Property spruiker Jamie McIntyre has agreed to hand in his passport as the corporate regulator begins legal action to permanently restrain him from promoting several land-banking schemes, which the Australian Securities & Investments Commission claims are unregistered managed investment schemes.
Mr McIntyre took to his self-published newspaper, the Australian National Review, to claim that ASIC was engaging in a witch hunt, demanding the resignation of the regulator’s chairman, Greg Medcraft, and the establishment of a royal commission into the issue.
According to an affidavit lodged with the Federal Court, ASIC had been investigating five land-banking schemes, promoted by Mr McIntyre and his associates, since January. The regulator took action after becoming concerned that the promoters of the scheme may have been insolvent, according to the court documents.
The high-flying Mr McIntyre, who once paid for Arnold Schwarzenegger to front one of his investment seminars, may have obtained some $5.5 million from 108 investors as part of the land-banking schemes, it is alleged.
His company, 21st Century Property, “has loaned monies to related entities including $3.6m to Pinnacle Event Management and $1.3m to 21st Century Education and those companies do not appear to be viable as going concerns”, ASIC investigator Andrew Price wrote in an affidavit.
ASIC also contended, court documents show, that the developments are “incapable” of being completed because the underlying land was either not yet owned by Mr McIntyre or financed by way of mortgage, and the relevant planning authorities had stated the land for each planned development was “highly unlikely” to be rezoned for residential use in the foreseeable future.
Mr McIntyre, through 21st Century Property, promoted at least five schemes including Botanica, Secret Valley Estate, Oak Valley Lakes Estate, Melbourne Grove Estate, and Bendigo Vineyard Estate.
A sixth scheme, known as Heritage Bendigo, collapsed in July, with the administrators, PPB Advisory, advising the first meeting of creditors that no company books or records had been provided and the directors’ notice of affairs “was essentially blank and did not provide any information”.
A spokeswoman for 21st Century said ASIC’s behaviour was “designed deliberately to cause maximum losses to option holders in these projects to try and frame Mr McIntyre”.
“It’s very clear ASIC is trying to target Mr McIntyre and intimidate him over his outspoken exposure and criticism of the ASIC for many years,” she said.
“However, someone has to stand up for the average investor against ASIC’s appalling tactics to cause everyday people losses simply to try and frame its targets.”
The schemes operate through land “options”, where investors pay a down payment on one block of a future development, and later pay an additional amount to cover the rest of the purchase price. 21st Century claims that by the time it is developed, the value of the property will have risen, creating a windfall gain for the investor.
But in most cases, the land in question is zoned for farming use, with no plans for rezoning. The Australian can reveal the land used for the Bendigo Vineyard Estate project, which was promoted as an integrated resort and house development, was purchased for $1.5m in June 2014. The land, according to court documents, is the security of a $985,000 loan.
A City of Greater Bendigo spokesman told The Australian: “The land in question would have to be rezoned first before any large subdivision could be sought and I’m advised that the likelihood of that happening in the next 20 years is almost zero.”
Despite that, there are 66 investors who have put about $3m into the scheme. Despite this, at the start of July there was less than $80,000 across two Bendigo Vineyard Estate bank accounts.
If all lots, more than 500, had been sold, the promoters would have stood to gain more than $70m without any construction or development taking place.
The 21st Century spokeswoman said plans to develop the project were long-term, and “it was going exactly according to plan”.
“Even if we failed for the next 20 years to rezone it, option holders are still completely protected as they have a default charge over the land asset and 100 per cent money back guarantee,” she said.
This article first appeared in The Australian Business Review.