The Australian Securities and Investments Commission (ASIC) has launched Federal Court action against the directors of a failed Victorian vendor of equity release products that put the financial security of at least 120 investors in jeopardy.
ASIC alleged that Stephen O’Neill, Gary O’Neill and Jolanta Olszewski of the Money For Living Group made false and misleading representations to investors.
Money For Living, which was promoted by actor Paul Cronin and swimming legend Dawn Fraser, offered consumers a reversion styled equity release product, where investors sold their home to the company up-front in return for a lump sum lower than the value of the property or regular income payments.
The company, along with MFL Property Holdings Pty Ltd, was placed in voluntary administration last month.
An ASIC media statement said the regulator considered the representations against the directors and companies to have been a “serious contravention” of the ASIC Act and the Corporations Act.
“These have had a significant impact on the vendors who sold their houses under what the Money For Living Group described as a system to access equity in their homes,” it said.
Administrator George Georges of Ferrier Hodgson confirmed last month that at least 120 investors had sold their homes to Money For Living, more than half of which are estimated to have been on-sold to third-party investors.
ASIC also asked the Court for orders to ensure that Stephen O’Neill, who is a past director of the failed company, remained in Australia while it continued its investigations.
At the time of the group’s liquidation last month, O’Neill was serving a prison sentence for defrauding investors through a previous mortgage loan company that he ran.
The case against the Money for Living Group is scheduled to resume in court on October 28.
Meanwhile, in a separate court action, five employees of the failed Elm Financial Services Group were banned for “illegal fundraising, misleading and deceptive conduct, and contraventions of directors’ duties”.
The orders by the Supreme Court of NSW was the culmination of action brought by ASIC against Dennis Terracini, Grant McCartney, Andrew Terracini, Howard Young and Robert Kay.
ASIC commenced court proceedings in April last year in relation to six risky investment schemes, primarily unsecured debentures, which Elm had promoted to inexperienced investors.
The schemes, which largely targeted retirees in the Orange region of NSW, resulted in collective losses of at least $17 million to investors.
The Court ordered that Dennis Terracini, of Chapman, ACT, be permanently banned from any future involvement in the financial services industry, and ordered him to pay $150,000 compensation to creditors and court costs of $50,000.
McCartney, of Surry Hills, NSW, was banned for five years and ordered to pay $50,000 costs.
Andrew Terracini — the son of Dennis Terracini — of Chisholm, ACT, was banned for seven years, while Howard Young, of Coogee, NSW, and Robert John Kay, of Bulli, NSW, were both banned for five years.
