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18-111MR Federal Court orders wind up of illegal land banking investment scheme and its operator
ASIC has today obtained orders from the Federal Court to wind up an illegal investment scheme known as the VKK Investments Unit Trust (VKK scheme), as well as the trustee and operator of that scheme, Gem Management Group Pty Ltd (Gem).
The principal asset of the VKK scheme is land located at 64 Hutton Road, Keysborough in Victoria.
Around 125 investors invested a total of approximately $22 million into the VKK scheme, which Gem operated since May 2010 on the expectation that the land at Hutton Road would be re-zoned, which has not occurred.
ASIC's investigation identified that:
- the VKK scheme is a managed investment scheme which has not been registered, as required under the Corporations Act; and
- Gem, which does not hold an Australian financial services licence, had also breached the Act by operating an unregistered managed investment scheme.
A number of investors in the VKK scheme were represented in the proceedings brought by ASIC and made submissions in support of ASIC’s application to wind up the VKK scheme and Gem.
Robert Woods and Salvatore Algeri of Deloitte Touche Tohmatsu have been appointed as joint liquidators of Gem and joint liquidators and trustees of the VKK scheme. The liquidators will have management of the VKK scheme and the land at Hutton Road.
ASIC Deputy Chair Peter Kell said, "Today the Federal Court took action to wind up an unlawful managed investment scheme and its operator. The ruling is a warning to those involved in unlawful schemes, including those that involve land banking, that ASIC will move to protect investors and have these unlawful schemes wound up."
"Land banking schemes have been a particular focus of ASIC. ASIC reminds investors considering investing in land banking schemes they are often unregulated and that investors have little protection if something goes wrong", Mr Kell said.
Questions about the future sale or management of the land at Hutton Road should be directed to the liquidators at:
Deloitte Touche Tohmatsu
550 Bourke Street, Melbourne VIC 3000 Australia
Telephone: +61 (0)3 9671 8338
ASIC commenced proceedings in July 2017 to wind up the VKK scheme and Gem (refer: 17-238MR).
More information about ASIC's proceedings is available here.
More information about land banking is available here.