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BFCSA: Angry Letters to JOSH FRYDENBERG re Sterling Collapse # 4

Posted by on in ROYAL COMMISSION INTO ASIC NEGLIGENCE
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03 July 2019

 

Hon. Josh Frydenberg MP

Federal Treasurer P O Box 6022

House of Representatives:  Parliament House CANBERRA  ACT  2600

 

 

Dear Mr Frydenberg

Re: Sterling First Collapse and Neglect of ASIC on Behalf of Australian Consumers

I am writing to you on behalf of my father who was duped into the scam investment of the now defunct Sterling Life Group by way of signing up to a 40-year rental lease (which I found out recently is a sub-lease) on the property he currently resides in Southern River, Western Australia.  My father is 83 years of age and lost his wife, my step-mother, just a few months back.  Therefore, not only is he grieving over the loss of his wife of 30+ years, but on top of that, has now been placed in a massively stressful financial situation which is taking its toll on his health, having total uncertainty, financially and residentially, as to his future.  I SHALL EXPECT YOU TO READ THIS LETTER IN ITS ENTIRETY!

We are now aware that this was yet another FINANCIAL CRISIS which could have been prevented if the Australian Securities and Investment Commission (also known as THE WATCHDOG!!) was actually doing its job and what it was paid to do!!  No doubt, the top brass in ASIC are paid very generous salary packages – and for what?  Doing nothing?  Or perhaps, corruption was the flavour of the day?  Who knows?  What we do know now, is that they certainly weren’t regulating Sterling First or any of the characters who were known to them from previous corporate collapses!

It has come to light that ASIC were well aware of the improprieties of Sterling First and its activities, and were well aware of the cast of characters who were directors of this group, as well as being aware of their colourful past history (Armstrong Jones, Wheeler Grace and Perrucci, etc. from way back in the 1980’s and who then again re-surfaced around the early 2000’s), since as early as 2015!  If ASIC had bothered to take action back then, then those who have been affected by this group of companies would not be in the situations that they now find themselves in.  Many of the retirees who signed up for this scheme have done so in the last couple of years and certainly my father signed up in late 2017 – well after this had been brought to THE WATCHDOG’s attention!  THIS IS TOTAL NEGLIGENCE ON THE PART OF THE WATCHDOG! 

Consumer Protection here in WA alerted ASIC to the possible improprieties of Sterling First and subsidiary companies several years back.  It seems that all ASIC were prepared to do was a little doorknock on a few of the tenants’ homes and ask if everything was ok.  These handful (literally, no more than half a dozen or so) of people were not given any warning that this company and its subsidiaries had been reported for investigation.

Another fact I have since been made aware of, is that all of the companies that came under the Sterling First/Life structure were REGISTERED WITH ASIC!!!  Where is the due diligence of ASIC in allowing these companies to be registered under new structures when the characters involved were known to have been involved in massive collapses in the past which resulted in the loss of millions of dollars?  Many elderly Australians lost all their savings in the past and appears that the only response from the federal regulator was a “Buyer Beware” message and ‘too bad, too sad’ attitude!

I am at a total loss as to why this company was not shut down when these concerns were first raised back in the late 1990’s/early 2000’s!  So, it seems, now there are well over 200 families, who are not only tenants (retirees) who find themselves swindled out of their life-savings and a secure place to live, but also property owners who are now having the stress of not receiving income from their investments and still having to find a way of making mortgage repayments on these properties.  There are others who made investments and have apparently been recouped with “FAKE SHARES”, from what I understand! 

Mr Frydenberg – these are not idiot people who just jump into these decisions and situations on a whim!  They are retired, hard-working Australians, many who have endured the hardships of the second world war and gone on to delay their own self‑gratification and gone without until they could afford some small luxuries of life.  They saved hard so that they could retire comfortably, ensuring that they would have enough savings to feel secure in the latter years of life plus have enough money to cover themselves for whatever healthcare they needed – WITHOUT BEING A BURDEN ON THE GOVERNMENT COFFERS! 

Many of these people involved in this scheme were duped into thinking that they could purchase a lease for 40 years and were sold on a promise of security of residence where they did not need to worry about paying rent, council rates or water rates and that the properties they lived in would be maintained if any maintenance needed doing during the time of their tenancy.  With some of these people who are battling with severe ill health issues and terminal disease, this now is of absolutely NO COMFORT to them during their hours of need!  The criminals of Sterling First had answers for every question and many of those who signed up even sought LEGAL ADVICE, which still did not raise any red flags to alert them to anything else other than this was a legitimate investment and would give them security for the rest of their lives.

There are now a great number of very stressed people and this situation could have been completely avoided if ASIC had been taking action on what it should have been focussed on when these concerns were first raised.   It should be now up to ASIC to compensate all of these people who have been swindled for the full amounts of money each one has invested and property owners should be compensated for the full loss of earnings on their properties, as a result of ASIC’s total incompetency in this matter!

I will give you details of how my father and step-mother were duped into this.

