'Where is my money?' - investors seek answers

Mum and dad investors ask 'where is my money?' as option schemes stall.

Concern is mounting among hundreds of investors across Australia over the fate of more than $100 million tipped into a string of failed or questionable land-banking schemes in Victoria linked to notorious spruiker Henry Kaye and his family.

A Fairfax Media investigation has confirmed a direct role by Kaye in the first of a slew of projects based on the contentious sale of "wholesale" housing options. Options are a high-risk financial device usually aimed at experienced investors; in these cases, buyers acquired merely a future right to buy a stake in the promised developments, rather than a parcel of land or property.

Does this look like it may one day be "Toorak of the West" to you? 57 Balmer Grange  Brookfield in Melton.

Does this look like it may one day be "Toorak of the West" to you? 57 Balmer Grange Brookfield in Melton. Photo: Danie Sprague

The options packages were promoted and sold by database marketing firms Market First and 21st Century, both companies in which Kaye's sister Julia Feldman has been a key figure. The Belarus-born Henry Kaye headed a get-rich-quick property empire that targeted unsophisticated investors. It collapsed in 2003 owing 3500 investors up to $60 million. Kaye was later found by the Federal Court to have engaged in misleading conduct, breaching the Trades Practice Act, and was barred from managing companies for five years in 2010.

Five years after the first of eight schemes examined by Fairfax Media was launched as Moira Park Green City in Shepparton, not one house has been delivered. The Shepparton project and another known as Reeds Edge in Hopkins Rd, Melton, have collapsed altogether. Several have been renamed in order to market them to fresh investors, and many appear unviable due to their zoning, remote sites and lack of support from councils.

Shepparton developer Nejat Mackali, who started Moira Park Green City, has broken five years of silence to reveal how Kaye, Feldman and  21st Century's star spruiker Jamie McIntyre, helped market the scheme (later rechristened Botanica). The relationship and the project fell apart, and documents obtained by Fairfax Media record the legal battle that ensued, and the involvement of the disgraced Kaye – whose role has been unclear until now – and Feldman.

Henry Kaye (left) and Jamie McIntyre at a fancy dress party.

Henry Kaye (left) and Jamie McIntyre at a fancy dress party.

21st Century director Dennis McIntyre denies Kaye is an investor in its land projects and defends the projects' viability, arguing land banking may take 10-20 years to show a return.

Perth patient care assistant Grazyna Monka is unsure what  has become of the $60,000 she outlaid on the original Shepparton scheme, and is worried for anyone who may fall for the marketers' pitch on the renamed project. "Now I've lost everything that I have saved up, I feel like I'm missing out on my life," she told Fairfax Media.

Another two projects in Melbourne's outer west Foscari (in Truganina) and Veneziane (in Melton), spruiked by Market First as 'iconic architectural masterpieces",  have repeatedly failed to match up to marketing promises and assurances. 

In the case ofthe 1000-lot Veneziane, developers failed in January to make a $300,000 payment to the Melton Council necessary to kickstart precinct planning, effectively stalling the scheme.

Fairfax has confirmed that in 2014, at the very time promotions firm Market First was pressuring investors to convert their options to building contracts, the developers of Veneziane's sister project Foscari, were quietly trying to sell the site they had acquired for $3.6 million in an off-market sale, asking more than $20 million.

Disenchanted Foscari options investor Liesl Baxter last year had her money returned after threatening to take her concerns to corporate regulator ASIC. The Perth midwife said news of the attempted sale was consistent with her theory that developers had no intention of delivering the elaborate luxury projects they had promised.  "I think the game plan is to construct a money-making scheme, using the integrity that comes from reputable names within the building and legal industries to gain the consumer's trust and confidence so they part with their money."

in January, Fairfax revealed how ASX-listed law firm Slater and Gordon had withdrawn as Market First's recommended legal representative to investors in the Foscari and Veneziane projects, expressing concern about the secrecy around the projects, and warning investors that they may have overpaid and been misled.

Since the revelation of Slater and Gordon's warnings in January, Market First Property Consulting has closed its office at 492 St Kilda Rd. Kaye, Feldman and Market First front man Rowan Burn, have failed to return repeated calls.

In recent weeks, investors have received emails from a different corporate entity using the Market First logo, insisting the projects in Truganina and Melton are on track. But information from the marketers has repeatedly misled.

In April last year, for example, Market First emailed investors in the Foscari project to tell them builder Creation Homes had been appointed. Creation Homes has angrily denied this and insisted it has no contract for the Foscari project. A spokesman said his company bid for some work long ago but never heard back.

Meanwhile, in promoting the rebadged Shepparton scheme, 21St Century has told investors the project is endorsed by the local Shepparton council. Last week, the council issued a written statement rejecting the claim: "The Greater Shepparton Council is not involved in this development in any way, nor is the council promoting or endorsing the proposal as part of its long-term development strategy."

The council stressed that one of 21St Century's key sites was "not identified for future residential growth".

Howard Rapke, of major Melbourne law firm Holding Redlich is advising a growing number of concerned investors in the land-banking schemes. Fairfax Media is aware that complaints about the schemes have been lodged with state and federal authorities.

The mainstream development industry has warned investors about purchasing options in future housing estates that may never be built. Former Urban Development Institute of Australia chief executive Tony De Domenico has described such purchases as "high-risk investment products, not land sales".