Investors in collapsed Lion Property Group ‘ponzi scheme’, say ASIC dismissed complaints

Devastated investors owed up to $120m in a collapsed property development company - described as a ‘giant ponzi scheme’ - say they’ve been forced to spend hundreds of thousands more pursuing the matter in court. So where’s ASIC been?

Lion Property Group had a provisional liquidator appointed.

Investors owed up to $120m in a collapsed property development company, described in court as a ‘ponzi scheme’, say they’ve been forced to spend hundreds of thousands pursuing the matter in court because corporate regulator ASIC “hasn’t done its job”.

Lion Property Group, along with 27 related companies, was placed into provisional liquidation on July 2 after action sparked by 27 investors in the Victorian Supreme Court.

Receivers were appointed to the group last week, on behalf of business lender Bizcap Au, which lodged a security against all its assets and property in May this year.

Two Lion companies are also subject to Federal Court wind-up action by the ATO.

The matter is due back in the Victorian Supreme Court for hearing this Friday.

In a hearing on the matter, the KC for the investors said Lion’s projects were “being operated as a giant Ponzi scheme” – a claim strongly denied by the directors.

Lion Property Group directors Garry Pesochinsky and John Sader.

ASIC did investigate Lion – in a probe that ended in June last year – but no effective action was taken and the scheme continued to advertise for new investors.

In a letter to the regulator, seen by News Corp, an investor who’d lost $1.85m described the “severe financial crisis” which had enveloped his family.

“ASIC, has failed me, my family, my future and 500 plus fellow investors,” the letter said.

Despite the provisional liquidation and receivership, the website for Lion – which was based in Melbourne and had an office in Brisbane – was still actively advertising development projects this week.

Sunshine Coast resident Sonja Boric has been speaking to media and meeting with politicians, trying to stir a response on behalf of Lion investors.

Among them is her brother-in-law Philip Galliott, who lost almost $1m to the scheme.

He and wife Mary have had to come out of retirement to support themselves, but are unsure how they’ll make ends meet once they are physically unable to work.

“That’s literally his super money,” Ms Broic said.

“It’s absolutely changed his life – he’s realistic, he’s accepted that he’s never going to get his money back, that’s why he’s gone back to work.

“They can’t afford health insurance or life insurance – if anything was to happen to them, they’re stuffed.

“That’s how much of a difference that million dollars has had on his life.”

Investors claim ASIC has left them to pursue the matter themselves.

Ms Boric described ASIC as a “sham regulator”.

“The regulators are happy for individuals to spend more than $500,000 chasing these companies through court because it means they don’t have to get off their arses and investigate,” she said.

“Why do we have to do that? What’s the point of having ASIC? They are a blight.”

It was only when investors launched the court action, leading to the appointment of an external accountant, that they could see the depth of the financial trouble they were in.

“These facts should have been triggered by public enforcement,” she said.

“If nothing else, we want to make damn sure everybody knows about this because it’s in the public interest.”

A statement from ASIC said it would “continue to monitor the situation, and we will assess any new information that comes to our attention on this matter”.

“ASIC will review the report from the provisional liquidators once it is available and, consider what action, if any, it might take, including commencing a new investigation,” the statement said.

Screenshots from the Lion Property Group website.

Lion had advertised opportunities to invest in property development projects, including luxury homes and apartment projects in rizty suburbs across Brisbane and Melbourne, as well as at well-heeled Mermaid Beach on the Gold Coast.

Documents submitted so far in the case said a financial examination had found $120m of investor funds had been paid into special purpose vehicles (SPVs), that is companies that were set up for specific development projects.

Shares in the SPVs were sold to investors as wealth opportunities and investors were told their funds were secured against the properties.

But they allege they were never told about a web of loans between the Lion companies, or about hefty mortgages taken out against the properties.