Provisional liquidators appointed to companies in suspected ‘Ponzi scheme’

The Federal Court of Australia has appointed provisional liquidators to five companies the Australian Securities and Investments Commission (ASIC) believes have been operating a ‘Ponzi scheme', in a case involving two of the Country's big four banks.

ANZ and the Commonwealth Bank of Australia were listed among 13 co-defendants in the case.

Court papers revealed that ASIC claims "there is substantial evidence" that CME Capital Australia Pty Ltd, Boston Pacific Capital Australia Pty Ltd, GKN Capital Pty Ltd, Boston Pacific Capital Pty Ltd and IMCG Pty Ltd, were "operating a ‘Ponzi scheme'.

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The court documents revealed that the companies raised "approximately $13.55 million from investors", of which "approximately $2 million" was lent to Loma Estate Pty Ltd, which "appears to be operated by Mr Lou Garita", who has been named as a director on ASIC's register, "although he is an undischarged bankrupt and ineligible to act in that position".

A further $1.75 million was lent to Berkshire NWI Invest LLC, with Michael Petrou, the sole director of four of the five companies set to which liquidators have been appointed, reporting that no income had been made available to fund interest payments to investors.

The fifth defendant, IMCG, was lent $7.24 million, in respect to which losses of about $2 million have been incurred.

"It appears that about $4.3 million is left, but more than $7.2 million is owed to the companies", the court papers stated.

The court's decision to appoint provisional liquidators to the five companies came 10 days after Petrou, appointed administrators to the businesses he was sole director of, CME Capital Australia Pty Ltd, Boston Pacific Capital Australia Pty Ltd, GKN Capital Pty Ltd and Boston Pacific Capital Pty Ltd, on the grounds that the administration would not be in the best interests of creditors.

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