ASIC claims ‘defamatory’ says accused, Keystone funds ‘unfrozen’

A Melbourne property developer and former Keystone director has responded to ASIC’s case against him, as the asset management firm’s funds have been ‘unfrozen’.

Director Paul Chiodo, from Melbourne-based property developer Chiodo Constructions.

Keystone have welcomed the “unfreezing” of their Shield Master Fund after an investigation by the corporate cop appears to have unravelled in court.

After the Australian Securities and Investments Commission secured interim freezing orders from the Federal Court on June 18 which restrained Keystone from removing property, selling or mortgaging property, incurring new liabilities or dealing with money in bank accounts, Deloitte has since been appointed to control the fund’s transactions.

Now, Deloitte’s Jason Tracy and Lucica Palaghia have been appointed “to have full control of the bank accounts of the Shield Master Fund” and orders dated 26 June state Keystone can make certain payments if they are approved by Deloitte first.

“Keystone Asset Management Ltd has welcomed the effective unfreezing of its Shield Master Fund by the Federal Court on June 25,” a Keystone spokesman said.

“Simon Milne, appointed in April as CEO of CF Capital investments Pty Ltd, has been approved to issue proposed payment approvals to Deloitte for all fund transactions,” he said.

It has also emerged Melbourne-based property developer and former Keystone director Paul Chiodo was incorrectly deemed a flight risk during the initial ex-parte hearing in a case of mistaken identity, based on travel bookings of a Swiss family with the same surname.

Travel restrictions placed on Mr Chiodo were lifted after his lawyers alleged travel plans identified by ASIC belonged to a Swiss-based executive Paolo Chiodo, his wife Sibilla Chiodo and their son Gian Paolo Chiodo.

The family intended to travel to Australia in the coming months. Mr Chiodo asked for his passport back after earlier surrendering it to the court.

As well, during a hearing on Wednesday, it was revealed ASIC was probing where Mr Chiodo got money from to purchase a house in the name of his wife.

But, on Thursday he denied those allegations.

“Claims that member contributions from The Shield Master Fund were misused in a private home transaction are completely without foundation and defamatory,” he said.

“As with all my personal transactions, the funds applied were properly earned by Chiodo Corporation as development management fees on our portfolio of projects.

“The payment, by funders, of management fees to development entities is industry and banking standard practice.

“Although the claim has not yet formally risen to ‘an allegation’, its airing in the Federal Court has risked further damage to my reputation.”

In a statement, ASIC said it “sought the orders to help protect investor funds while an investigation is continuing”.

The corporate cop earlier this year launched action against the Shield fund to stop new offers of investments in it.

ASIC said it issued the stop orders to protect retail investors from buying products under product disclosure statements which might be “defective”.

Among the corporate watchdog’s concerns was the fund might not have adequately disclosed “the conflicts of interest associated with investments in funds related to Keystone or how Keystone managed those conflicts”.

Responding to the ASIC action, a note relating to the Shield fund was sent to Keystone members in April.

It said advisers were appointed to investigate potential conflicts of interest between Mr Chiodo — who was also a Keystone director — and entities linked with him.

“The board has also engaged top tier legal, accounting and corporate advisers to review the underlying arrangements of the Fund, its governance and its investments, including as they concern conflict management and related party arrangements with Chiodo Corporation Pty Ltd and other entities related to Paul Chiodo,” the note read.