A land banking scheme in Victoria, known as the Realestate Equity Investment Trust (REIT), and an associated company, Timeline Project Management (TPM) is being wound up by the Federal Court in Melbourne following a lengthy Australian Securities and Investments Commission (ASIC) investigation.
The regulator launched legal action against the REIT and TPM in July after it alleged it had operated as a managed investment scheme with no responsible entity after its now liquidated manager, Lotus Pty Ltd, had its Australian financial services licence (AFSL) cancelled in September 2016 for compliance breaches.
The REIT owned land located in Lara, Victoria, north of Geelong where at least 82 persons had invested $800,000 into the scheme.
ASIC said the REIT had operated despite still not having a responsible entity, and appeared unviable as there had been no measurable progress of development on the land.
In addition, the regulator held concern over the lack of financial statements lodged for the REIT in the five years to 2017, and the poor treatment of investors which included the dissipation of money to entities outside the scheme.
“Unlawful schemes such as land banking put investors' money at risk and investors should be very careful in checking whether schemes are legitimate before putting up their hard-earned money,” said ASIC commissioner, John Price.
“ASIC will take action against unlawful managed investment schemes and the parties that run such schemes.”
BDO Australian representatives Nicholas Martin and Andrew Sallway would be responsible in their capacity as receivers of the property of REIT and liquidators of timeline to ensure the REIT would be round up in accordance with its constitution.
The matter has a listed case management hearing set for 20 March 2018.