Co-Develop

I work in a lot of advisory and legal areas of property, and in my database have found this which is fromt he ASIC site. Go to http://www.asic.gov.au  and there is a site there fido which shows scams, problems, watch dog. Hopes this assists with your research. Bye

04-416 Co-Develop property schemes to be wound up

Friday 17 December 2004

The Australian Securities and Investments Commission (ASIC) has obtained orders in the Supreme Court of Queensland to wind up managed investment schemes operated by the Brisbane-based property developer, Co-Develop Australia Pty Ltd and eight related companies (the Co-Develop Group).

The Court ordered that each scheme be wound up, and appointed Mr Lachlan Stuart McIntosh and Mr John Richard Park of KordaMentha to supervise the winding up. Mr McIntosh will also assume control of the Co-Develop Group.

The Co-Develop Group, the sole director, Mrs Kylie Jane Freeman and Chief Executive Officer, Mr Leslie Raymond Freeman, also undertook not to seek any further money from investors for the schemes. They also undertook to refrain from declaring that sophisticated investors, joint venture agreements and promissory notes were exempt from regulation under the Corporations Act 2001.

Furthermore, as part of the order, the Co-Develop Group, Mrs Freeman and Mr Freeman undertook not to seek to recover management fees until investors had been re-paid their principal investments and interest.

ASIC alleged that the Co-Develop Group operated an unregistered managed investment scheme, carried on a financial services business without holding an Australian financial services license, offered securities without a current disclosure document, and engaged in conduct that was misleading and deceptive or likely to mislead and deceive.

‘ASIC has a structure in place to regulate managed investment schemes that aims to ensure that investor’s money is protected. Those who invest in schemes that aren’t registered are not provided with these protections’, ASIC’s Executive Director of Enforcement, Ms Jan Redfern said.

‘While we will take action to protect the interests of investors, consumers need to be vigilant, and always check their money is invested with responsible and compliant operators’, Ms Redfern added.

The final hearing of the matter was adjourned to a date to be fixed.

Background
ASIC alleged that in the course of financing various property developments, the Co-Develop Group sought and obtained money from the public through the use of promissory notes, joint venture agreements and debentures. The funds are used as mezzanine finance, that is, as additional funds to finance obtained by the Co-Develop Group from a financial institution. There are at least nine schemes where the money invested by members of the public are used in connection with the property developments being undertaken by the Co-Develop Group. The property developments are located in Toowoomba, Beaudesert, Redbank Plains, Coombabah, Morayfield, Margate, St Lucia and Westbrook in Queensland and Evans Head in Northern NSW. Each scheme has up to 17 investors and funds invested in the schemes total $28.8 million. Returns between 35 per cent and 100 per cent per annum were offered to investors.

Hi,

I'm not sure if this crowd has any connection to the previously mentioned Co-develop Australia but you really have to wonder about a website spruiking for property development clients where no names or background experience is given. And if they're not connected why would they ever use such a tainted name?
 
As a Brisbane developer of 27 years experience I followed the rise and fall of Co-Develop Australia quite closely. They were obviously running managed investment schemes, using promisory etc so it was inevitable that ASIC would come down on them like the proverbial ton of bricks. 

This current co-develop crew seem to be sailing very close to the wind in regards to operating managed investment schemes. I quote "syndicates that jointly carry out developments". I regularly come across operators who either purposely or probably through ignorance are contravening the Corporations Act, Managed Investments Act and the Financial Services reform Act.

Section 9 of the Corporations Act defines a managed investment scheme if it has the following features:
(a) people contribute money or monies worth as consideration to acquire rights (interests) to benefits produced by the scheme….
(b) any of the contributions are to be pooled, or used in common enterprise, to produce financial benefits, or benefits consisting of rights, or interests in property, for people who hold interests in the scheme ….
(c) the members do not have the day to day control over the operation of the scheme..

Sounds to me like the proposed 5 or 6 person syndicates with co-develop running the show fit the bill. While real estate is not a financial product under the definitions of the Financial Services Reform Act, a managed investment scheme is (Section 764A 1ba). To deal in a financial product requires an Australian Financial Services Licence. The bottom line is if investors get involved in a scheme that is operated outside of these Acts and ASIC winds it up they will be the big losers.

In reality it is even more complicated than I have described. I'll leave discussion about registered or unregistered schemes, product disclosure statements, excluded offers etc for another day.

My advice. Don't get involved without top shelf legal advice by a lawyer who specialises in corporation law such as McMahon Clarke http://www.mcmahonclarke.com