They had a supposed ‘friend’, who I choose not to name at this point in time, who was receiving commissions for selling these leases out.  Interestingly, he did not enter into one of these leases himself and it is now becoming clear that this person was very much involved in the Finance Brokers Scandal back in the early 2000’s.  My step-mother had not been in good health for a long time and my father was around 80 at the time they started to think about down-sizing.  This friend had obviously been promoting these 40-year leases so he could earn himself some commission from the sales, however I wonder now whether he may have been more involved than what he made out!

Unfortunately, my parents have never spoken to myself or my two brothers about any of their financial decisions or circumstances in the past, and therefore we were oblivious to all of this at the time and only became aware of their involvement after they had signed up and handed over their $212,500 to Sterling Life.   As soon as they had advised me they had signed up for a 40-year lease, alarm bells started ringing in my head and I questioned them as to why they would sign up for a 40‑year lease when they are definitely not going to be around for that long, plus other questions as to what happens if you need higher care, no longer able to look after yourselves, do you get your money back if you need to move due to requirement of higher care, etc, etc, etc?  Unfortunately, as they were being sold something from someone whom they considered a ‘friend’, although he was earning a commission, then I think they tended to be too trusting and didn’t ask the questions that needed to be asked.

There is a total lack of paperwork, so I am not exactly sure as to the timing when all the transactions occurred.  They had their name down for one particular property however this didn’t eventuate as they hadn’t sold their house.  Some months later, they did eventually sell their house and had their names down for the property my father currently resides in. 

Now that my step-mother has passed away, I have taken it upon myself to assist my father out in this situation. 

I am astounded and absolutely disgusted that the ASIC-REGISTERED businesses under the banner ‘Sterling First’ have been permitted to operate in the following manner:

1.     That there is no actual signed lease agreement in my father’s possession with the details of this lease.  There is a poorly photocopied Registration Form which is the only signed document I can find.

 

2.     That there is no proper receipt from when he first handed over his money to this company, although there is a letter dated in January 2018 stating that the amount of $212,500 had been invested into SilverLink.

 

3.     My father has never received any statements from the company detailing his investment, showing the deductions of the rental amount and administration fees.  I would have thought that a statement is a mandatory requirement of a financial business who has taken funds for investment and that the investor would be entitled to ongoing statements detailing the deductions of the rental amount, any administration fees, as well as the residual balance of this investment after these costs have been deducted.

 

4.     How is one supposed to complete taxation returns, or apply for other financial assistance, without evidence of where their money has been invested and a current summary of how that investment stands?  Last week, my father and I went into Centrelink to apply for rental assistance, for which I understood, he would qualify for.  They asked for:

a.     A lease/rental agreement – no documentation!

b.    A statement showing his current asset balance with SilverLink – no documentation!

Due to lack of documentation, they said they may be able to draw something up for him but it is unlikely that he would qualify for rental assistance.  The lady at Centrelink has said she will investigate his situation, though, to her credit. 

HE DOES NOT OWN THIS PROPERTY AND HAS HANDED OVER APPROXIMATELY 80% OF HIS SAVINGS WHICH IS TO PAY RENT ON THE PROPERTY HE NOW RESIDES!

 

At every turn, ASIC has been a systemic failure, leaving behind shattered lives, stolen savings and wholesale theft of homes and assets.  Asset-stripping has become a major pastime.  ASIC has always been a weak regulator, but now it has a reputation of protecting the criminals at the expense of consumers.  This cannot be allowed to continue!

So, here we are, in 2019 and this still keeps happening!  Australia now has another group of retirees who have been deliberately targeted and severely affected and impacted by these WHITE COLLAR criminals.  This is simply history repeating itself!  People’s lives have been put on hold as there is no certainty as to how these retirees’ future is going to look.  A significant number of these people are elderly with some serious health issues, and the last thing they need at this point in their lives is the uncertainty that has been created through the total lack of competency and accountability by ASIC to ensure that these concerns were out there in the public arena.  From my understanding, the whole purpose of ASIC is to ensure that companies are legitimately operating within the law and it is now very clear that ASIC were well aware of the red flags against Sterling Life well before many of these people had signed up.

With an ever-increasing number of people transitioning into retirement over the next number of years, coupled with the reduced number of younger working Australians paying taxes, I would have thought that this sector of the population is going to be a massively huge and increasing burden on the economy, particularly if retirees, who would have otherwise be self-funded, get duped into these ‘FAKE SCHEMES’ and then become dependent upon the government for the pension because these WHITE COLLAR CRIMINALS have drained them of their life savings and ALL THE WHILE THE CORPORATE WATCHDOG SITS ON IT’S ASS AND TURNS A BLIND EYE!

I now write to you in anticipation that each of these people who have lost their savings in this WHITE COLLAR CRIME FIASCO be compensated from Federal Treasury/ASIC coffers as compensation for their losses so they can claim their lives back!  All these retirees are wanting is their money back so they can get on with their lives and deal with whatever else is going on for them.

I look forward to your response and advice about how the compensation will be made.  I expect that you will be attending to this matter as an URGENT and CRITICAL priority.

Yours sincerely

 

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