In a public statement, ASIC said that the five companies were involved in two land banking schemes known as Hermitage Bendigo located at Midland Highway, Bagshot, Victoria, and Veneziane, located at Brooklyn Park Drive and Balmer Grange, Brookfield.
Four of the companies, including Brookfield Riverside Pty Ltd, Bilkurra West Pty Ltd, Bilkurra South Pty Ltd and Gillies Road Pty Ltd, entered into contracts for the purchase of land for rezoning and were involved in the promotion of the schemes and received money from investors.
A fifth company, Project Management Pty Ltd, entered into project management agreements with each of the four companies and required these companies to deposit all project revenues into bank accounts that it maintained.
ASIC said that this enabled Project Management to exercise control over each of the finances of the four project companies.
“ASIC sought orders as it was concerned that the project companies were insolvent, that money raised from investors [of] more than $15 million had been transferred between companies without any apparent concern for obligations owed to investors, and that the majority of funds raised from investors had been dissipated,” the corporate regulator stated.
An ASIC spokesperson confirmed that some of the investors in the scheme were SMSFs.
The court found that the case for winding up each of the project companies was compelling.
“There was a clear case for both the project companies and Project Management to be wound up in the public interest and to enable completion of investigations in the existing liquidations of other companies that had also been operating the land banking schemes,” ASIC stated.
“The project companies were wound up on the basis that they were insolvent and that it was just and equitable to do so.”
Project Management consented to the winding up order being made.
ASIC said the court found that the financial affairs of Project Management were inextricably bound up with those of the project companies, that Project Management had control over investor monies, that it had intermingled funds and used them across the various land banking schemes, that it had maintained poor documentation, and that it took management fees out of the investor funds released to it.
ASIC commissioner John Price said that ASIC will take action against entities that run schemes where investor monies are put at risk.
“Investors should be very careful in ensuring that they understand the risks associated with land banking schemes and should ensure that they obtain independent legal and financial advice before making any such investments,” Mr Price said.