Developer Mayfair 101’s plea to ‘save’ investors’ $211m

The Mayfair 101 investment group believes it can still save $211m worth of investors’ money if the Albanese government will tether the corporate regulator and forego $22m worth of penalties.

Mayfair 101 managing director James Mawhinney on Dunk Island.

Former Dunk Island developer Mayfair 101 warns the retrieval of $211m of investor money from a range of global financial assets will be imperilled unless there is urgent federal intervention to curtail the corporate regulator.

Mayfair 101 managing director James Mawhinney has written to the federal government urging intervention to help deal with a long-running litigious battle with the Australian Securities and Investments Commission, including a $22m penalties bill.

Mr Mawhinney has pledged that his company is working hard to try to ensure the $211m, plus interest, can be rebuilt to ensure “every single dollar is repaid”.

ASIC pursued Mayfair 101 at the outset of Covid-19, arguing it was selling high-risk investment products but marketing them as low-risk.

In September last year, the Federal Court overturned Mr Mawhinney’s 20-year fundraising ban after ASIC’s case against him was found to have lacked procedural fairness.

However, the court did not accept all of the appeal grounds and Mayfair and Mr Mawhinney are still locked in a complex, years-long battle he fears will destroy his goal of retrieving investors’ cash.

He has written to two senior government ministers, arguing the $22m penalties are unjust.

“The 570 Australians who subscribed for Mayfair’s products are currently owed $211m plus interest,’’ he wrote to Attorney-General Mark Dreyfus. “I and my team have been working non-stop for three years to protect Mayfair’s clients and rebuild to ensure every single dollar is repaid. ASIC, on the other hand, is seeking payment of $22m from Mayfair by 12 June 2023.

Dunk Island Resort.

“If ASIC presses for payment, which they have taken the first step toward doing by issuing the invoices, I will be forced to appoint administrators to the three companies. This will be a catastrophic outcome for the prospects of Mayfair’s clients being made whole.’’

The government said the matter was referred to Treasurer Jim Chalmers, who is on leave. The Australian sought comment from Finance Minister Katy Gallagher. ASIC declined to comment citing future likely court action.

Mr Mawhinney also sued ASIC deputy chair Sarah Court, claiming she allowed a media release that, he alleges, wrongly claimed he knowingly misled the public by marketing high-risk products as low-risk.

Despite the Federal Court overturning the fundraising ban, it did not rule that his legal costs should be met fully, as it claimed many of the grounds of appeal were deeply flawed.

Mr Mawhinney says damage to Mayfair by the ASIC action has been extreme, leading to 20 legal proceedings, insolvency practitioner appointments to 40 companies, mortgagee sales, portfolio business company closures, 70 job losses and the 570 clients who subscribed to $211m of debt instruments without principal and interest payments for three years.

He said the company had acquired Dunk Island nearly four years ago and would have created 10,000 jobs and delivered $1.6bn worth of growth in far north Queensland. Dunk Island was bought in 2022 by Atlassian co-founder Mike Cannon-Brookes and wife Annie.

“ASIC labelled Mayfair a ‘Ponzi’ scheme and labelled me a flight risk. ASIC depicted me as a fugitive and fraudster to obtain victories in court. They defamed me to bolster their public image,” Mr Mawhinney said.

“ASIC’s actions have directly impacted the lives of 570 Australian investors, most of whom are retirees or SMSF trustees.’’