Queensland and New South Wales investors lost more than $2 million as part of a Ponzi-style scam after pouring their money into failed housing investments, police allege.
Detectives charged Richard John Marlborough, 52, with dishonestly inducing victims into transferring money into accounts he controlled over a three-year period.
Police alleged that as a director of Members Alliance Group, Mr Marlborough orchestrated a cold calling scam which saw mum and dad investors buy into properties that often were never built.
The homes for sale were located in rural NSW and Queensland — areas the investors were unlikely to ever visit.
Investors were easy to dupe because they could not easily keep track of the projects which were often thousands of kilometres away, police allege.
However Mr Marlborough's lawyer Daniel Hannay said his client would defend the charges, arguing the business was always "a legitimate" one.
He was granted bail on the conditions he reports to police three times a week, surrenders his passport, makes no contact with former staff and does not go within 500 metres international ports of departure.
"There is an allegation of fraud for a company that at the time had 350 staff members so it is an extensive and complex police investigation and [the charge] is obviously refuted, ," Mr Hannay said.
Offenders accused of forging victims' signatures
Mr Marlborough was arrested at his luxury Gold Coast home this morning after an 11-month joint investigation by Queensland police, ASIC and the Queensland Building and Construction Commission.
Detective Senior Constable Anthony Hartley said most victims had no idea they had been duped until they were crippled with debt.
"Some people had no slab poured, there were varying degrees of completion of jobs," he said.
Often no work was completed at all, police allege.
Detective Superintendent Terry Lawrence said photos of homes were sometimes sent to investors, but the properties were not theirs.
"The offenders themselves have actually forged signatures of some of the homebuyers," he said.
The investigation involved building companies owned by the Members Alliance Group, including Image Building Group and Silverback Constructions.
The group collapsed in July 2016 with debts of over $30 million.
Police said more arrests were expected.
Police issue warning over cold call companies
Senior Constable Hartley said Members Alliance started as a legitimate company but ended up selling fraudulent house and land packages to try and complete others contracted earlier down the line.
"We will allege the offending actually commenced way back in 2013 and certain people have had homes completed, by funds drawn down on victims who signed up for investments later on down the track," he said.
"Sort of like a big Ponzi scheme for want of a better term."
Police said some of the 40 victims had clawed back money through a class action, but others lost their livelihoods.
Superintendent Lawrence warned the public about trusting companies who cold called prospective investors.
"No legitimate investment company will cold call you and ask you to invest, at all, so if you get cold called just hang up," he said.
