Mayfair 101 Group director James Mawhinney will be unable to promote or raise funds for financial products for a further 15 years after the Federal Court found handed down final restraint orders.
Mawhinney will be unable to receive or solicit funds in connection with any financial product, or advertise, promote or market any financial product.
In proceedings that had been brought by ASIC, the court found that Mawhinney had a “willingness to adopt a reckless approach to the conduct of a financial services business”.
Mawhinney had been subject to interim restraint orders since 13 August 2020, and the new ruling will be the total period of injunctions to 20 years.
In a separate announcement from the Mayfair 101 director, Mawhinney said he will appeal the decision adding he had “defeated the majority of the accusations levelled at him… including 57 out of 90 allegations of misleading or deceptive conduct”.
Mawhinney said he disagreed with the court’s finding that Mayfair’s clients have suffered losses and that, prior to ASIC taking enforcement action, no defaults had occurred and all clients had been paid principal and interest on time and in full.
“Our clients made loans which we applied to acquiring underdeveloped real estate and various other assets,” Mawhinney said in a media statement.
“The debt obligations still exist and are recognised. We are rebuilding valuable assets to make our clients whole and will not rest until this is achieved. We will be appealing the court’s decision.”
However, Justice Catherine Button said Mawhinney gave no proper consideration of how investor obligations would be met, and his plan was to only raise more money from investors.
“The operations established and run by Mr Mawhinney exposed investors to an obvious and substantial risk of loss, which risk materialised, resulting in investors suffering heavy losses,” Justice Button said.
“The simple fact is that, in circumstances where the Mayfair Group was in serious financial trouble, Mr Mawhinney made the decision to stop paying investors sums due to them and was prepared to try to get the Mayfair Group out of the hole it was in by raising more money from unsuspecting investors.”
The injunctions follow the Court finding in July that Mawhinney was associated with or involved in breaches of the law committed by the Mayfair 101 Group companies.
Mayfair 101 sought to raise debt from wholesale clients to fund 20 private equity projects including a real estate development on Dunk Island in Queensland and 200 properties in nearby Mission Beach.
Dunk Island was badly damaged by Cyclone Larry in 2006 and Cyclone Yasi in 2011 and the redevelopment was meant to be funded through the group’s investment products.
In the space of eight months, Mayfair companies had signed contracts to buy nearly 300 properties on Mission Beach for an anticipated total purchase price of over $200 million, but the July judgment said the pace of real estate purchasing in the Mission Beach area was “frenetic” and lacked incoming capital to fund the deals, a situation that was further exacerbated by the Covid-19 pandemic.
The court found that “unless restrained” Mawhinney will conduct a financial service business that adopts a “financially reckless approach that exposes the investing public to significant risk of loss”.
Despite concerns raised by ASIC and the court, a group of Mayfair investors blamed the regulator for the downfall of the troubled investment schemes, claiming they are victims of legal action which they have labelled a “national disgrace”.
