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False Allegations and an Abandoned Case: Why Parliament Must Investigate the IPO Wealth winding-up

Opinion Piece by James Mawhinney, Mayfair 101 Managing Director

Last month it became public that liquidators appointed to the IPO Wealth division of Mayfair 101 had abandoned all claims against me and returned 80% of the contested assets.

The outcome came after a nearly four-year battle involving six legal proceedings which cost millions of dollars in legal fees, triggering hundreds of millions of dollars of damage, and displacing the lives of nearly 600 Australians and their families. The settlement brought us another step closer to setting the record straight and making our clients whole.

This development, which would come as a surprise to those who read the damning headlines about me in 2020, now calls into question how such wild, unsustainable claims were allowed to be made by insolvency practitioners Hamish MacKinnon and Nicholas Giasoumi when they would later be abandoned. More important, who at the Australian Securities and Investments Commission authorised these claims to be accepted without being tested?

Amongst the erroneous information provided by the insolvency practitioners to the Supreme Court of Victoria, was this in 2022: “Your Honour will have seen that some of the funds, substantial portions of the funds made their way off-shore to the United Kingdom and to the British Virgin Islands”.

Normally a bank statement would be required as proof of such transfers occurring. However, no statements were produced because no such transfers ever took place. I had never transferred money to the British Virgin Islands and neither I nor my companies had even held a bank account there.

Nearly three years after challenging ASIC in the Federal Court to produce a single shred of evidence of these transfers, they have produced nothing.

The settlement is hardly a small matter: the IPO Wealth division of Mayfair attracted over $120 million of funding from 181 Australians over three years. The collapse of the group based on these false allegations has caused hundreds of millions of dollars of damage, meanwhile the insolvency practitioners and their lawyers have collected close to $7 million in ‘professional’ fees for their unsustainable claims.

The debacle started when I received an email from the head of Vasco, the trustee of the IPO Wealth fund, on 31 January 2020. He was asked to meet with six ASIC representatives to discuss my business, but I was not invited and I was never told of the outcome of the meeting.

At the time Mayfair 101 held more than half a billion dollars’ worth of assets, had zero complaints from our clients and they were paid on time and in full. Auditors appointed by the trustee to check the assets only a few months prior had given us a clean bill of health.

Two months after the mysterious ASIC meeting, COVID triggered a temporary liquidity bind, as it did for practically every business around the world. The impact on Mayfair was multiplied when ASIC froze our ability to raise money, causing Mayfair to miss a couple of repayments to the trustee.

I wrote to the trustee and urged them to utilise a ‘cash reserve’ of more than $8 million, which was enough cash to service noteholder interest payments for a year or more. The trustee rejected my recommendation and in late May 2020 they appointed receivers.

Rather than telling the court that Mayfair had missed some repayments in the weeks prior, the trustee painted a picture that I had misappropriated $18 million worth of assets.

A few days later, the receivers – Mr MacKinnon and Mr Giasoumi – filed a report in the Supreme Court that parroted the trustee’s claim.

Knowing they were mistaken, we examined the balance sheet and found the trustee did not disclose to the court a corresponding decrease in liabilities, also of $18 million. The amounts netted off. There was no change in the asset position. The assets had been paid for in full.

In June 2020 my lawyers wrote to the trustee and receivers – both were experienced Chartered Accountants – explaining their mistake and requested a meeting. They promptly rejected any suggestion they were wrong and refused to hold a unitholder meeting despite there being written directions from more than 100 unitholders to do so.

What occurred next deserves the scrutiny of Australian Parliament. Barely 48 hours after the trustee and receivers were put on notice of their glaring accounting error, ASIC applied to join the proceedings as an amicus curiae, or ‘friend of the court’. ASIC supported the winding up of the IPO Wealth group despite being on notice that the central allegation was false.

ASIC weaponised the false allegations against me in the Federal Court to ban me from leaving the country, ban me from dealing in financial products, and wind up a company that Mayfair’s noteholders subscribed to. (The Full Court overturned my 20-year ban, in late 2022, finding ASIC ran a “mistaken” and “absurd” case. My travel ban has also since been lifted.)

This derailed Mayfair’s $1.6 billion redevelopment of Dunk Island and Mission Beach which would have created 10,000 jobs for the country. It left another 128 Australians who had subscribed to $62 million worth of Mayfair’s notes, with another set of liquidators appointed, and another 250 Australians owed another $70 million without principal and interest payments for nearly four years.

The Australian Parliament needs to uncover what has gone on here. The public and the courts have been misled about my business and my character, and false allegations have been relied upon by public officers – who were on notice of them – in a relentless attempt to claim a scalp.

Mayfair 101’s clients and the Australian public deserve answers. I urge Australia’s Parliament to commence an inquiry.

James Mawhinney is the Founder and Managing Director of Mayfair 101


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