The controversial Australian investment group Mayfair 101 has transferred an asset that belongs to its investors to a British Virgin Islands company controlled by the group’s founder, James Mawhinney, a court has heard.
The revelation comes just days after receivers were appointed over more than a dozen companies in Mayfair 101 and amid an investigation into the group by the corporate watchdog.
On Friday, the Victorian supreme court heard that in October, shares in Accloud, a British company that last year briefly boasted Tory politician Priti Patel as a director, were moved to a Mawhinney-controlled BVI company called 101 Investments.
In return, 101 Investments agreed to pay more than €15m for the shares – but the sum is not due for another 15 years, the court heard on Friday.
The court, which is supervising the receivership of several Mayfair 101 companies, also heard allegations from an investor that the Mayfair 101 fund that held the Accloud stake, IPO Wealth, was a Ponzi scheme, and from receivers that Mawhinney had not allowed them access to company emails.
Mawhinney’s counsel, Sam Hay SC, told the court his client had not had any opportunity to respond to the allegations and had given the receivers full access to relevant documents.
Mayfair 101 is best known for buying cyclone-ravaged Queensland resort Dunk Island last year as part of an ambitious plan to turn the area into a tourist mecca that also involved buying up properties at nearby Mission Beach.
But in recent months Mayfair 101 has angered some locals by failing to settle on properties it had agreed to buy and has been fighting a series of legal battles with the corporate regulator, which accuses it of misleading and deceptive conduct by comparing its investment products to bank term deposits. It denies the allegations.
This month Mayfair 101 also defaulted on $3m in repayments due to IPO Wealth, prompting the trustees of the fund, Vasco Trustees, to appoint receivers over 17 companies in the group.
IPO Wealth, which has 181 investors who have tipped in more than $80m, invested in a number of start-up style tech companies, including Accloud, Indian payments processor Paymate, and cryptocurrency plays.
Accloud appointed Patel as a director in March 2019 on a fee reported to be £45,000 a year, but she resigned in late July after being made home secretary.
UK corporate records show Accloud lost US$1.8m last year and US$8.8m the previous year.
There is no suggestion Patel or anyone else involved in any of the companies in which Mayfair 101 has invested has done anything wrong.
Judge Ross Robson said that in a report to the court the receivers, Nicholas Giasoumi and Hamish MacKinnon of Dye & Co, alleged Mayfair 101 failed to tell the trustees of the IPO Wealth Fund the interest in Accloud was transferred to Mawhinney’s BVI company in January.
“Mr Mawhinney has not had an opportunity to respond to the report,” Robson said.
He said one investor put $1m into the fund. “They say they understood the investment was like a term deposit,” Robson said.
Another investor submitted a detailed report in which their accountant claimed they were unable to identify any investment of the fund that paid a dividend.
“The accountant contends the fund is a Ponzi scheme,” Robson said. “He suggests the trustee may have been asleep at the wheel.”
Counsel for Vasco Trustees, Carrie Rome-Sievers, rejected the suggestion. “Obviously it disputes that strongly,” she said.
The case is set to return to court on 24 June.
In a statement received after publication of this article, Mayfair 101 said the appointment of receivers was “unwarranted and disadvantageous to unitholders” in the IPO Wealth fund and denied assets had been moved to cause detriment to the fund’s investors.
“IPO Wealth Fund investors have not been disadvantaged by any internal asset transfers given the benefit of such decisions results in a stronger Group and therefore capacity to repay investors,” the company said.
It said the fund had never “held direct interests in the underlying assets owned by the Mayfair 101 group”.
This article was updated on 1 June 2020 to include a statement from Mayfair 101, which was received after publication
