PUBLIC DEFENDER

Is the deal too good to be true? The warning signs are always there, says a law expert

More mums and dads caught out in collapse of Members Alliance

DEPRESSION, marriage pressures, a near-constant feeling of sickness and trouble sleeping.

These are the byproducts when businesses collapse owing millions to mum and dad investors.

Melbourne’s Rita Valenti says she knows the pain all too well.

The medical secretary and her husband were two of many to succumb to the Members Alliance cold call investment scheme, allegedly forking out around $450,000 to build a home on the Gold Coast that was never finished.

In August, Members Alliance collapsed owing almost $30 million to the tax office, $741,000 in unpaid rent to the Gold Coast City Council, $7 million in superannuation to about 90 employees and $800,000 in entitlements to staff of a labour hire firm.

A News Corp Australia investigation recently exposed the cold-call investment property group.

The company is suspected of duping investors’ banks into paying money for work on properties that was never carried out by resubmitting old progress payment forms.

Investors caught up in the scheme are believed to have had little idea of what was going on until they were crippled by debt, having typically been sold unfinished properties thousands of kilometres away, mainly in rural Queensland and country NSW.

Ms Valenti says she first received a cold call from Members Alliance about three years ago and committed financially within months.

But the mother-of-one said it wasn’t until March this year when she and her young family made the trek thousands of kilometres up to her apparently completed home in Pimpama, did she realise the implications of her investment.

“It’s been very stressful. I’m suffering depression, I’ve had a lot of anxiety attacks, I haven’t been feeling very well,” she said.

“It’s put pressure on our marriage.

“We understood it was at lock up stage but it wasn’t.”

The 44-year-old said her husband complained to Members Alliance immediately with no success while she approached the family’s financier – National Australia Bank.

“They’re looking into it – their policy which I wasn’t aware of, is that they only inspect the slab and then the final stage,” she said.

“Because they made us sign the progress payments they were thinking it was OK so they issued out the money.”

Griffith University professor of law Ross Martin says there are a number of warning signs prospective investors should look out for.

“The general principle is firstly inquire and inquire from sources that are beyond the control of the spruiker so commercially sophisticated people – if there’s enough money involved, solicitors and accountants,” he said.

The academic says above all else, consumers should ask questions of investment opportunities.

“The red flags are undue pressure – the idea that it’s very time sensitive and you’ve got to get on board now otherwise you lose the opportunity,” he said.

“And if you try to resist that pressure they say things like ‘oh listen this may not be for you if you can’t make decisions or you don’t have the sophistication to make decisions quickly’.

“Time pressure that doesn’t seem to be particularly persuasive, cold calling generally is a red flag for these sorts of things and property that you can’t see or visit is another red flag.”

Professor Martin urged investors to consult the Queensland Government and ASIC websites and the ACCC’s pages – devoted to providing investors with advice on how to keep themselves out of trouble.

But the sad fact of the matter for the Valentis is that there is no promise that they will ever recover the hundreds of thousands of dollars

Rita Valenti has been burnt by the collapse of the Members Alliance.

they allegedly invested in the Pimpama property.

Since March, Ms Valenti says she has approached a reputable builder who has agreed to finish the job.

Yet, she has no idea how much more she may have to fork out before she has a home that is even close to liveable.

“I have found a builder. We are now going to proceed with that builder because the solicitor already transferred the contracts. So we’re starting a new contract,” she said. “He’s starting our house soon. “Basically I have to outlay more money because it’s been paid up until lockup stage, which it’s not. I’m hoping for the work to start in the next couple of weeks.”

Coast Weekend attempted to contact Members Alliance but directors would not comment.

Jason Bettles and Raj Khatri, of Robina-based Worrells Solvency and Forensic Accountants, were appointed liquidators and voluntary receivers of 18 companies that made up Members Alliance.

A spokesperson said all was not lost for the investors whose homes went unfinished after the collapse of Members Alliance.

The representative said the majority of losses sustained by investors in Members Alliance were likely to be covered by insurance.

“Many, if not all, of the affected homeowners whose houses are incomplete are aware that they can lodge insurance claims under the QBCC (Queensland Building and Construction Commission) home warranty scheme and/or private insurers under the NSW Home Building Compensation Fund (HBCF),” they said.

“The QBCC scheme and the HBCF were established to ensure that people in the position of affected homeowners have the ability to lodge an insurance claim and have their homes completed when building companies enter liquidation so as to minimise, if not completely avoid, suffering loss. “Many of the affected homeowners have lodged insurance claims with the QBCC (and under the HBCF) and those claims are presently being processed in the ordinary course.

“In some instances those insurance claims have already been processed and approved by the QBCC and/or by private insurers under the HBCF.

“The QBCC may have initially rejected some insurance claims on technical grounds and, subsequent to a review of the QBCC’s processes by the … Minister for Housing and Public Works, it appears the QBCC is now approving claims and our clients expect that this will continue until each affected homeowner’s claims have been addressed.

“Our clients anticipate that the previously reported significant losses which would be suffered by homeowners grossly exaggerates their loss and that it is more likely that the homeowners will only suffer minimal, if any, actual loss due to the cover afforded by the insurance schemes.”

IT’S BEEN VERY STRESSFUL. I’M SUFFERING DEPRESSION, I’VE HAD A LOT OF ANXIETY ATTACKS

HAVE YOU BEEN RIPPED OFF? PUBLIC DEFENDER MIGHT BE ABLE TO HELP. JACK.HARBOUR@NEWS.COM.AU