Shield Master Fund investors to get $100m back within months
Liquidators hope to return between $200m and $400m of the $480m investors put into the stricken fund linked to property developer Paul Chiodo, but it could take years before the process is fully unpicked.
Investors in the frozen Shield Master Fund could get some of their retirement savings back before the end of this year as liquidators retrace a money trail that has uncovered more than $30m funnelled into property, including a $15m South Yarra luxury apartment.
Liquidators hope to eventually return between $200m and $400m of the $480m investors put into the fund from 2022, The Australian can reveal.
If that lands at the midpoint, $300m, it would mean investors recover 62c in the dollar from the failed fund. This will likely take years, a source close to the liquidation told this masthead.
Shield was a managed investment scheme that collapsed last year amid allegations of misleading investors and mishandled funds.
Shield investor money was mostly allocated to the Advantage Diversified Property Fund, a vehicle which made loans to various companies associated with property developer Paul Chiodo. This money funded projects in Fiji, Italy, Port Douglas and Melbourne, according to the regulator.
At the time, Mr Chiodo was a director of Shield’s responsible entity, Keystone Asset Management, and its investment manager, CF Capital.
A material amount, $188m, is sitting in Bell Potter accounts and invested in listed securities. This is where liquidators will source the funds to make the first distribution from, The Australian understands.
Joint liquidators Jason Tracy and Glen Kanevsky of Alvarez and Marsal Australia are understood to be readying to make a distribution of about $100m in the coming months.
This return will be the first since the liquidators were appointed to Shield’s responsible entity, Keystone, in late 2024 and will require approval from the Federal Court.
Liquidators currently have control of $200m worth of Shield assets, including the $188m sitting in Bell Potter.
As well, they last year obtained freezing orders over funds in building contractor Robert Filippini’s bank accounts totalling $110m. Mr Filippini and his construction firm City Built were allegedly allocated $158m of Shield investor money despite there being no formal contracts in place and Mr Filippini not holding a building licence at the time.
Liquidators also put caveats over four properties totalling around $30m, including a luxury four-bedroom, four bathroom apartment in the opulent Capitol Grand tower in trendy South Yarra.
Mr Filippini’s wife splashed $15m on the penthouse-style apartment in mid-2023, right as the corporate regulator was starting its surveillance of Mr Chiodo.
A year earlier, she put down $5m on a three-bedroom, three-bathroom apartment in Surfers Paradise.
Both properties are subject to caveats, as are two Melbourne homes purchased by Keystone director Ilya Frolov’s wife with a combined value of about $8m.
The liquidators previously estimated businesses associated with Mr Frolov were handed about $17m of investor money. He is believed to be splitting his time between Dubai and Israel.
Further to the $158m allegedly handed to Mr Filippini and his City Built, and the $17m to Mr Frolov’s businesses, Keystone is alleged to have given $65m to lead generators to turbocharge the fund between 2022 and 2024.
The Australian understands at least $15m of this has ended up in Dubai, and there is no certainty the other $50m is recoverable.
About $30m of Shield investor money is stuck in an escrow account in Italy, originally to be used as part of Mr Chiodo’s grand plan to purchase a hotel in Venice. Liquidators are unlikely to recover it all.
And, the property development projects that were at various stages of completion when Keystone and Shield collapsed look to be mostly worthless to Shield clients.
Nearly all of the properties have loans against them to secured lenders. Once those loans are repaid, there is unlikely to be much left.
The exceptions are 75 Port Douglas Road, currently for sale, and 33 Davidson Street, also in Port Douglas, which is currently under construction. Liquidators may recover $10m or so from these.
The Shield matter is separate to Falcon Capital’s $450m First Guardian collapse, which potentially wipes out the retirement savings of 6000 investors, based on liquidators finding that the fund channelled hundreds of millions of dollars offshore and there will likely be a “substantial shortfall” of recoverable assets.
