The regulator has moved to prevent a company based in the British Virgin Islands from providing financial services in Australia after local investors where deceived.
The Australian Securities and Investments Commission (ASIC) has obtained interim orders in the Federal Court in Adelaide stopping China Environment Group (CEG) and its director, John William Ullmann, from selling CEG shares as part of a convoluted investment strategy.
What ASIC alleges
The watchdog alleges that CEG, a company incorporated in the British Virgin Islands (BVI) entered into an agreement with Lucky Pearl Investments Limited, also based in the BVI, for the sale of CEG shares.
However, it was Ullmann’s personal shares in CEG that were marketed to Australians by two companies associated with Lucky Pearl: Anova Corporate Services Limited (Anova) and Great Wall Capital Limited (GWC). Both these companies use addresses in Shanghai, China.
None of CEG, Anova, Lucky Pearl, GWC or Ullmann (as pictured, right, on the GEC website) hold an Australian financial services licence. 
ASIC alleges that Ullmann, as the sole director of CEG, acquired 100 million shares in CEG for US$0.01 each. Investors were then sold Ullmann’s shares for US$1.
The regulator further alleges that promotional materials prepared by Ullmann and CEG were presented in a manner so as to deceive investors into believing that their money would be directed to CEG to enable it to develop clean-air technologies in China.
It appears as much as 80 per cent of the money was paid as commission to Lucky Pearl and the balance paid to Ullmann and another company believed to be associated with Lucky Pearl.
Many of the investors who purchased CEG shares from Ullmann had previously acquired shares marketed by Anova and GWC in other companies, including Hydro Solutions Asia and Delmedica Investments Limited.
The hand of the law
The investigation is ongoing but, until further order, CEG and Ullman cannot:
- provide advice in relation to any financial product;
- deal in, or arrange access for any person to any financial product, solicit investment in or receive funds related to CEG; or
- alter, amend or destroy any books, records or documentation related to CEG.
ASIC encourages investors and advisers to visit its MoneySmart website for a list of companies that are not licensed to sell financial products in Australia.
