ASIC takes legal action in the Federal Court against Queensland man over false information claims
A Queensland man previously banned from the financial industry is under investigation again for using false information to raise nearly $50m.
The corporate watchdog is pursuing a Sunshine Coast man over allegations he used false information to raise nearly $50m from people “close” to him for investments in a web of fake companies.
The Australian Securities and Investments Commission has lodged its case in the Federal Court against David Paul Hodgson and two companies – MacroLend and Great Southland, of which Mr Hodson is the sole director – claiming neither had financial services licences when they separately raised money from investors.
Both companies belong to a larger group of companies known as the Paladin Group, ASIC said.
Mr Hodgson’s Paladin Group isnot linked with security company Paladin, which received a $532m refugee services contract on Manus Island, Papua New Guinea.
ASIC said MacroLend, a registered Australian company, was unlicensed when it raised more than $47.4m from 169 investors, including for investments in the development of a software product by another company linked with the Paladin Group called Kradle Software.
It was alleged investors were told Kradle Software held intangible assets of $1.02bn when its balance sheet recorded intangible assets of $11,180.
Great Southland, a company registered in Belize, Central America, operated illegally in Australia and also did not have a financial services licence, ASIC alleged.
“ASIC is concerned that investments have been made in MacroLend and Great Southland by people close to Mr Hodgson without the legal protection provided by an Australian financial services licence,” ASIC deputy chair Sarah Court said.
“ASIC is also concerned about the alleged misrepresentations made by MacroLend, which we allege enticed investors (by) using false information regarding its assets.”
The watchdog is seeking declarations and injunctions against Mr Hodgson and the two companies, plus an order disqualifying Mr Hodgson from managing any corporation for a period to be determined by the court.
It’s understood that within the Paladin Group, there is a subgroup of companies known as the Coreearth Group. Included in that group is Coreearth Holdings and Kradle Software.
Coreearth holdings owns all shares in Kradle Software.
It is not the first time Mr Hodgson has been examined by ASIC. A statement from 2015 reads: “ASIC has banned Mr David Hodgson, of the Sunshine Coast, Queensland, from providing financial services for two years after an ASIC investigation found that Mr Hodgson, a director of Exalt Global Funds Limited (Exalt), failed in his duty to ensure that Exalt complied with its obligations as a responsible entity under the Corporations Act.”
ASIC found Exalt – which did have a financial licence – made misleading statements in product disclosures, including that an investment in the Paladin Monetizer Fund was low risk when it was not.
As well, Exalt did not keep proper financial records for the Paladin Monetizer Fund and failed to lodge profit and loss statements, and balance sheets with ASIC for the 2013 and 2014 financial years.
ASIC commissioner at the time Greg Tanzer said: “The directors of responsible entities must take their compliance obligations seriously or risk being removed from the financial services industry.”
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