Federal Court finds ActiveSuper misled investors
The Federal Court of Australia has found ActiveSuper misled clients into investing $3.1 million in a non-existent US-based business and other offshore investments, through self-managed superannuation funds (SMSFs) it had encouraged them to establish.
Court papers revealed that the alleged contraventions, which included providing financial services without an Australian Financial Services licence, stemmed "from the circumstances in which numerous Australian investors with relatively modest amounts of superannuation were induced to establish SMSFs and to use their superannuation funds for investment in property in the US and in companies incorporated in the British Virgin Islands".
"Most of the invested monies were not used for the purposes contemplated by the investors and have been substantially, if not wholly, lost," the papers revealed.
The Court documents noted that before October 2013, ActiveSuper and its director, Jason Grant Burrows, reached an agreement with ASIC under which Burrows had consented to an order disqualifying him from managing a corporation for a period of 10 years.
ASIC alleged that ActiveSuper engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act. The conduct relied upon for this allegation is the dissemination of the US Realty Memorandum containing false representations that:
- returns of between 20 and 25 per cent per annum would be paid to investors;
- the superannuation monies from the SMSFs would be applied to purchase shares in a private limited liability company to be formed and registered in Arizona, would be applied for the purposes of purchasing foreclosed residential property as part of an investment portfolio; and would be "quarantined in an Australian based trust account" until such time as the Arizonan company was capitalised;
- SPG was currently contracted to handle property purchases for US Deals Ltd in New Zealand;
- the Manager of the US company was Australian Property Investment Management Arizona Ltd (APIMA), a duly formed company in the State of Arizona.
The Federal Court will hear allegations against a number of co-defendants in the case, who ASIC have alleged were accessories to ActiveSuper's breaches of the Corportations Act, next month.
AUTHOR
Nicholas O'Donoghue
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