The Federal Court of Australia has sided with ASIC over a case concerning an alleged unregistered managed investment scheme and a related company, approving the regulator’s application for orders to appoint interim receivers.
Justice Neil McKerracher handed down his decision on Wednesday, with ASIC managing to succeed in applying for interim receivers over the assets of Chris Marco, AMS Holdings (WA) Pty Ltd, and AMS as trustee for the AMS Holdings Trust.
ASIC’s investigations have previously indicated that Mr Marco, who traded as Coastline Group and related entity AMS, owes around $240 million to 132 investors.
The receiver appointment is part of ASIC’s ongoing application for final orders to wind up an alleged unregistered managed investment scheme operated by Mr Marco, with a date for the hearing of the winding up application yet to be set.
But the interim receivers, Robert Kirman and Robert Brauer of McGrathNicol, Perth, are first required to report back to the court concerning the affairs of Mr Marco and AMS by 26 July 2020.
In his judgment, Justice McKerracher stated there was a strong need for an independent assessment, as was “apparent from the highly uncertain nature of the investment activities undertaken by Mr Marco and what appears to be a repeated failure over a lengthy period of time to generate material returns for most investors”.
“There is also a serious concern, based on ASIC’s evidence, that the pooling of investor funds without adequate record keeping has meant that payment of some returns to investors have come from contributions made by subsequent investors such that there now appears to be a shortfall in excess of $200 million between assets held by the defendants and amounts stated to be owed to investors,” he said.
The orders sought will allow interim receivers to identify and value property in the event that such distribution is ordered.
In December, the regulator filed an application seeking leave to apply for further orders in the Federal Court in WA to wind up an alleged unregistered managed investment scheme and a related company operated by Mr Marco.
The court granted ASIC the leave on Wednesday.
The regulator is also seeking declarations that Mr Marco failed to hold an AFSL while carrying on a financial services business.
On 1 November 2018, ASIC obtained asset preservation orders over the assets held by Mr Marco and AMS.
Since the orders were made, Mr Marco has made numerous applications to vary the asset preservation orders permitting him to pay expenses incurred by AMS.
ASIC’s investigation into the conduct of Mr Marco is ongoing.
The matter was heard on 16 March.
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