ASIC shuts down sham schemes

A series of unregistered investment schemes and the companies that promoted them have been wound up after the Victorian Supreme Court described the schemes as a sham.

TheAustralian Securities and Investments Commission(ASIC) was successful in its application to the Supreme Court to have the 22 illegal schemes, worth $100 million, and their promoters - ABC Fund Managers, ABC Investment Management, Allied Securities, Tye Nominees and Lingus - placed into liquidation after discovering irregularities with the group during routine surveillance.

The schemes were promoted between 1995 and 1998 to clients and associates of Wharton Partners, an accounting practice based in Toorak, Victoria.

The Supreme Court deemed that substantial losses connected with the schemes were nothing but shams designed solely to elicit a tax advantage.

ASIC became aware of the matter after ABC Fund Managers, a licensed dealer, failed to transfer its existing prescribed interests schemes to the new Managed Investment Schemes regime by June 30, 2000.

“This action was brought to rid the investment sector of businesses that ASIC believes operate outside the law and mislead the public,” ASIC’s director of enforcement Jamie Orchard says.

The five companies that promoted the schemes share some common company directors and secretaries, including John James Gillies and Stephen Lynne Wharton.

The defendants have indicated they will seek leave to appeal the decision. The matter is due to return to the Court of Appeal on October 26.