Factual Background
4 On 23 June 2016, ASIC commenced a formal investigation pursuant to s 13 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) into suspected contraventions of the Corporations Act, the ASIC Act and the Criminal Code (WA) from 1 January 2011 onward. The focus of the investigation was on fundraising, disclosures, dealings and representations made in relation to the Newman Estate project and any other related property developments by Ms Desiree Veronica Macpherson and various companies associated with Ms Macpherson, including the defendants.
5 The evidence obtained by ASIC during the investigation to date has revealed the following:
(1) Ms Macpherson has caused approximately 251 companies, including the defendants, to be incorporated in Australia;
(2) under the control of Ms Macpherson a number of those companies, including the defendants and numerous corporate special purpose vehicles (SPVs), operated together to run a real estate and property development business under the banner of the "Macro" brand (Macro Group) from premises at Suite 3, 931 Albany Highway, East Victoria Park (East Victoria Park premises);
(3) Lot 511, Great Northern Highway, Newman (Newman Estate) was acquired by 511 GTN Pty Ltd (Receivers & Managers Appointed) (In Liquidation) (511GTN) for $11 million in early 2012;
(4) from late 2011, by various means, 511GTN, Macro Realty Developments Pty Ltd (In Liquidation) and other companies associated with Ms MacPherson, including a Singapore based company, Macro Realty Developments Pte Ltd (Macro Singapore), raised funds from senior lenders and private investors for the purposes of acquiring and developing all or part of the Newman Estate;
(5) the funds borrowed by 511GTN for the purposes of developing the Newman Estate included $35,420,000 borrowed on or about 16 January 2014 from a company associated with a Hong Kong based hedge fund known as Pacific Alliance Group (PAG) at an interest rate of 27.5% per annum (PAG Facility);
(6) the PAG facility was secured by a first ranking security over all of the assets of 511GTN and a first ranking mortgage over the Newman Estate granted to an Australian registered foreign company which is the security trustee and agent under the PAG Facility, Prominent Investment Holding (Australia) Ltd;
(7) subdivision of the Newman Estate was completed by 511GTN, and separate titles in respect of the 244 subdivided lots which now make up the Newman Estate were issued by the Western Australian Land Information Authority (Landgate) on 16 April 2015;
(8) in addition to raising funds for the purposes of developing the Newman Estate, numerous other companies and SPVs within the Macro Group, controlled by Ms Macpherson, have borrowed additional funds from predominantly overseas investors, ostensibly for the purposes of:
(a) the purchase of lots in the Newman Estate from 511GTN and their subsequent development;
(b) the purchase of lots in the Kurra Estate (another subdivision project in Newman, Western Australia) and their subsequent development; and
(c) the purchase and development of other property in the Pilbara region of Western Australia;
(9) during the period 30 July 2014 to 29 March 2016, approximately 170910 predominantly overseas based investors lent $109,818,103 to companies within the Macro Group, at interest rates varying from 11% per annum to 36% per annum;
(10) Macro Developments operated as the central "bank" or "treasury" company within the Macro Group and substantially all of the $109,818,103 borrowed from private investors was eventually transferred to an Australian bank account in the name of Macro Developments;
(11) the funds pooled in the bank account of Macro Developments were used to pay substantially all of the expenses of the Macro Group (except those of 511GTN) including payments of interest and repayments of principal to private lenders, regardless of the particular entity within the Macro Group to which the relevant private loan was originally made;
(12) interest payments in respect of the private investor loans were made on a reasonably consistent basis by Macro Developments during the period July 2014 to March 2016;
(13) during that same period, the companies within the Macro Group generated very little by way of operating income or income from property development or sales;
(14) the result was that almost all of the expenses of the Macro Group, including interest payments to the initial private investors, were paid using income derived from later private investors rather than from profits generated by any property development scheme or other business being operated by any of the companies within the Macro Group;
(15) in or about March 2016, the inflow of income from new loans from private investors was no longer sufficient to meet the Macro Group's ongoing financial obligations to existing investors in respect of interest payments and the repayment of principal, with the result that the Macro Group:
(a) ceased making interest payments to investors in respect of the loans made by them to companies within the Macro Group;
(b) ceased making principal repayments to investors in respect of the loans made by them to companies within the Macro Group; and
(c) ceased making payments to most of the trade creditors of the Macro Group;
(16) 511GTN also defaulted on its obligations under the PAG Facility, with the result that on or about 14 July 2016, Prominent appointed Ian Francis and Michael Ryan of FTI Consulting (Receivers) as joint receivers and managers of the fifth defendant;
(17) in or about June 2016, the companies within the Macro Group terminated the services of their remaining employees and contractors and vacated the East Victoria Park premises;
(18) Bankwest, the first mortgagee in respect of the East Victoria Park premises, foreclosed on its mortgage and sold the East Victoria Park premises; and
(19) on 30 May 2017, by orders made in this Court in proceeding WAD 73 of 2017, Macro Developments, 511GTN and four other companies within the Macro Group were wound up on the ground that it was just and equitable.
