‘Best possible outcome’ sees First Guardian investors cop massive loss on failed property deal

First Guardian investors will get 8 cents on the dollar back on a loan the fund made to a property developer in western Melbourne, with liquidators saying they believe this was the “best possible outcome” for unitholders.

The liquidators of Falcon Capital, the responsible entity of First Guardian, released an update to creditors and unitholders on Wednesday night announcing a deed of settlement was reached with a property developer working for the fund.

The report said that Falcon Capital advanced around $38.3 million to the Guerinat Group between 10 June 2020 and 13 February 2025, including an agreement with property development firm Western Subdivisions for $33.5 million.

That loan was used to fund the purchase of a property in Fyansford, Victoria, on the outskirts of Geelong, on 22 May 2024, less than a year before liquidators were appointed on 9 April 2025.

A deed of settlement was reached for $2.85 million, including a further contribution of $50,000 for legal costs of obtaining court approval for the settlement.

The report said that $23 million of the unsecured loan had been advanced to Western Subdivisions and the company has no assets available to repay the loan.

The liquidators said they had negotiated with the director of the firm, Abdullah (also known as Abidal) Guerinat, who had been under public examination during court proceedings, to reach an agreement over the loan which would result in “the best possible outcome” for First Guardian unitholders.

To complicate matters, despite Western Subdivisions initially purchasing the property, another company – Blackrock Property Holdings (unrelated to global asset manager BlackRock) – was nominated as a substitute purchaser. Guerinat is the sole director of Blackrock.

The purchase of the Fyansford property was $53.2 million plus GST, but Blackrock needed to borrow additional funding to settle the purchase which came from RMBL Investments.

RMBL has a first-ranking registered mortgage over that property, giving them priority over other lenders including Falcon Capital.

The liquidators said they “fully acknowledge” the recovery is much less than First Guardian unitholders would have expected.

“However, the liquidators are of the view that the settlement sum exceeds the net current recoverable commercial value of the Western Subdivisions Investment,” the liquidators report said.

FTI Consulting delivered an update in May stating total recoveries have reached $6.2 million, but there is only an estimated net cash position of $326,000 after expenses.

Asset realisation included $370,100 for a Lamborghini Urus; $492,000 for Fox Friday Brewing, one of the alleged pet projects of Falcon Capital director David Anderson ($28.7 million book value); $3 million for Kanun Capital, a property developer with a book value of $33 million; $91,865 for Archer Cast Capital (book value of $90,000); $14,995 for Kool Global Solutions; and $4,574 for a realised Interactive Brokers portfolio.

Falcon Capital director David Anderson and chief investment officer and director Simon Selimaj have fronted court, with lawyers for the latter asking the court to release some assets for sale to settle legal bills and the court approving the sale of Anderson’s Melbourne residence.

Investments in Shield and First Guardian grew due to a sophisticated network of lead generators that contacted people who used online “superannuation health check” advertisements and applied high-pressure sales tactics to refer them to financial advisers.

ASIC acted against the funds over concerns investor money was being misused on high-risk investments, pet projects of directors and personal expenses, and court proceedings against both funds are ongoing.

Shield was operated separately by Paul Chiodo, and liquidators for the fund, Alvarez and Marsal, are expected to recover around 70 cents on the dollar.

Netwealth has remediated First Guardian investors $100 million, bringing those clients back to their initial starting investment position before being rolled into the fund.

Diversa Trustees and Equity Trustees, each the trustee for multiple platforms holding the fund, are fighting allegations of wrongdoing and due diligence failures in court.

All three trustees have seen additional license conditions imposed by APRA, including an independent review of how high-risk investment products are onboarded.

Diversa has applied to the government for a $239 million bailout of First Guardian investors, and Equity Trustees is expected to follow suit.

ASIC has also acted against lead generators, advisers and licensees allegedly responsible for distributing the funds.