The Federal Treasurer
Hon. Josh Frydenberg MP
Po Box 6022,
HOUSE OF REPRESENTATIVES
PARLIAMENT HOUSE
CANBERRA ACT 2600
Dear Mr. Frydenberg,
RE: URGENT COMPENSATION FOR VICTIMS OF STERLING FIRST GROUP COLLAPSE
WHITE COLLAR CRIME – NO PROTECTION
In 2016 I invested all I could borrow against my almost fully paid off house in Sterling First – I did my due diligence and went through all of the provided documents. Their Information Memorandum stated that company was expanding rapidly, was innovative, with promising future, with a great cause of providing so needed affordable accommodation to retirees, and where ASIC’s name was mentioned on numerous occasions. How wrong I was!! Just 3 years later I am with HUGE mortgage of $520,000! Paying currently $24,000/year just an interest on this money.
Sterling First group of companies collapsed last month without any warning! ALL MONEY GONE and no funds left. And this group of companies was registered with ASIC and apparently under ASIC’s investigations since before I invested. If I knew that directors had a bad history and were known to ASIC, that investigations were being conducted, I would still have my hard earned money today.
I am single mother of 2, who came to Australia in early 80’s escaping communism with hopes of building my life here and for a better life. 3 years ago, I decided to invest in Australian company for the first time and a large sum of money. Being partially pressed by circumstances as I lost my job, I was looking for an opportunity of sound investment that paid dividends until I am secure in my new work. I came across Sterling First. My intention was to substantially reduce my investment in 1-2 years once I had a job.
Now I got a sad, devastating ‘lesson’ in capitalism of the 1st world country – don’t trust anyone, not even the Government that has created bodies and regulations for your protection, anyone can rob you any time and face no penalties, don’t invest.
ASIC a WATCHDOG. It is a wrong name I think and insulting to dogs, as dogs are loyal to their owners who feed them. We pay taxes to finance ASIC but no protection from criminals. ASIC just sits and watches how we bleed to death and then moves onto another investigation. Just last year their budget was increased by over $400mln and they get performance bonuses of approx. $9mln/year. I don’t it is was deserved.
The heartbreaking fact is that all this fiasco was 100% avoidable if ASIC has done its job properly, and issued a public warning. A simple warning. Most people joined between 2016-2018, while investigations started much earlier.
The other matter is SF director’s consciousness or rather total luck of. These people should be thoroughly screened and they should stand a trial. Crime is a crime, whether whit-collar or not. Every time I research any of the papers I was issued by SF or SIT (only few papers, as they were rarely sent with a new bunch of excuses e.g why we cannot sell shares, and new lies about listing on ASX!), I discover fraud, misleading information, deceit and more lies.
Simple example:
1. Quote from Information Memorandum (IM) 2017:
“The Company believes its key strengths include:
• Exposure to secular growth in older Australians’ demand for affordable housing
• Innovative and proven solution to retirement living within the wider community
• Recurring and reliable cash flow from property and funds management operations
• Scalable throughout Australia and potentially internationally
• Insulated from cyclical economic and equity market movements
• Alignment of shareholders and directors’ interests. Executive Management and Directors own 56% of issued share capital
• Dedicated and experienced team with demonstrated sector performance”
And only 2 years later, quote from Liquidators report:
“The Directors have provided us with the following reasons for its failure:
– severe decline in the value of residential properties held of more than 25% and the restricted ability to sell those properties;
– rent income suffered a 20% decline across the portfolio;
– cost of senior debt and the debt to the Development Trust became an unsustainable cash flow burden on the business;
– closure of the SNL business resulted in a reduction in revenue to the Sterling First Group;
– the inability to launch a new rental trust to replace the SIT added further cash flow issue for the Group and RMA”
No comment.
Knowing that Sterling First bunch of criminals (as I would call them after having done my research) being investigated, and have faulted before, ASIC allowed that more people were lured in until late 2018! Where is “care of duty” of the Government’s body?
I request that Ryan Jones, Ray Jones, Mr Armstrong, Brian Ruzich, Simon Bell and Mark McKeown and other people that run these companies are thoroughly investigated and justice is served.
I only found out that SF goes to Voluntary Administration through the third party – not ASIC, not Sterling First, and that was late May, already 3 weeks into administration.
I was urged by Mark McKeown to redeem my cash invested in Co-development units ($59,400) for worthless shares that he has valued himself of $0.20/share as late as 31 May 2019 while SF was already in administration, but I only found out a week ago that this company was not even part of SF group anymore ! Mysteriously it changed hands somewhere on the way and to anybody’s knowledge. And this company was liquidated back in January 2019!!. To this day I have no idea who was his director, or whether he was the director. The condition he proposed for this cash/shares exchange was that we/I release all of his responsibility forever! No other communication. This is a crime and the worst arrogance I came across ever in my life.
I feel not just being robbed of over $1/2mln, that I will have to be paying back for the rest of my life, but also deeply humiliated, pushed around, mislead, lied to, deceived and preyed on, with no rights whatsoever, slapped across face. If I was an object that can be moved around and finally disposed.
I could no withdraw any money for the last 2 years, and dividends were not paid since 2017, all with an excuse that audits are being conducted in preparation of ASX listing!!
Right now, at 58, I still have a few years of work life, but then my super of $100,000 can only pay back a quarter of my loan and I’ll have to apply for a Government pension. I have to cut off of my private health insurance. And I can go on with a list of horrible consequences that this disaster has created for me and for few hundred others.
I have lodged a complained with ASIC only days after I found out about administration and I waited 3 full weeks just to be told to go back to liquidators for further clarifications.
I wake up every day (if I can sleep) and still can’t believe this is happening to me in this country.
The totally devastating part is that over 100 retired couples have lost all savings and homes. Can you image yourself in this situation when you are 80, worked hard all your life, saved all those years and someone just takes it all, with a permission of Government? Wouldn’t you call it the highest caliber crime? And because there is no blood, it goes with “sorry – no funds left. You can put your loss against your capital gain’. But there is no capital gain to claim against, and there won’t be, as there is nothing else left to sell and no time to build from 0.
And there are other consequences that can’t be measured in $, such as stress that highly impacts mental and physical health, family problems, marriage break-downs and suicide, just to name a few. There are people with terminal illness that stress of this magnitude will surely negatively affect.
This white-collar crime is not to be brushed off easily.
I plea for the compensation to be paid to all people as a matter of highest urgency.
A good start is to cut ASIC performance bonuses, and pay the victims who ASIC miserably failed to protect instead.
On behalf of myself and all victims, I ask you to consider this matter as a highest priority, and that $36mln stolen from us is to be compensated for within 7 weeks.
We need our lives and our trust in the government back.
I await you reply.
Yours faithfully,
KP
Not proud Australian citizen right now