Lm Australia Fiasco - Investors In Thailand/s.e. Asia

scotinsiam · February 22, 2014

Here is an update

http://www.smh.com.au/business/drake-transferred-funds-to-de-facto-as-his-lm-group-failed-20140216-32ttm.html

Drake transferred funds to de facto as his LM group failed

Date February 17, 2014

Michael West Business columnist

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Peter Drake. Photo: Louie Douvis

As his billion-dollar fund empire was imploding last year Peter Drake was busy transferring cash to his girlfriend, a move that concealed assets from his creditors and kept the Gold Coast impresario living the high life.

Drake's LM group went into administration in March last year. Between November 2012 and October 2013, the businessman transferred $468,710 into bank accounts operated by his de facto Maria Magi, a native of Estonia.

The details of Peter Drake's asset trail - or at least the Australian and Fijian legs of his asset trail - are contained in an affidavit filed with the Queensland Supreme Court by receivers Bentleys on behalf of the Australian Securities and Investments Commission.

Of the cash transfers to Maria Magi, $242,913 was a refund from the Office of State Revenue, which Bentleys believes ''Mr Drake intentionally set out to conceal from the OSR''. This was a refund from land tax that was originally paid by LM on behalf of Drake.

Drake advised Bentleys in an interview last year that the land tax was "paid into Ms Magi's account to allow her to use the interest as income". It has since been spent on living expenses.

Another $152,316 was transferred to a Maria Magi account with ANZ in Fiji. Drake had a house in Fiji that he transferred into a trust in 2007 in a deal with his ex-wife Belinda Drake. The cash transfer to his girlfriend's account was made as a ''gift'', Drake told the receivers. The gift was given the month after LM collapsed.

''It has led us to believe due to the timing of this transaction … there is no other reason for the purpose of this transfer, other than to move these funds away from Mr Drake and out of the hands of his creditors,'' says the report.

A further $73,480 was transferred via direct deposits from Drake Insurance and its successor, Australian Global Insurance Services (AGIS), where Peter Drake now works - although he is neither a shareholder nor a director. He leases his Mercedes from the business.

Most of those funds have been spent too. A summary of payments from Ms Magi's ANZ Access Advantage Account, between April and September last year, shows ''Transfers to P Drake'' of $21,500, private school tuition $21,370, surgery and cosmetic procedures of $14,033 and Mercedes Benz Finance $24,548. There was $271,114 spent from that account alone during the six month period, including almost $28,000 in ATM withdrawals.

While the sums identified by Bentleys are significant, they represent only a fraction of the money that went offshore before the LM collapse. The Kiwi rugby lover and father of three had $43 million in loans with his funds and companies. The loans were never paid down and the money appears to be gone. Now, with four insolvency groups presiding over the LM carcass, the prospect of a return for LM creditors is slim.

Nevertheless, Peter Drake carries on working in insurance, just down the road from his old LM haunts. The receivers report claims Drake ''intentionally misled'' them about his role at AGIS, saying he had ''no involvement in the business''.

Instead, its investigations indicated that Drake controlled AGIS and had established a discretionary trust of which he was the sole beneficiary. ''He has withdrawn trust distributions of $73,480 from Drake Pty Ltd and AGIS since April 2013 (the month after LM collapsed).''

The receivers found ''there are no assets of any significant value held in the name of Peter Drake''.

Drake and the other directors of LM, none of whom have been bankrupted or prosecuted, presided over an immense destruction of wealth at their mortgage fund empire. At its peak, LM held more than $1 billion in funds under management. Drake valued the business at $3 billion. He was sole shareholder and sole director of most LM entities.

A slew of transactions, particularly in the grossly overvalued Managed Performance Fund, entailed loans to property development companies controlled by Drake himself.

This fund sank $250 million in loans into the Maddison Estate project on the Gold Coast - 60 per cent of the entire fund was concentrated in this one asset. It was valued at $1 billion on completion. But administrators KordaMentha recently reckoned its worth to be just $2 million.

The Maddison project was one of Peter Drake's developments.

BusinessDay sought comment from Peter Drake and Maria Magi for this story.

Read more: http://www.smh.com.au/business/drake-transferred-funds-to-de-facto-as-his-lm-group-failed-20140216-32ttm.html#ixzz2u2TAHNie

scotinsiam · February 22, 2014