against Mr Mawhinney at its next hearing in June.

The veteran Melbourne barrister has been close to Mr Mawhinney and his partner as the regulator closed in on its latest case against him.