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Melbourne real estate guru Sasha Hopkins has been ordered to pay $1.25 million in penalties and disqualified from managing corporations for four years, after a court found yesterday that he and his business The A Team Property Group (TATPG) had operated unregistered managed investment schemes for properties in Brisbane, Melbourne, Byron Bay and Adelaide.
The Federal Court also found that Hopkins and TATPG were carrying on a financial services business without a licence, and has ordered the company and five of the investment schemes and associated companies be wound up with the appointment of receivers.
Hopkins is the sole director of TATPG, a business that offered a range of property development opportunities between 2018 and mid-2022 when it had its assets frozen by court order following action from the corporate watchdog, with total investor losses reaching an estimated $27 million.
The investments were promoted as joint-venture property developments on social media platforms such as Facebook, described as exclusive opportunities offering fixed returns of 25-50 per cent to be paid between 12 and 26 months.
TATPG first charged clients a one-off $16,500 fee for "coaching and mentoring services" in connection with property investment, followed by a client management agreement giving them access to the joint-venture opportunities.
Clients were then required to enter into a loan agreement with special purpose vehicles (SPVs) owned by Sash Investment Holdings, an entity owned by Hopkins who has been or is the director of 46 companies since 2014.
Many investors were referred to third parties to establish self-managed superannuation funds in order to invest in the schemes.
The court found that many of the 217 investors in the schemes were inexperienced in investing and believed that the funds they had invested were secure and that returns would be significant.
Proposed developments were in the Brisbane suburbs of Hamilton, Clayfield and Kangaroo Point, Melbourne suburbs including Brighton, Beaumaris, Elwood, Windsor, Prahran, South Yarra and Kew, in addition to properties in Byron Bay and the Adelaide suburb of Camden Park.
The ruling by Justice Beach represents the first time that a court has ordered a pecuniary penalty against an individual for a contravention of section 601ED of the Corporations Act, which requires registration of a managed investment scheme under certain conditions.
"Mr Hopkins had a central role as the founder, designer and operator of the unregistered schemes, including advising individuals to invest their personal savings by setting up a SMSF to invest in a scheme," Justice Beach said.
It is also the third-highest civil penalty ordered against an individual in relation to a proceeding commenced by he Australian Securities and Investments Commission (ASIC).
"ASIC recently announced unscrupulous property investment schemes as a key enforcement priority," ASIC deputy chair Sarah Court said.
"ASIC is concerned about consumers being enticed to invest in high-risk property development schemes, particularly where they are advised to set up self-managed superannuation funds to make the investment.
"Mr Hopkins and the A Team Property Group failed to hold a financial services licence and operated 11 unregistered managed investment schemes. This ultimately resulted in very significant losses for investors."
Anthony Connelly, Robert Smith and Katherine Sozou, of McGrathNicol, have been appointed as liquidators of TATPG and several affiliated schemes and trusts, while David Vasudevan and Timothy Bradd, of Pitcher Partners, were appointed as liquidators to one particular scheme centred on a proposed development on River Terrace in Brisbane's Kangaroo Point.
"Indeed, it is appropriate that orders be made for the winding up of the schemes given the extent and seriousness of the contraventions, Mr Hopkins’ conduct and involvement in the contraventions and in controlling the schemes, the extent of investor losses, the absence of the prospect of a return to investors in several of the schemes, the desirability of an independent person being in control of any recovery process, and relatedly, the conceptual problems that would arise if finalisation of the schemes were to be effected by those presently in control of them, which would likely produce further statutory breaches," Justice Beach said.
"And clearly, the public interest in preserving the integrity of the system of investor protection justifies that the current schemes be wound up, and justifies having independent persons with suitable qualifications and the ability to investigate the affairs of the current schemes perform the task of winding up."
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