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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Rise of the Vigilante 2007 "ASIC 's lack of will to act against the Perpetrators."

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Rise of the vigilante

John Collett SMH
May 2, 2007
Tracked down ... Kovelan Bangaru.

Tracked down ... Kovelan Bangaru.
Photo: Rob Homer


Fed up with the Australian Securities and Investments Commission's inaction, investors who lost their life savings in collapsed investment schemes are taking matters into their own hands.

Having had their patience tested to breaking point, they are now tracking down promoters of failed schemes to their overseas hideaways and serving them with legal claims.

Katya Barnes and her husband lost $160,000 with the property developer Streetwise, which collapsed in 2005 with more than $60 million in losses. Streetwise's founder, Kovelan Bangaru, fled to the United States soon after the collapse, after the regulator failed to freeze his passport.

The Barneses went to California and, with the help of a private investigator, located Bangaru. He has since been arrested and is awaiting extradition back to Australia.

In another example of investors taking matters into their own hands, a group of investors tracked down and served legal notices on Gabrial Pennicott, formerly of Melbourne, who had fled to Canada after the $20 million collapse of his IBP Capital "wealth creation" business. Pennicott was a former business associate of property spruiker Henry Kaye.

Consumer advocate Denise Brailey, who now works for litigation funder IMF, says she warned ASIC about Pennicott's IBP Capital and about Streetwise years before they collapsed.

"People need to understand from the very beginning that they cannot expect too much from the federal regulator," Brailey says. In her opinion, the law is adequate to deal with deceptive and misleading behaviour but there is a lack of will on the part of the regulator.

The rise of the investor vigilante is the inevitable outcome of a system that is failing investors.

The property boom created an unprecedented opportunity for promoters to take advantage of people with dreams of being self-sufficient in retirement.

The emergence of companies whose business is to fund class actions is helping to make the pursuit of civil actions through the courts possible.

Litigation funder IMF has initiated legal proceedings against four financial planning firms who advised their clients to invest in the property developer Westpoint, which collapsed at the end of 2005, owing more than $300 million to small investors.

IMF underwrites the court costs and takes a percentage of the plaintiffs' winnings. But it is only worth IMF's while to take on cases where the sum being pursued is large and there is money to be recovered. That leaves most of the victims of promoters' misleading and deceptive conduct, or fraud, with nowhere to turn.

"It is galling to think that from the criminal point of view very little will be done but it is even more galling that there is virtually no chance of recovery when the regulator allows the culprits to fly out of the country," Brailey says.

"That stymies the liquidators' job of trying to recover the money."

Promoters who flee offshore stand a good chance of never having to face justice. Because of the expense involved in locating them and bringing them back, the litigation funders, the liquidators and ASIC are unlikely to chase them. That means the only way investors stand a chance of getting some of their money back is to locate the promoters themselves.

In Brailey's opinion, many of those promoters who are now overseas posed clear flight risks, but she says ASIC should be doing more to identify such risks and be more active in applying to the courts for their passports to be taken from them.

Investors feel isolated and find it difficult to organise and, because of privacy laws, ASIC refuses to inform victims of the contact details of their fellow victims.

Brailey says investors have been active in monitoring the activities of promoters. One victim noticed a promoter had his furniture loaded onto a truck and taken to a container terminal. The victim had to tip off the police that the promoter was on the move. Investors really are on their own.


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