Mayfair 101 pushes back at $30m fine and 20-year ban in ASIC appeal fight

Mayfair 101 boss James Mawhinney told the Federal Court he was told some of his dealings with ASIC would be privileged – only to discover the material was still used against him.

Mayfair 101 managing director James Mawhinney outside Federal Court. Picture: David Ross

Mayfair 101 managing director James Mawhinney has told the full bench of the Federal Court he was told some of his dealings with the regulator would be privileged – only to discover the material was still used against him.

Mr Mawhinney, who has been banned from spruiking financial services for two decades, is appealing the ban and a $30m fine handed to him by the Federal Court.

In the first day of what appears set to be lengthy hearings, lawyers acting for Mr Mawhinney argued the Australian Securities and Investments Commission’s earlier case was based on inadmissable evidence that he should have sought to have protected under a privilege defence. He did not do this because he was ignorant of his rights, he claims.

Mr Mawhinney also alleges the lawyers who assisted him in the earlier case brought by ASIC were incompetent and if he had known such a steep penalty was on the table he would have handled the case differently.

His separate appeal against his $30m fine argues reports prepared into the Mayfair investment scheme failed to understand the structure of the assets and contained “clear errors of fact”.

Mayfair 101 made headlines with the high-profile purchase of hundreds of properties in Queensland’s Mission Beach and Dunk Island. The investment scheme burst onto the scene in September 2019 when Mayfair 101 bought the freehold to the island off the northern coast of Queensland from mining entrepreneur Peter Bond for some $31.5m.

The company also signed deals to buy 130 homes in Mission Beach worth around $180m.

Mayfair 101 and its associated brands raised almost $211m from investors, however ASIC alleges it failed to reveal its investment products were more risky than bank or term deposits.

Mayfair 101 suspended redemptions from the notes sold to investors in March 2020,

ASIC soon followed, warning Mayfair 101 it would publish a notice of warning to investors, but Mayfair blocked its publication.

ASIC launched legal action against four companies in the Mayfair 101 group, with the regulator granted an injunction to compel it to cease marketing.

In May 2020 ASIC sought to appoint administrators to Mayfair’s IPO Wealth Holdings businesses, before following in August with court action targeted at Mr Mawhinney. ASIC alleged the investment products were marketed to inexperienced investors.

However, Mr Mawhinney claims only sophisticated investors with assets in excess of $2.5m could subscribe to the products.

Mr Mawhinney claims ASIC’s interventions to wind up Mayfair 101 caused the investment scheme to fail as it was unable to recapitalise. ASIC secured findings against Mr Mawhinney before Federal Court judge Stewart Anderson in 2021, who handed out the ban and fines. Justice Anderson said Mr Mawhinney had a “total disregard for the law” and he had “no confidence” he properly understood Australian financial services laws,