Options scheme duped banks and buyers in Queensland

AN elaborate scheme ratcheted up the prices of some of Australia's most coveted beachfront properties.

Whistleblower real estate agent Rob Lambert purchased this Albatros Avenue in 2008 for $10.5 million. Picture: Lyndon Mechielsen

AN elaborate scheme ratcheted up the prices of some of Australia's most coveted beachfront properties, misleading valuers and duping banks, finance companies and the buyers who parted with millions of dollars, according to a longtime Gold Coast real estate agent facing financial ruin.

The Weekend Australian has confirmed that side agreements including "put and call" options were used as part of an orchestrated strategy to distort the prices and values of some beachfront properties fetching more than $5 million in a strip along the Gold Coast's famed Mermaid Beach.

The put and call options contrived to depict a sales price of several million dollars more than was actually achieved.

Queensland Fair Trading Minister Peter Lawlor, who has received briefings and a dossier from the whistle-blowing agent, Rod Lambert, and a Gold Coast police detective, said the scheme "stinks to high heaven".

"I think it is a police matter," added Mr Lawlor, a solicitor from the Gold Coast who has assigned senior investigators to the case.

"There's a fictitious component in the transactions. There was almost a stockmarket-like frenzy about it as people were getting

in and out and making a couple

of million dollars at a time the agents were also receiving very big commissions."

Ray White Broadbeach and its award-winning top agent Michael Kollosche, who specialises in selling beachfront properties and who sold one on Mermaid Beach to Mr Lambert, insists there were only a couple of incidents. Other agents and valuers with long experience believe the use of put and call options helps to explain explosive price growth in properties in Hedges and Albatross avenues.

Mr Lambert said going public now was "the right thing to do". However, it would be "financial suicide" because of the impact his disclosures might have on the price of his redeveloped property, which is being auctioned tomorrow on the instructions of his lender. "These transactions have created a market that has lost its base, reality and truth," Mr Lambert said.

Mr Kollosche agreed there were questions surrounding the use of the put and call facility on the property bought by Mr Lambert, but said he had nothing to do with it. He denied any knowledge of, or involvement in, improper dealing.

He added that he achieved record sales by acting ethically.

"This is about a tall poppy syndrome, with me being torn down along with other people who are being blamed by Rod Lambert because he bought like many other people at the top of the market," Mr Kollosche said.

Mr Lambert and his wife, Lisa, have vowed to recover their losses since buying the Albatross Avenue property in early 2008 for $10.5m. They and other beachfront buyers have briefed lawyers to sue several parties in civil suits.

Official documents and sales registry data show that just before Mr and Mrs Lambert paid $10.5m, it had sold for $10.59m. However, their subsequent investigations showed the $10.59m was a fictional price -- created by the use of a put and call option -- and only $7.85 million had changed hands.

Sebastian Muscolino, a Brisbane property consultant, swore a statutory declaration in which he described himself as an unwitting participant in the scheme.

Mr Muscolino says the formal sale contract, showing the price of $10.59m, was used to obtain a written valuation for the same amount, and obtain almost $8m in finance for his boss, Mr A, who cannot be otherwise identified for legal reasons.

The bogus price was entered on the official sales register and relied on by valuers, prospective purchasers and the next buyer, Mr Lambert, as the true market price.

The put and call transaction effectively allowed Mr A to pocket more than $2.5m in profit without putting any of his own money in the deal. Through his solicitor, Mr A, now bankrupt with debts of more than $9m, has strenuously denied any wrongdoing