United Global Capital pushed clients into First Guardian funds

Failed advice firm United Global Capital recommended clients invest in the now-suspended First Guardian funds.

In December, creditors resolved to wind up Keystone and appoint liquidators, with investors now fearing much of their retirement savings are gone. Picture: Alex Coppel

A financial advice firm that had its licence cancelled last year, and whose sole director has been slapped with a 10-year ban, recommended clients buy into a now-suspended fund that had ties to under-fire property developer Paul Chiodo, with investors still no clearer on when they will get access to their money.

Falcon Capital, the responsible entity for suspended fund First Guardian, last week told investors it had been waiting close to a year for the proceeds from exiting a property fund run by Mr Chiodo, who is fighting allegations he spent millions of dollars of investor funds on personal expenses.

It is the first time Falcon has indicated the Chiodo investment as at least part of the reason for the delay in “cash receivables” that has stopped its funds from reopening and handing millions of dollars back to clients.

The Australian can also reveal that advisers at United Global Capital, the advice firm that had its licence cancelled last June and is now in liquidation, recommended First Guardian funds to clients before it was shut down.

“ASIC is aware that UGC financial advisers were recommending First Guardian to clients,” an ASIC spokesman told The Australian.

UGC’s sole director, Joel James Hewish, was last year slapped with a 10-year ban from providing financial services, in part for creating a culture of noncompliance and incompetence at UGC, according to the corporate regulator.

This followed an investigation by the regulator that found UGC’s authorised representatives contacted prospective clients and recommended they establish self-managed superannuation funds and invest in highly speculative investments related to Mr Hewish.

Paul Chiodo.

The Australian is not alleging any improper behaviour by Falcon Capital or First Guardian.

Falcon Capital provided an update to investors on the fund suspension and ties to Chiodo Corp last week.

“Falcon (Capital) was the trustee of the Chiodo Diversified Property Development Fund until June 2021, when Keystone Asset Management Ltd took over as trustee,” the fund told investors.

The Australian first revealed links between Mr Chiodo and First Guardian funds earlier in February.

“Falcon as trustee of the Australian Development Fund held units in the Chiodo Diversified Property Development Fund until March 2024, when it divested its interest. Payment for that divested interest is held as a cash receivable,” the fund said in the update to investors on February 10.

Keystone Asset Management, now in liquidation, was the responsible entity of the Shield Master Fund, a managed investment scheme that investors pumped $480m into between 2022 and 2024.

In December, creditors resolved to wind up Keystone and appoint liquidators, with investors now fearing much of their retirement savings are gone.

Keystone was also the trustee of the Advantage Diversified Property Fund, a wholesale property fund into which ASIC alleges a large proportion of Shield’s funds were invested.

Mr Chiodo was a director of Keystone but stepped down on May 27, 2024, the same date First Guardian investors were informed of the planned restructure of their fund.

He is alleged to have spent $6.8m worth of investor money on personal expenses and hundreds of thousands on celebrity boxer appearances, according to claims filed by the corporate regulator in the federal court in August. Mr Chiodo disputes the allegations.

Falcon Capital sought to reassure investors amid concerns of exposure to Shield, saying: “Falcon has never invested in the Shield Master Fund.”

The corporate regulator put stop orders on Shield in February 2024 and the Federal Court froze its assets in June in a bid to protect investor funds.

Informing investors of the restructure last May, Falcon flagged the First Guardian funds would be divesting “several significant assets” with capital return expected by August. That has still not eventuated.

“The lifting of withdrawal restrictions over the fund remains contingent upon the receipt of significant contracted cash receivables,” the latest update to investors said.

“Falcon expects to receive the bulk of these significant contracted cash receivables in February and March 2025.”

Falcon Capital was contacted for comment.

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