The financial entrepreneur James Mawhinney’s dream of a billion-dollar redevelopment of Queensland’s Mission Beach appears to have been shattered after rich lister Peter Bond repossessed the Dunk Island resort at the centre of the scheme.
Bond’s move came after the corporate regulator, which has been investigating Mawhinney and his investment group, Mayfair 101, for three years, obtained a court order freezing the assets of several entities associated with the project in Mission Beach, Queensland, and banning Mawhinney from leaving the country.
In legal proceedings, the Australian Securities and Investments Commission has accused Mawhinney of misleading investors in Mayfair 101, which has raised at least $140m from the public, by claiming some of its offerings were similar in safety to a bank term deposit.
Separately, Mawhinney has also been accused in court of transferring potentially valuable assets away from the grip of investors and to a company in the British Virgin Islands, 101 Investments, of which he is the ultimate owner.
Mawhinney has always denied doing anything wrong and has accused Asic of “massive overreach” in its actions, which he claimed on Friday put the Mission Beach project at risk.
Bond, the former chief executive of Linc Energy, sold the island to Mawhinney’s investment group, Mayfair 101, for more than $30m last year.
However, on Tuesday, Bond’s son, Adam Bond, told Guardian Australia the family’s company, Family Island Operations, had taken control of the island after Mayfair failed to meet payment terms.
“Unfortunately under the circumstances we have been left with no alternative but to foreclose,” he said.
“We have spent several months working with Mayfair in an attempt to engineer a solution. However, despite several extensions to payment terms Mayfair have remained unable to meet their obligations.”
The foreclosure is likely to have huge repercussions in Mission Beach, where some members of the community had hoped for an economic renaissance led by the redevelopment of Dunk Island and others had agreed to sell their properties to Mayfair 101.
“We recognise the impact this decision may have on Mayfair investors and the Mission beach community,” Adam Bond said.
“We can assure all concerned that this decision was not taken lightly or without other alternatives being thoroughly explored first.
“In our capacity as controller of the asset it is our intention to move quickly to ensure that Dunk Island can attract the right ownership to continue toward reopening and reestablishing its position as one of Queensland’s iconic destinations.”
On Thursday, the federal court judge Stewart Anderson appointed Said Jahani and Philip Campbell-Wilson of Grant Thornton as provisional liquidators of a key Mayfair 101 company, M101 Holdings, and banned Mawhinney from promoting fixed-income notes that Asic had previously complained Mayfair had compared to bank term deposits.
Anderson also banned Mawhinney from leaving the country and froze the assets of 14 property trusts Mayfair 101 had used to buy land in and around Mission Beach.
He said that on the basis of material Asic supplied to the court, which included the existence of a Monaco bank account in Mawhinney’s name, he was “satisfied that there exists a considerable risk of potentially fraudulent dissipation to the detriment of the relevant note holders”.
Mawhinney ought to be banned from raising further money from investors using the fixed-income notes due to several matters of “serious concern”, he said.
These included the fact that as of 30 March M101 Nominees had received more than $67.5m from investors, but by 1 July had just $2,765 in the bank; that investor funds were “used to fund a loan that was not adequately secured; that Mawhinney had stated a desire to restructure his companies to “protect our assets from recourse from receivers where practical”; and that Asic feared the fundraising was “akin to arrangements colloquially referred to as a ‘Ponzi scheme’.”
Mawhinney has been contacted for comment.
