ASIC targets dodgy SMSF spruikers
The Australian Securities and Investments Commission (ASIC) has obtained orders from the Federal Court appointing liquidators to MOGS Pty Ltd, which is associated with two Queensland-based self-managed superannuation fund (SMSF) companies.
The move by ASIC is part of an investigation into two SMSF advice companies — Royale Capital Pty Ltd and ActiveSuper Pty Ltd — which are accused of misleading investors about their investments.
MOGS is a company incorporated in Australia that is "engaged in the business, inter alia, of property investment, including by arranging for the construction and/or sale of residential land and houses", according to ASIC.
Following a hearing on 3 December 2012, orders were also made to appoint provisional liquidators to companies in Australia, the British Virgin Islands and the Cayman Islands — Sydicated Property Group Ltd (SPG), Worldwide Property Opportunities Ltd (WPO) and Cayco Management (Cayco), respectively.
ASIC's investigation into Active and Royale began in November 2011. The regulator alleges clients of Royale and Actice were cold called and encouraged to set up SMSFs.
"They were then encouraged to make investments in, amongst other things, distressed properties in the USA. The investment in these properties by the SMSFs was to have occurred through the LLC Companies [four companies in the United States]," according to ASIC.
Prospective investors were told they would — or alternatively, could — achieve "safe and secure" "fantastic returns" of between 20 and 25 per cent per annum with SMSFs, according to ASIC.
ASIC alleges that Royale and Active were not authorised to offer shares in the LLC Companies to the SMSFs under the provisions of the Corporations Act.
The regulator also alleges that money subscribed to the LLC Companies, WPO and SPG were provided to MOGS as a loan to meet its day-to-day operating expenses — rather than for the SMSFs for real estate opportunities.
While some properties were purchased by the LLC companies in Arizona, they have since been sold.
The ASIC investigation continues, with the matter set to return to court on 26 August 2013.
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