Mayfair 101 fund's prize asset under a cloud

Receivers have raised the alarm about the transfer of a key software asset from one part of the under-fire Mayfair 101 investment group to another – on the promise of repayment in 15 years.

The transfer was uncovered as part of a receiver inquiry involving Mayfair 101’s currently frozen IPO Wealth fund.

Companies associated with the fund, into which investors have poured in $82 million, might be put into liquidation, the Supreme Court of Victoria heard on Friday.

“It must be very, very distressing for investors,” Justice Ross Robson said. “They’re very, very large sums of money.”

The court hearing was held to determine the next steps in the receivership process and Justice Robson questioned whether a liquidator should be appointed.

An accountant representing an investor also raised concerns whether the fund itself was a “Ponzi scheme” and the trustee, Vasco, had been “asleep at the wheel”, the court heard.

Vasco’s lawyer, Carrie Rome-Sievers, rejected any suggestion of a lack of diligence by the trustee.

Vasco oversees the fund, which has lent $77 million to another Mayfair 101 entity called IPO Wealth Holdings.

IPO Wealth Holdings, in turn, has made investments in companies including Indian software accounting start-up Accloud and restaurant payments app Liven.

Legal action

It’s all part of the Mayfair 101 group, which made a splash with the purchase of Dunk Island last year and has raised more than $210 million in total, including its Mayfair Platinum products.

Mayfair 101, founded by James Mawhinney, 36, has already been battling legal action from the Australian Securities and Investments Commission over its advertising.

But problems deepened when IPO Wealth Holdings this month missed repayments on its loan of $3 million back to its sister fund.

The fund’s trustees had receivers appointed to IPO Wealth Holdings and 16 special purpose investment entities.

The receivers, Hamish MacKinnon and Nicholas Giasoumi of Dye & Co, submitted to the court results of a preliminary investigation into the IPO Wealth business.

Among the most startling revelations was that the main investment – a stake in Indian accounting software firm Accloud – had actually been transferred from a direct holding to another entity in the Mayfair 101 group dated January 2019. This was for more than €12 million ($20 million), to be paid back in 15 years.

Justice Robson, reading from the report, said: “What was meant to be an asset of the fund has been transferred to the company and in exchange a promise to pay from Mr Mawhinney a sum not repayable [for] 15 years.”

The court also heard submissions from IPO Wealth investors, including a worried retiree couple who had invested $1 million in what they understood “was like a term deposit”.

Another investor had recently separated and invested $500,000 in January 2019, which she hoped to use to build a house.

The distributions are the only source of income and she needed to redeem the money “to pay the builders she has engaged to build the house”, the court heard.

A Victorian man, known only as Investor A, was allowed to appear in the Zoom-video court hearing and said he was concerned by Vasco’s actions as his experience with IPO Wealth over two years had been “nothing but impeccable”.

He said he was a landlord and “the whole world is on a debt moratorium”.

But accountant Robert Storai, representing Investor C, supported the appointment of a provisional liquidator.

The court heard he had investigated the fund’s assets and questioned how it could generate cash to pay 10 per cent distributions when it was not generating income from its investments.

Mr Storai also said the value of the assets had dropped from an initial $172 million, by more than 100 per cent.

Mr Mawhinney was represented by lawyer Sam Hay, who maintained that the Mayfair 101 founder was complying with court orders to hand over relevant documents.

But the receivers’ lawyer, Michael Galvin, argued that more access was required, including being able to image computer servers. “My client hasn’t had any access to email correspondence … which could be fundamental.”

Two flagship Mayfair Platinum products, the M+ Fixed Income Product and the M Core Fixed Income Product, have also had redemptions frozen.

The matter has been adjourned to June 24 to allow the receiver more time to investigate, and to allow Mr Mawhinney to respond to the eventual findings.