Investors chase lost millions
INVESTORS stung by the billion-dollar collapse of Gold Coast finance company City Pacific are mounting a claim against corporate regulator ASIC, saying it let down the mortgage fund’s 11,000 investors.
About 1300 investors have registered with Sydney advocacy firm SR Group, which plans to lodge claims under two Federal compensation schemes in a bid to recoup some of the eye-watering losses endured by the fund’s mostly-senior investors.
SR Group is headed by Susie Bennell, a former agent for boxer Kostya Tszyu, and plans to pursue ASIC under the Compensation for Detriment caused by Defective Administration scheme.
It also plans to lodge a claim under the new Compensation of Last Resort Scheme which was announced in the wake of the Royal Commission into the financial services sector and begins on July 1.
SR will charge participants a flat fee between $540 and $792 plus 10 per cent of any money recouped.
One person who won’t be registering is Robina retiree Ray LeGassick, who invested $1.4 million with City Pacific and said he was not interested in sending “more good money after bad”.
“I deleted the emails – I just think there’s little hope of getting any money out of anyone,” he said.
“We’re just going on what we’ve got left to just enjoy life
and we certainly don’t want to spend any more money on it.”
SR Group business development manager Mali De Castro said the action was entirely voluntary for investors and the group had aimed to make it accessible to those who were still struggling financially.
“We have sought to provide these unitholders with an avenue they have not previously explored in seeking redress and compensation for the drastic loss in value of their invested funds,” she said.
Court battles have been waged for a decade over City Pacific which, at its peak, had a market capitalisation of nearly $1 billion.
Its Pacific First Mortgage Fund, owned by the 11,000 elderly investors, loaned millions of dollars to property developments on the Gold Coast including Mariner’s Cove and the Surfers Paradise site where Jewel is being built. The fund collapsed in 2009 in the wake of the Global Financial Crisis, shortly after funds management company Balmain Trilogy wrested control from City Pacific. Despite evidence of unusual transactions, pleas from the liquidator and allegations of illegal activities, ASIC has never investigated.
Through the multiple court actions, City Pacific’s solicitor Minter Ellison and accountant KPMG have each been ordered to pay compensation to the victims, while former CEO Phil Sullivan and two of his colleagues were ordered to pay $70 million. Mr Sullivan declared bankruptcy in July, avoiding the court-ordered payment.
Mr Sullivan, whose personal wealth was once valued at $300 million, has said he couldn’t pay the $70m he was twice ordered by courts to cough up – but he could afford to drive luxury cars and live in a mansion, own and race horses and donate to politicians.
Nine months after he told the Federal Court he’d “got nothing left”, mortgage documents show a company he directed, DCG Development Capital, jointly loaned $15.5 million to a company owned by fellow failed GFC developer Mark Howard.
One elderly investor, who did not want to be named, said she planned to register with SR Group and have another crack at recouping some of her $30,000 in losses.
“It seems like it’s wonderful that somebody’s going to try for us,” the investor said. “I thought it was unlikely I’d ever see anything from anyone about it.”
WE’RE JUST GOING ON WHAT WE’VE GOT LEFT TO JUST ENJOY LIFE AND WE CERTAINLY DON’T WANT TO SPEND ANY MORE MONEY ON IT INVESTOR RAY LEGASSICK