Federal Court shuts down offshore scam
A British Virgin Islands-based company has consented to Federal Court orders preventing it from selling shares and providing financial services in Australia.
China Environment Group's (CEG's) sole director John William Ullmann, a UK citizen living in Hong Kong, was found to have acquired 100 million shares in the company for one US cent each, the financial services regulator found.
These shares were then marketed to Australians at US$1 each by offshore companies Lucky Pearl Investments, Anova Corporate Services and Great Wall Capital.
According to the Australian Securities and Investments Commission (ASIC), promotional materials prepared by Ullmann and distributed by Anova and Great Wall deceived Australian investors into believing that money raised would be used by CEG to fund its investment in Chinese clean technology projects.
In fact, the US$1.4 million raised by 49 Australian investors between May and November 2012 was paid to Ullmann for his CEG shares, of which Lucky Pearly received over US$1.1 million as commission, ASIC stated.
The regulator said many of those who purchased CEG shares from Ullmann had previously acquired shares marketed by Anova and Great Wall in companies including Hydro Solutions Asia and Delmedica Investments, all of which are listed by ASIC as unlicensed companies Australians should avoid.
The Federal Court orders prohibit CEG and Ullmann from offering securities to any person in Australia; soliciting investments or receiving funds from members of the public intended for investment in CEG; and carrying on a financial services business in Australia.
Since the Federal Court action commenced, some investors who had bought CEG shares have been contacted by offshore unlicensed entities with offers to purchase the CEG shares — providing the investors pay more money for shares in another company.
ASIC has warned investors not to accept these offers as the potential for losing their investment entirely is likely.
Echoing comments he made in a recent speech in Sydney, ASIC deputy chairman Peter Kell said the matter once again highlighted the need for investors to take necessary steps in order to avoid being caught in a scam.
"As much as we would like to, ASIC can't stop every scam before it happens, especially those based outside of Australia," he said.
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