ASIC launches court action over collapsed property scheme Sterling First

The corporate watchdog is taking legal action against a group linked to a collapsed property scheme that cost dozens of retirees their live savings.

Sterling First operated in Western Australia, Victoria and Queensland, and spruiked itself as pairing up "smart property investors that are looking to get a better rental return with retirees that are looking to sign a long term lease".

A number of affected tenants, mostly retirees, have been forced out of their homes.Credit: Jessica Shapiro

The group's 12 entities went into administration in March, with Ferrier Hodgson giving the preliminary view they become insolvent around January.

More than 100 investors were left high and dry, with the Australian Securities and Investments Commission allowing promoters to continue selling leases until at least October last year despite being aware of red flags surrounding the scheme in early 2017.

A number of affected tenants, mostly retirees, have been forced out of their homes, having invested in the belief that the lifetime leases would cover 40 years' rent.

ASIC, which is conducting an internal review over the collapse, has launched Federal Court proceedings against Theta Asset Management, a financial services licensee, and its managing director Robert Patrick Marie.

ASIC alleges Theta and Mr Marie were responsible for authorising the issue of five product disclosure statements for the Sterling Income Trust and failing to ensure they did not contain misleading or deceptive statements.

Of the 101 affected investors, 63 invested in the Sterling Income Trust to generate funds to cover their rental expenses.

Others held shares offered by other companies within the Sterling group.

Almost $17 million was raised from retail investors in accordance with the allegedly defective product disclosure statements.

ASIC is seeking civil penalties, as well as an order banning Mr Marie from managing corporations.

The alleged breaches of the Corporations Act that ASIC is seeking each carry a maximum possible fine of $200,000.

ASIC's investigations into other conduct by the Sterling group of companies is continuing.

AAP