First Guardian investors could lose all of their superannuation savings

First Guardian investors could lose all their super savings, as directors splashed out on a $9m mansion and Lamborghini while pumping client money into illiquid assets and channelling $242m offshore.

A Lamborghini Urus, purchased by Falcon in 2023, was found in the possession of Mr Selimaj in recent weeks. Liquidators have since taken control of the vehicle and passed it on to Slattery Auctions for sale.

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Investors in the collapsed First Guardian Master Fund may never recover a dollar of their superannuation savings, according to liquidators appointed to wind up the investment scheme which has all the hallmarks of a half a billion dollar fraud.

Falcon Capital operated a Ponzi scheme for years overseeing the First Guardian fund, it has emerged, capitalising on the marketers and financial advisers who funnelled new investors into the now failed strategy with false promises of high returns, the liquidators’ report suggests.

In reality, virtually all of the money went to illiquid assets, loans to related parties and even a $500,000 Lamborghini the company failed to disclose when it collapsed this year, liquidators Ross Blakeley and Paul Harlond said in their report published late on Tuesday.

They also discovered client redemption requests were met by cash funnelled from applicants, a structure typical of Ponzi scheme promoters like Bernie Madoff.

In a blow for the 6000 investors whose superannuation savings are frozen in the collapsed strategy, the liquidators said losses could potentially be as high as $446m, the net amount invested.

Falcon Capital director David Anderson.

Investors were initially led to believe the value of their assets was in the region of $500m but the liquidators said the recoverable value of the investments, which includes $242m channelled offshore, was likely “considerably” less.

The liquidators identified tangible assets of just $2.2m comprising cash and a Lamborghini Urus.

If any money is recovered, it will be years before it is returned, the liquidators said.

Where the money went

Despite First Guardian purporting to invest client money in defensive, diversified and growing assets across a number of funds, the liquidators said the allocation was arbitrary, with no difference between the different classes or the assets held in each class.

Falcon operated two investor application accounts whereby client money was received and sent to First Guardian Funds, and money was sent back to meet redemption requests. In total $642m was received and $197m redeemed, leaving $446m outstanding.

Of the outstanding funds, a total $69m was invested or loaned to entities associated with Falcon Capital director David Anderson, while the 19 investments across the various First Guardian funds “do not include any direct assets which are real property backed with first-ranking mortgage security”, the liquidators said.

In a further blow, three Australian-based ventures Falcon put a value of $59m on are already insolvent, according to the report.

As revealed by The Australian in March, the fund invested hundreds of millions of dollars in companies associated with Mr Anderson, including celebrity chef Scott Pickett’s restaurant empire, Tasmanian craft brewery Fox Friday, and an Indonesian property finance firm run by First Guardian’s former head of private equity.

Falcon kept pumping money into illiquid investments even after suspending the fund last year, according to the securities regulator, which has taken legal action against the business and obtained freezing orders against directors Mr Anderson and Simon Selimaj, also known as Simon Sallka or Sokol Selimaj.

Lavish Hawthorn home and Lamborghini

Melbourne-based Mr Anderson also used investor moneys for his personal benefit, including to pay the mortgage on his lavish $9m Hawthorn home, ASIC alleges.

The 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”, the regulator alleges. Mr Anderson purchased the Hawthorn residence in December 2020.

The Lamborghini Urus, purchased by Falcon in 2023, was found in the possession of Mr Selimaj in recent weeks. Liquidators have since taken control of the vehicle and passed it on to Slattery Auctions for sale.

Falcon also handed in excess of $45m to three marketing and lead generation companies between 2021 and 2023, with more than half of the money siphoned directly from First Guardian fund assets, according to the corporate regulator.

An ASIC spokesman said the First Guardian collapse was a priority for the regulator. It has 40 staff working on the investigation, he said.

“We understand the circumstances surrounding First Guardian are distressing for those affected and it is one of ASIC’s priorities to investigate what has happened,” the spokesman said.

“ASIC’s investigation suggests that potential consumers were called and referred to personal financial advice providers who advised consumers to roll their superannuation assets into a retail choice superannuation fund, and then to invest part or all of their superannuation into First Guardian.”

Chiodo funds

First Guardian funds also invested in one of failed property developer Paul Chiodo’s funds. Mr Chiodo, whose Shield Master Fund is also in liquidation, is fighting allegations he spent millions of dollars of investor capital from the Shield Master Fund on personal ­expenses.

The same advisers who funnelled investor money into the First Guardian funds were also putting investors into the Shield funds.

Melbourne-based financial adviser Ferras Merhi, who operated Venture Egg Financial Services as well as a second advice shop, Financial Services Group Australia, put thousands of clients into the Shield and First Guardian funds.

According to ASIC, Mr Merhi is linked to at least 2440 clients who invested $179m in First Guardian funds.

Paul Chiodo.

Mr Merhi’s own figures are that 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. More than 1100 of these investors were also directed into the Shield Master Fund by the same adviser, he told The Australian.

ASIC has yet to ban the advisers that were recommending First Guardian but has begun issuing banning orders for the advisers putting investors into Shield funds.

On Wednesday, ASIC said it had banned MWL financial adviser Matthew Bradley and former MWL adviser Isaac Jacob McQueen.

ASIC said it found the advisers gave inappropriate advice to certain clients which was not in their best interests by recommending they invest most of their superannuation into high growth or growth class of the Shield Master Fund.