The corporate regulator has signalled its intent to block Mayfair 101 director James Mawhinney from continuing to raise capital from investors via another company while being subject to a 20-year ban from fundraising and promoting investment products.
On Tuesday ASIC filed a contempt application against Mawhinney, the director of companies in the Mayfair 101 group, and separate federal court proceedings against Eleuthera Group, which it says Mawhinney has been using to seek investment despite the ban and operating without a financial service license.
ASIC says Mawhinney and the Eleuthera Group “made false or misleading representations and engaged in misleading or deceptive conduct” by sending emails including “investment options, terms and rates of return”.
The order comes after the federal court shut down Mawhinney’s M101 Nominees, a company in the Mayfair 101 Group, in January after the debenture issuer became insolvent and was unable to repay noteholders. At the time M101 Nominees was using money raised from new investors to fund distributions and redemptions to new investors, ASIC said, and owed investors approxiamtely $211 million.
“I am satisfied that there is ample evidence to justify a lack of confidence in the conduct and management of M101 Nominees’ affairs,” commented presiding judge Anderson. “I am satisfied, based upon the evidence relied upon by ASIC, that there is a risk to the public interest that warrants protection and that such protection can best be provided by ordering the winding up of M101 Nominees.”
In April, following an application by ASIC, Mawhinney was hit with a 20-year ban on promoting debenture products and using specific words and phrases such as “certainty” and “capital growth” in advertising material.
Such is ASIC’s concern over the Mawhinney’s activities, it has set up a dedicated page on its website hosting updates on its investigation into Mayfair 101 and related matters.
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