PONZI Schemes with no recourse because it's allowed somehow!

PONZI SCHEMES

As the #elections2023 draws nearer, it is becoming increasingly apparent that the world of developers preying on unsophisticated investors and their #Superannuation is a devastating problem that needs to be addressed. This age-old practice has caused so much heartache, and it is time for action to be taken to stop the continuation of what is a Groundhog day process.

We have all heard about the dealings of both parties and neither is innocent, but need to choose, right?

The campaigns have begun as we now battle for the seats of power but unfortunately neither are dealing with the massive elephant that has parked himself in every corner when it comes to Property and Developers. Corruption and BS remain the same - the usual suspects and the continuation of people losing their livelihoods and superannuation in a volatile period. History is repeating and many economists that warned organisations of the potential were either ignored or perhaps silenced. Regardless the patterns of the past are at play once more.

Many in the Construction and Finance Industries are aware of these schemes and can detect them without much explanation needed. These practices are predictable, and yet they continue to cause significant damage to innocent investors. The schemes already uncovered in Australia are just the tip of the iceberg.

Yes, there have been several cases of illegal property investment schemes in Australia. These schemes are typically designed to defraud investors by promising high returns with little or no risk. There is always a risk when you are placing your #Trust in strangers!

Here are a few examples of recent or public illegal property investment schemes gone bad...in Australia:

1. Westpoint Group: The Westpoint Group was a property investment scheme that collapsed in 2006, leaving investors with losses of up to $400 million. The scheme promised investors high returns on investments in a range of property developments, but it was later revealed that the funds were being used to finance other parts of the business.
2. Wickham Securities: Wickham Securities was a property investment scheme that was shut down by ASIC in 2013. The scheme raised approximately $27 million from investors by promising high returns on investments in property developments. However, it was later revealed that the funds were being used to finance other parts of the business.
3. Neolido Holdings: Neolido Holdings was a property investment scheme that was shut down by ASIC in 2015. The scheme promised investors high returns on investments in property developments, but it was later revealed that the funds were being used to finance other parts of the business.

The clear deceit, in this case, showed how a 'friendly' professional was used to protect the schemers. This has happened continuously throughout the industry and the unfortunate thing is that our regulators, our banking institutions and other professionals we believe will protect us manage to turn a blind eye to the warning signs and then the continual misappropriation of funds.

These are just a few examples of illegal property investment schemes in Australia but do not forget the other corrupt issues that relate to Property Developers getting into desperate waters - utilising professionals to support their schemes.

It is important for investors to conduct thorough due diligence before investing in any property investment scheme and to seek professional advice to ensure that the investment is legitimate and compliant with Australian laws and regulations.

You cannot rely on organisations to protect you at this stage.

Do not rely on introduced to convince you to take their word!

The use of investor funds to pay for property debt that does not belong to you is ludicrous.

Generally, using investor funds to pay for property debt is legal if it is disclosed in the investment agreement and the investor has consented to such use of funds as a loan - but that is never the case! An investor will only discover the manipulation when it all falls apart and then you really understand that you are definitely an #unsecured #creditor.

For those who are unaware, these schemes involve developers approaching unsophisticated investors, often through a self-managed super fund (SMSF) or other retirement funds, with promises of high returns on their investments. They convince these investors to purchase shares in properties, which are usually bargains and a ploy to obtain more funding.

The Mental Health impact on investors can be devastating, especially for those who have never invested and were blinded by the grandeur and prospect of making whatever funds they had work for them. Losing their entire life savings and retirement in the process.

People who prey on our vulnerability and at times our desperation for security allow them to use mind games and manipulation to entice us to take actions we normally would not consider.

The thing is that they will not be there to pick up the pieces and deal with the after-effect of betrayal. The guilt and then the fear, because now you may face financial hardship or other ramifications.

OTHER tactics may be off-the-plan purchases when the Developer knows they cannot be completed...or worst still...they have not even settled the sale of the actual site.

In some cases, the developers may even abandon the project, leaving investors with nothing but a worthless piece of land. As seen with the collapse of various house and land businesses.

It is time for action to be taken to stop these practices. The government needs to implement tighter regulations on developers and provide more protection for investors. It can be done but we need to ask why has this not happened.

Or should the regulators monitor these situations better There should be greater transparency around off-the-plan purchases and more stringent requirements for developers to provide accurate valuations and assessments of their projects. Perhaps financial institutions should monitor accounts for large transactions and consider their obligations to KYC (Know Your Customer)...Seriously they should be concerned with the standard requirements of Austrac and the AML/CTF (Anti Money Laundering & Counter TerrorismFinancing)!!

Investors (Mum & Dad Investors not experienced prospectus analysts) need to be educated about the risks involved in these schemes and should be encouraged to seek advice from financial professionals before making any investment decisions.

Remember to Ask for advice (DO NOT GIVE INSTRUCTIONS) - what would they do in your position - would they invest?

• Investors or unregistered loans that accompany share certificates mean nothing if the business is insolvent!
• Investors should also be wary of any promises of high returns on investments and do their due diligence before committing any funds
• Investors using their Superannuation need to be extra vigilant.
• Investors who roll over their Industry Super into an SMSF (Self Managed Super Fund) have serious ATO implications that will come back to haunt them.
• Investors who have given funds to organisations that do not hold an ASFL need to seek legal advice or go to the #regulators ASIC
• You should be going to ASIC regardless

In conclusion, the world of developers preying on unsophisticated investors and their #Superannuation is a serious problem that needs to be addressed. It is time for the government to take action and implement tighter regulations to protect investors from these predatory practices.

Let me rephrase this:

#Australia is the most regulated country in the world (apparently!) - yet many have been able to continue these processes without recourse. Legislation has been tightened amended and stitched up so that there are no more slip-ups. We have seen the FINES and the slaps on the wrist for all that engaged during the Royal Commissions and inquiries into corruption...but nothing really changed.

We have heard the promises and many (including myself) have provided Politicians, All Regulators, Banks, Ombudsmen, and virtually anyone in a position of power to do something with detailed information. By this time the Directors have moved assets, placed a shadow director in a timely manner and before you know it has #rebranded and morphed into a new business.

The usual response is " At this time we will not be initating an investigation however will keep the details on file"

The lack of monitoring by government regulators and lenient treatment of fraudulent developers has enabled Ponzi schemes to thrive. Such schemes are not the result of human error, but rather intentional deceit. Addressing the issue in Australia will require a comprehensive approach that includes strengthening, and rebuilding regulatory frameworks, supporting victims, and promoting public awareness and education to prevent financial exploitation. We have already taken steps to teach professionals in finance, accounting, and insolvency how to prevent and detect economic coercion, which not only benefits their firms but also reduces liability and wrongdoing.

However, the bigger challenge remains: educating people on how to recognise and prevent economic coercion disguised as a promise of financial return. Sadly, those who speak out against such schemes often face emotional backlash.

It takes a holistic approach and it will always involve L.I.F.E (Love Identity Finance and Emotions) to mitigate the effects on the person's overall well-being and ability to rebuild or recover (especially if they are taking action)

It is a frustrating battle after the event and the system has failed many. The unknowns about Administration and Liquidation - not knowing their rights and having to rely on others (once more) - loss of agency - inability to defend themselves given they signed documentation, usually without legal advice, depended on a professional to advise them but somehow gave the instruction and forfeit their rights to protection - too much to know that is not usually shared!

Diva Academy has begun teaching the things others do not speak about and guiding people on how to navigate through the maze of information to conduct comprehensive due diligence before parting with your TRUST and ultimately your MONEY.