The tangled web of the Beacon acquisition

A number of subsidiaries of non-bank licensee Beacon Financial Group have been acquired by US-based Genesis Financial Inc. But it’s not clear why.

Beacon has previously been the subject of controversy. Linchpin Financial Group, which owned Beacon, was also the subject of controversy after ASIC alleged money was diverted from its Investment Income Opportunity Fund to directors for personal loans. Linchpin has since been liquidated.

Genesis Financial Inc is incorporated in Wyoming and has an office in Las Vegas. The CEO of Genesis is Roy Rose, who founded Whitestone Investment Network, Inc and Patron Co LLC. Aside from that, little is known about them. What is known has been gleaned from company filings with the SEC. Genesis previously engaged in buying and reselling financed real estate loans, mortgages, and contracts. Following a reverse merger with EPOINT Payment Corp, it is now in the business of providing financial services via mobile to underbanked and unbanked customers.

Exactly why a US company dealing in fintech wants to acquire a troubled network of Australian financial services firms is unclear.

The man who wasn’t there

The director of Genesis Financial Inc is currently listed as Rahul Singh, a Melbourne-based lawyer. Information on Mr Singh is also difficult to find.

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All attempts to contact Mr Singh have failed, despite the fact that he has held multiple director and non-executive chairman positions at several resource companies. One phone number – listed alongside what appears to be Beacon Hill AOL email address, where Mr Singh was previously chairman – leads to Nicholson Ryan Lawyers. ifa was told that Mr Singh doesn’t work there, but that there had been an increase in calls for him in the last month. According to a statement from Genesis, Mr Singh was admitted as a barrister and solicitor of the Supreme Court of Victoria, Australia – but when ifa contacted the Victorian Legal Services Board, we were told that nobody by that name holds a current practicing certificate. Mr Singh has also apparently worked at McKinsey and Co. and Mercantile Mutual Limited prior to it becoming ING.

In 2003, Mr Singh was the manager of the Dhunn-Carr Hedge Fund L.P (DCHF). While he was manager, DHCF was found, by the Massachusetts Securities Division, to have offered and sold an interest in the DCHF to a non-accredited investor in breach of the Massachusetts Uniform Securities Act.

Attempts to contact Mr Singh at Surefire Resources NL, where he is executive chairman of the board, were also unsuccessful.

Prior to going to press, Beacon Group Managing Director Peter Daly called to say that Mr Singh was in fact no longer director of Genesis Financial Inc. 

The deal

In September 2018, Genesis had just $20,000 cash in assets, with a negative working capital of $3.3 million. A planned acquisition of SmartPay Leasing LLC fell through and Genesis recorded a $200,000 loss on deposits.

Genesis bought the Beacon subsidiaries for consideration of US$15,500,000, comprised of $5 million in cash and $10.5 million in shares of Genesis’ common stock. Genesis remitted $100,000 in cash, and at the closing – subject to Beacon obtaining all required Australian government and regulatory authority approval – will remit an additional $900,000. The balance of the purchase price is payable in specified instalments of cash and stock at the end of each financial year, subject to Beacon recording at least “$3 million” – the purchase agreement does not define whether this ‘$3 million’ is in profit or otherwise.

An attempt to contact Genesis for comment at their listed Las Vegas number was unsuccessful.

Mr Daly has declined to comment on the matter.

The tangled web of the Beacon acquisition
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