Property Gloom As Another One Bites The Dust

The Age

Thursday July 26, 2007

Michelle Draper, With AAP

IN THE latest of a string of property-related collapses, a South Australian mortgage business has been placed in voluntary administration.

Adelaide-based private mortgage firm John West and Associates, under investigation by the Australian Securities and Investments Commission, has gone under with debts of more than $9.5 million.

More than 50 investors would be affected, but it was too early to assess what returns to creditors might be available, administrator Austin Taylor of Meertens Chartered Accountants said in a statement.

However, Mr Taylor said it was the first such collapse in South Australia.

Property development finance company Bridgecorp folded this month owing 19,000 Australian and New Zealand investors more than $A450 million. Bridgecorp raised funds from the public in the form of debentures and unsecured notes, and lent the money to developers and its own related entities.

According to ASIC's investigations, John West and Associates borrowed funds from investors at interest rates of up to 3 per cent a month, and on-lent those funds at higher rates for commercial purposes.

It is believed that those commercial purposes included property development but it is also believed that companies used the loans as start-up funds and for research and development.

ASIC launched legal action against the company in the Supreme Court in March. ASIC alleged that John West and Associates, run by Jonathan Peter West, had been operating an illegal managed investment scheme in breach of the Corporations Act for the past four years.

The court at that time ordered Mr West and his company to stop operating, although it can still repay interest and receive principal repayments on existing loans.

The company was also ordered to report to ASIC weekly.

"ASIC has taken this action to protect investors and to prevent even more people giving Mr West their money to invest in what ASIC believes is an unregistered and illegal investment scheme," ASIC's deputy executive director of enforcement, Allen Turton, said in a statement on March 23.

A trial date is set for September 10.

An ASIC spokesman said yesterday that ASIC was seeking to have the scheme and its promoter wound up. "This action is ongoing," he said.

He added that ASIC was continuing its investigation into the company.

According to court documents, John West and Associates had 55 loans on its books valued at $7.8 million at May last year.

Between November 1998 and May 2006 there were 80 loans worth about $10.3 million. -- With AAP

© 2007 The Age

Back to News Index | Back to Home