ASIC winds up illegal land banking investment scheme

The Australian Securities and Investments Commission (ASIC) has wound up an illegal land banking investment scheme along with its associated entities, Melbourne-based company Aviation 3030.

The regulator sought orders from the Federal Court on the basis that there was a “justifiable lack of confidence in the management of Aviation by its directors”, it said.

ASIC found that directors had issued to themselves and to their associates a large number of grossly undervalued shares, fabricated invoices and correspondence, provided false instructions to the company’s external solicitors, misled investors, entered into related party loans and made unauthorised and exorbitant expenditures.

The corporate regulator’s application to wind up the business was opposed by Aviation and its two majority shareholders, to which 63 per cent of the business’ capital was issued in March, 2016.

At the same time, the application was supported by a group of 12 minority investors who were granted leave to intervene in the proceeding.

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Aviation’s primary asset was purchased for $7.8 million in 2011 with a view to rezoning the property to increase its value. In order to do so, Aviation raised around $10.59 million from around 70 shareholders and unitholders.

Following this, in 2012 the property was rezoned and significantly increased in value. In March 2016, the company issued 63 per cent of its share capital to companies associated with the directors of Aviation.

In 2018, the property was sold to Shanghai-based developer, Dahua.

“The orders made by the Court will allow an orderly and lawful winding up of the companies and the investment scheme they have operated and will place the future process of distribution of funds to investors into independent hands,” ASIC’s commissioner, John Price, said.

“This action shows ASIC will intervene where directors prioritise their own interests above those of investors.”