First Guardian, Shield adviser Ferras Merhi and referrer Osama Saad hit with travel ban

Venture Egg’s Ferras Merhi and Aus Super Compare’s Osama Saad, who are caught up in the investigation into the collapse of First Guardian and Shield, are banned from leaving the country.

Former EDFL ruckman Ferras Merhi, also a financial adviser, will be unable to leave the country until at least mid December. Picture: Stuart Milligan

Venture Egg’s Ferras Merhi and Aus Super Compare’s Osama Saad, who are being investigated as part of the official probe into the $1bn First Guardian and Shield funds failures, are banned from leaving the country amid allegations they may not have complied with freezing orders and have been winding down their Australian business interests.

The Federal Court on Thursday extended travel bans sought by The Australian Securities and Investments Commission on Mr Merhi and Mr Saad until December 12.

Justice Mark Moshinsky said documents submitted by the corporate cop suggested its investigation into the former financial adviser and the lead generator could take at least a further six months.

The court also heard ASIC is investigating other parties it suspects of contravening the law in relation to Shield and First Guardian, including InterPrac Financial Planning and Reilly Financial.

Ferras Merhi of Venture Egg Financial Services.

Louise Bowden, whose adviser Rhys Reilly at Reilly Financial recommended she put the vast majority of her super savings into First Guardian, fears her capital has been lost to the scheme. Reilly Financial is an authorised representative of InterPrac.

Ms Bowden followed through on the advice to put $150,000 of her super in the fund in mid-2023. That money is now frozen, much of it feared lost.

“ASIC should have actually been across all of this. It begs the question, is anyone’s superannuation actually safe? ASIC should have shut the fund down a long time ago,” Ms Bowden told The Australian.

“I do have time up my sleeve, but that’s a lot of superannuation to try and recover,” Ms Bowden, 44, added.

Mr Reilly recently contacted clients to say he ceased recommending First Guardian as an investment option in mid-2023 and that his name was used on later advice documents without his authorisation. He told clients he has sought legal advice.

The court on Thursday heard ASIC found indications both Mr Merhi and Mr Saad failed to disclose all of their assets despite being subject to asset freezing orders since February.

“While there is no clear evidence of flight risk, it seems inescapable, given the facts and circumstances that there is some risk that (Mr Merhi) may leave and not return to Australia,” Justice Moshinsky said in his judgment.

He gave the same reasons for the travel ban on Mr Saad.

“I am satisfied that it is necessary or desirable for the purposes of protecting the interests of aggrieved persons to make the travel restraint orders sought by ASIC,” Justice Moshinsky said, adding that he would include a modification that would allow Mr Merhi and Mr Saad to seek a variation if there were an urgent need to travel.

Mr Merhi and Mr Saad are part of the regulator’s broader probe into the Shield Master Fund and the First Guardian Master Fund, both of which collapsed in the past 12 months.

As many as 12,000 investors are now facing the loss of up to $1bn in superannuation savings due to the alleged misuse of investor money.

Many investors were clients of InterPrac-authorised representatives Venture Egg and Reilly Financial. Mr Merhi separately operated another advice shop, FSGA, which held its own financial services licence.

Between Venture Egg and FSGA, Mr Merhi and his associates put 6726 investors into Shield and First Guardian, representing $226m allocated to Shield and $234m to First Guardian, ASIC alleges. Most of this happened between 2021 and 2023.

During this same period, First Guardian allegedly paid Mr Merhi tens of millions of dollars in marketing fees through another of his businesses, Cornerstone Marketing.

This included at least $12m from First Guardian to Mr Merhi’s marketing firm in that time.

Mr Saad operated his lead generator Aus Super Compare which would allegedly cold call people and link them up with Venture Egg and other advisers. He was also the director of another company, Atlas Marketing.

Atlas was allegedly paid $21m by First Guardian between May 2023 and February 2024, according to documents filed by ASIC in Federal Court.

At least $12m of this was sourced directly from one of the First Guardian funds, being essentially investor money, ASIC alleges.

Mr Saad was introduced to the First Guardian founders by Mr Merhi, according to the regulator.

The corporate regulator began investigating Shield and its responsible entity, Keystone Asset Management, in late 2023 and put stop orders on the fund February 2024, ensuring no further investor money would be transferred.

But it only commenced a formal investigation into First Guardian funds and their responsible entity Falcon Capital in September 2024, seven months after it halted investments into Shield, despite both funds having exposure to the failed property developer Paul Chiodo.

Falcon Capital was the trustee of the Chiodo Diversified Property Development Fund until 2021 and First Guardian had a $94m position in one of Mr Chiodo’s development funds when it collapsed.

Mr Chiodo was also a director of the firm that oversaw the $480m Shield, which is now in liquidation.

Know more? Contact Cliona O’Dowd: [e-mail]