ASIC has commenced proceedings in the Federal Court of Australia against companies associated with Jamie McIntyre and the 21st Century Group in relation to their promotion and sale of interests to investors in five land banking schemes.
ASIC’s proceedings are part of ASIC’s wider and ongoing investigation into land banking schemes.
ASIC this week settled proceedings commenced against Midland HWY, which was the developer of a land banking scheme known as, ‘Hermitage Bendigo’ (formerly, ‘Acacia Banks’) located outside of Bendigo in Victoria. The 21st Century Group also promoted this development.
Land banking is a real estate investment scheme involving the acquisition of large blocks of land by a promoter or developer of the scheme, often in undeveloped rural areas, who then offer portions of the land to investors. Land banking companies typically promote the investment with representations of high potential returns if the land is redeveloped, or if plans for rezoning and development are finalised.
Investors either purchase a lot in the land, or acquire an option to purchase a lot of land in an unregistered plan of subdivision. The option agreement is triggered at a time that the necessary development is approved by the local council.
While ASIC does not regulate direct property investment, ASIC considers that land banking schemes, depending on the particular scheme, may be a managed investment scheme and/or a financial product and that the promoters of these schemes should therefore hold an Australian financial services licence and register these schemes with ASIC.
ASIC alleges that the schemes are unregistered managed investment schemes and that the 21st Century Group companies and Mr McIntyre have been unlawfully carrying on an unlicensed financial services business.
The five schemes are promoted and advertised as:
ASIC understands that there are over 100 investors in the schemes, which have been promoted to investors, including through seminars, by entities associated with Mr McIntyre’s 21st Century Group. Companies associated with Mr McIntyre and the 21st Century Group are also the developers of the schemes (development companies).
ASIC is seeking orders to appoint a provisional liquidator or receiver and manager to each of the five schemes and the development companies in order to take control of any assets and protect the interests of investors.
The development companies are:
ASIC is also taking action against the development companies and the following for being involved in an unlicensed financial services business.
ASIC is also seeking orders that each of the defendants, including Mr McIntyre, be restrained from promoting, further promoting or operating any of the schemes and from operating a financial services business.
On 21 August 2015, the Federal Court of Australia accepted undertakings from each of the defendants, including Jamie McIntyre, that until further order or agreement with ASIC, they would not promote the developments, act in furtherance of the developments, receive, solicit or dispose of any funds in connection with the developments, remove any assets from Australia or charge any assets and dispose of or destroy any books and records in relation to the developments.
The undertakings allow the defendants to make interest payments in relation to the loan entered into by Bendigo Vineyard Estate Pty Ltd for the Bendigo Vineyard Estate & Resort development.
On 8 September 2015, the Court heard and refused an application by the respondents to vary undertakings given by them to the Court on 21 August 2015 so as to enable the fourth respondent (Secret Valley Estate Pty Ltd) to settle the purchase of land.