Liquidators assigned to property held by Chris Marco are able to distribute millions of dollars from the alleged Ponzi scheme to affected investors.
Liquidators assigned to property held by Chris Marco are able to distribute millions of dollars from the alleged Ponzi scheme back to the affected investors, with court ordered conditions.
The Australian Securities and Investments Commission claimed the Mt Hawthorn businessman owed about $240 million to 132 investors from his unregistered investment scheme, which was allegedly in operation for 16 years.
In a judgment delivered today, Federal Court Justice Michael Feutrill found it was appropriate for the liquidators to repay affected parties from a single mixed fund comprising Mr Marco's cash at bank, property, investments and motor vehicles and assets held by his company.
In 2020, the federal court ordered the winding up of an unregistered managed investment scheme reportedly operated by Mr Marco and his company, AMS Holdings.
McGrath Nicol partners Rob Kirman and Rob Brauer were then appointed as liquidators of AMS and the alleged investment scheme.
According to today's judgment, the liquidators found $285.6 million was deposited into the scheme accounts from September 2002 to November 2018 with 91 per cent of funds from the same investors or scheme members.
The scheme members were allegedly told by Mr Marco that the money would be used to fund investments, with interest payments to be paid from the profit generated.
The liquidators have sought court orders to treat Mr Marco's and AMS Holdings' assets and property as one, pooling it to a single mixed fund to pay the debts owed in full.
Justice Feutrill said the liquidators would be justified in treating the remaining property of the scheme as a single mixed fund because it was not feasible to identify each member’s portion.
“Having regard to that conclusion, as a matter of principle, it is more appropriate for the liquidators to distribute the remaining property of the scheme in a manner that reflects the equitable proprietary interests of scheme members in that property,” he said.
The court orders listed all unpaid remuneration, costs and expenses of the interim receivers, receivers and liquidators as the priority payment, followed by outstanding debts owed by AMS Holdings and scheme members as beneficial owners of the assets.
A condition imposed by Justice Feutrill was for all payments made to a scheme member to be deducted from their total capital contributions, but members with a negative balance were excluded from participating in the distribution.
Justice Feutrill said the liquidators would be justified in treating the managed investment scheme as a Ponzi scheme.
“The evidence upon which the liquidators rely in the application demonstrates that the scheme was not a genuine managed investment scheme and it was operated as a Ponzi scheme,” he said.
“That is, the promised 'returns' to earlier 'investors' were paid out of the capital contributed by later 'investors' in the scheme.
“The scheme was insolvent from its inception and the remaining property of the scheme is insufficient to meet 'investors' claims to capital and unpaid promised 'returns'.”
Justice Feutrill said the non-scheme member receipts totalling $13.6 million were insufficient to meet the $205.9 million paid to scheme members as returns.
"That is, nearly all scheme member returns were funded by scheme member deposits," he said in his judgment.
Mr Marco is facing an additional 50 counts of fraud under the Criminal Code, with ASIC alleging he defrauded $36.5 million from nine investors.
