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BFCSA: Dear Mr Prime Minister Rank Misrepresentation in Aged People’s Accommodation Promotion # 36

Posted by on in ROYAL COMMISSION INTO ASIC NEGLIGENCE
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The Hon Scott Morrison MP
Prime Minister Parliament House
CANBERRA ACT 2600
https://www.pm.gov.au/

July 20, 2019


Rank Misrepresentation in Aged People’s Accommodation Promotion: An Appeal for Restitution


Dear Mr. Morrison,

I am writing out of concern for the hundreds of retired people who have been defrauded by the actions of Sterling New Life and its parent company Sterling First (Aust) Limited of 19 Lyall Street, South Perth, WA 6151, which is now in Administration with over $20 million of investors’ money missing.

Founded in 2011, Sterling First combined “the two disciplines of property and funds management … and pioneered a range of both investment and housing opportunities to suit a variety of different lifestyles and financial standings” (from Sterling First website).

Sterling First described the product it marketed to the public, Sterling New Life (SNL), as “an alternative to traditional downsizing options which would result in real cash being freed up for living a more comfortable life in retirement.”

In good faith retiree investors paid in advance the rent for 40 years of tenancy (up to $325,000) as their ingoing for a home. Their good faith was met by what The West Australian (5 June 2019) reported as “allegations of misleading or deceptive conduct, unconscionable conduct and breaches of contract”.

Included in the misrepresentations made to these elderly people were:

  1. They believed that the funds they contributed were secured. But the Sterling Group provided no warranty on the product they were selling.
  2. Purchasers were not informed that SNL was one of eleven companies under the Sterling First umbrella, nor that their ingoing funds, which constituted the major part of most couples’ life savings, were distributed untraceably through the multilayered web of overlapping and interdependent Sterling First Group entities, many of which were trading with ongoing losses.
  3. These unsecured contributors were not informed that Sterling First used a significant fraction of their ingoing capital to pay the Group’s interest bill.
  4. Contributors were not informed of who owned the title to their home. Neither did Sterling disclose the complex ownership structure within which the rental properties were held.
  5. They were not told that the SNL they were buying into was the subject of an ASIC investigation for which Notices had been issued under the ASIC Act.
  6. The precarious solvency of the whole Sterling Group was withheld from purchasers.

 

This extraordinary information asymmetry suggests that the conditions for caveat emptor are abrogated, hence this appeal for restitution has a legal as well as a moral basis.

 

Mr. Morrison, I appeal to you to go beyond pursuing the Sterling First perpetrators of these fraudulent actions to utilising measures comparable to those enshrined in the Proceeds of Crime legislation to secure financial restitution for the SNL purchasers whose contributions have vanished.

 

Yours sincerely,

 

 

 

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