fyi - Co-Develop & ASIC

[NigelW]

From ASIC's website:

04-416 Co-Develop property schemes to be wound up

Friday 17 December 2004


The Australian Securities and Investments Commission (ASIC) has obtained orders in the Supreme Court of Queensland to wind up managed investment schemes operated by the Brisbane-based property developer, Co-Develop Australia Pty Ltd and eight related companies (the Co-Develop Group).

The Court ordered that each scheme be wound up, and appointed Mr Lachlan Stuart McIntosh and Mr John Richard Park of KordaMentha to supervise the winding up. Mr McIntosh will also assume control of the Co-Develop Group.

The Co-Develop Group, the sole director, Mrs Kylie Jane Freeman and Chief Executive Officer, Mr Leslie Raymond Freeman, also undertook not to seek any further money from investors for the schemes. They also undertook to refrain from declaring that sophisticated investors, joint venture agreements and promissory notes were exempt from regulation under the Corporations Act 2001.

Furthermore, as part of the order, the Co-Develop Group, Mrs Freeman and Mr Freeman undertook not to seek to recover management fees until investors had been re-paid their principal investments and interest.

ASIC alleged that the Co-Develop Group operated an unregistered managed investment scheme, carried on a financial services business without holding an Australian financial services license, offered securities without a current disclosure document, and engaged in conduct that was misleading and deceptive or likely to mislead and deceive.

'ASIC has a structure in place to regulate managed investment schemes that aims to ensure that investor's money is protected. Those who invest in schemes that aren't registered are not provided with these protections', ASIC's Executive Director of Enforcement, Ms Jan Redfern said.

'While we will take action to protect the interests of investors, consumers need to be vigilant, and always check their money is invested with responsible and compliant operators', Ms Redfern added.

The final hearing of the matter was adjourned to a date to be fixed.

Background
ASIC alleged that in the course of financing various property developments, the Co-Develop Group sought and obtained money from the public through the use of promissory notes, joint venture agreements and debentures. The funds are used as mezzanine finance, that is, as additional funds to finance obtained by the Co-Develop Group from a financial institution. There are at least nine schemes where the money invested by members of the public are used in connection with the property developments being undertaken by the Co-Develop Group. The property developments are located in Toowoomba, Beaudesert, Redbank Plains, Coombabah, Morayfield, Margate, St Lucia and Westbrook in Queensland and Evans Head in Northern NSW. Each scheme has up to 17 investors and funds invested in the schemes total $28.8 million. Returns between 35 per cent and 100 per cent per annum were offered to investors

 

[Ausprop]

Thanks for this interesting article. I think there are a few of these syndication groups around that are flying under the radar.

 

[Tim]

Does anyone know of any other companies in Brisbane in with co-develop that might be affected by this?

Tim

 

[Sunstone]

Property: A familiar name resurfaces
As Co-Develop Properties is wound up for alleged misleading and deceptive conduct, Co Develop Properties heads to the market chasing $56 million.

By John Stensholt
BRW. 17 March 2005

A Queensland property development company is trying to raise up to $56 million from investors only a few months after several connected companies faced court action and allegations of misleading and deceptive conduct by the Australian Securities & Invest-ments Commission (Asic).

Co Develop Properties Limited issued a prospectus on January 17 seeking $33.6 million by issuing redeemable preference shares (there is a provision for an extra $22.4 million to be raised if the offer is oversubscribed). The prospectus says the company has been formed for the purpose of buying, developing and selling residential, commercial, industrial and retail real estate.

Co Develop Properties is connected with Co-Develop Australia Pty Ltd, which, along with eight related companies - including one called Co-Develop Properties Pty Ltd - faced winding up orders in the Supreme Court of Queensland in December.

The court action was brought by Asic, which obtained orders in the Supreme Court to wind up managed investment schemes operated by the Co-Develop Group (made up of Co-Develop Australia and the eight related companies). The group undertook not to seek any further money from investors of those particular schemes.

Asic says there were nine schemes that financed various property developments. Investors were offered annual returns of 35-100% using promissory notes, joint venture agreements and debentures used as mezzanine finance. The group raised $28.8 million. Asic alleged the group engaged in conduct that was misleading and deceptive or likely to mislead and deceive. It also alleged the group operated unregistered managed investment schemes, carried on a financial services business without holding an Australian financial services licence, and offered securities without a current disclosure document.

Now management associated with Co-Develop Australia is seeking more money from investors, at a more conservative 12% return. The latest prospectus says: "Co Develop Properties is unrelated to another property development company, Co-Develop Australia Pty Ltd, except that both companies share common management in the form of Mr Les Freeman." The companies share the same Brisbane premises.

The prospectus says: "Co-Develop Properties Pty Ltd has also been named in the [Asic court] application and should not be confused with Co Develop Properties Limited, which is not a party to the Asic proceedings."

The latest prospectus says Freeman is managing director of Co Develop Properties Limited. He was party to the Asic proceedings in relation to the Co-Develop Group, of which he is chief executive. He was reportedly the subject of investigations by Asic in relation to broking and business activities in 2002. He subsequently gave undertakings that ensured he escaped being banned from offering securities.

Co Develop Properties' chairman, Barrie Adams, is described on the company's web site as a former regional commissioner of Asic's Queensland office. After the Asic action was announced in December, Adams reportedly claimed he was not connected with the companies subject to Asic action.

A spokeswoman for Co Develop Properties told BRW: "There is no connection between the two groups (Co-Develop Australia and Co Develop Properties) besides common ownership. They are separate companies that are managing totally different businesses. It is not like they have just undertaken a name change and are carrying on the same business." Later, Co Develop Properties sent BRW a statement that said: "[After the Asic action] the Co-Develop Australia management team looked at restructuring operations in order for the company to move forward within an ever-tightening regulatory regime. The result of this review was the formation of Co Develop Properties Limited."

Co Develop Properties will source its developments (for a fee) from Co-Develop Projects, part-owned by interests associated with Freeman. The prospectus says that because neither of the two companies are respondents to the Asic court action they will continue to do business.

Asic reportedly undertook a three-month investigation last year into the Co-Develop Group, which ran a series of seminars promoting mezzanine finance deals to "sophisticated investors". The group encouraged investors to become joint-venture developers in projects in south-east Queensland. Each of the nine investment schemes attracted up to 17 investors. Earlier in 2004, Co-Develop Group claimed it had bought 224 housing blocks for $6000 each, and said it could then sell them for up to $55,000 per block.

Land deals

Brisbane construction company Co Develop Properties Limited wants to raise $56 million from investors.
Several companies connected with it, including Co-Develop Australia, faced court action last year brought by the Australian Securities & Investments Commission (Asic).
Asic sought winding up orders for several Co-Develop investment schemes that offered investors returns of 35-100%.

http://www.brw.com.au/fearticle.aspx?relId=12573

 

[Kiwi Investor]

I went to a co-develop seminar about 6 months ago on the GC, dooh !

 

[Punchy]

I went to a co-develop seminar about 6 months ago on the GC, dooh !

Any property seminar held on the GC should be shown extreme caution.

 

[Kiwi Investor]

I only go to seminars to gain knowledge and see what different strategys are being used, not to spend any of my revenue!

I did go to a good seminar last month run by Barry Pickering of On Site Direct on the GC.

I'm sure there are some reputable companies on the GC.

KI