6 In respect of the fundraising activities of the companies within the Macro Group, the evidence obtained by ASIC during the investigation to date has led Mr Bertram to believe that certain materials provided to potential investors by Macro Developments and/or Macro Singapore for the purposes of fundraising in September 2014 contained statements which were misleading and deceptive or likely to mislead or deceive potential investors.
7 The evidence obtained by ASIC during the investigation with respect to the financial position and conduct of the defendants may be summarised as follows.
8 Each of the first to sixth defendants is an SPV company within the Macro Group controlled by Ms Macpherson, which is the registered proprietor of one or more lots in the Kurra Estate or Newman Estate.
9 The evidence indicates that those lots were acquired by them using money borrowed:
in the case of the first to fourth and sixth defendants, from Macro Developments; and
in the case of the fifth defendant, directly from private investors.
10 In respect of land which was acquired by the first to fourth and sixth defendants using money borrowed from Macro Developments, it may be inferred that such money was, in whole or in part, originally lent to companies within the Macro Group by private investors, before eventually transferred to Macro Developments as set out above.
11 The accounts of the first to sixth defendants indicate that in the period 1 July 2015 to 31 March 2016 each of them had no income and a deficiency of assets against liabilities.
12 Each of the first to sixth defendants has failed to comply with:
its obligation to keep written records that correctly record and explain its transactions and financial position and performance, contrary to s 286(1)(a) of the Corporations Act;
its obligation to keep written records that would enable true and fair financial statements to be prepared and audited, contrary to s 286(1)(b) of the Corporations Act; and
a requirement to produce books and records made under s 30 of the ASIC Act, contrary to s 63 of the ASIC Act.
13 Each of the second and third defendants has failed to comply with its obligation to have a registered office in this jurisdiction, contrary to s 142(1) of the Corporations Act.
14 Each of the seventh to twelfth defendants is an SPV company within the Macro Group controlled by Ms Macpherson, which is not the registered proprietor of any land in the Kurra Estate or Newman Estate.
15 Notwithstanding that those defendants are not the owner of any land, the evidence indicates that each of them has borrowed money directly from private investors, which money has not been repaid.
16 The accounts of the seventh, eighth, tenth and twelfth defendants indicate that in the period 1 July 2015 to 31 March 2016 each of them had no income and had a deficiency of assets against liabilities.
17 The ninth and eleventh defendants do not appear to have maintained accounts.
18 To the extent that the assets of the seventh, eighth, tenth and twelfth defendants consist of intercompany loans to Macro Development, those assets are almost certainly of no value as the liquidator of Macros Development has deposed that it is unlikely that there will be any meaningful return to unsecured creditors in the winding up of Macro Developments.
19 Each of the seventh to twelfth defendants has failed to comply with:
its obligation to keep written records that correctly record and explain its transactions and financial position and performance, contrary to s 286(1)(a) of the Corporations Act; and
its obligation to keep written records that would enable true and fair financial statements to be prepared and audited, contrary to s 286(1)(b) of the Corporations Act.
20 Each of the eighth to twelfth defendants has failed to comply with a requirement to produce books and records made under section 30 of the ASIC Act, contrary to s 63 of the ASIC Act.
21 Each of the seventh to twelfth defendants has failed to comply with its obligation to have a registered office in this jurisdiction, contrary to s 142(1) of the Corporations Act.
22 Each of the thirteenth to fifteenth defendants is an SPV company within the Macro Group controlled by Ms Macpherson, which is not the registered proprietor of any land in the Kurra Estate or Newman Estate and which does not appear to have borrowed money directly from private investors.
23 Each of the thirteenth to fifteenth defendants has failed to comply with:
its obligation to keep written records that correctly record and explain its transactions and financial position and performance, contrary to s 286(1)(a) of the Corporations Act;
its obligation to keep written records that would enable true and fair financial statements to be prepared and audited, contrary to s 286(1)(b) of the Corporations Act; and
the requirement to produce books and records under s 30 of the ASIC Act, contrary to s 63 of the ASIC Act.
24 Each of the thirteenth and fifteenth defendants has failed to comply with its obligation to have a registered office in this jurisdiction, contrary to s 142(1) of the Corporations Act.
25 The sixteenth defendant is a company within the Macro Group controlled by Ms Macpherson, which is the registered proprietor of the property at 5 Edkins Place, South Hedland.
26 The sixteenth defendant's accounts indicate that in the period 1 July 2015 to 31 March 2016 the sixteenth defendant made a net loss of $24,052 and had a total deficiency of assets against liabilities of $1,222,613 as at 31 March 2016.
27 The seventeenth defendant is a company within the Macro Group, of which Ms Macpherson is a director, along with Mr Darin Jinks. It is, or was, the registered proprietor of 12 units at 2 McKay Street, Port Hedland.
28 The seventeenth defendant's accounts indicate that in the period 1 July 2015 to 31 March 2016 the seventeenth defendant made a net loss of $17,157 and had a total deficiency of assets against liabilities of $2,982,320 as at 31 March 2016.
29 Two controllers have been appointed to the seventeenth defendant pursuant to registered mortgages with respect to one of more of the lots owned, or formerly owned, by the seventeenth defendant at 2 McKay Street, Port Hedland.
30 The eighteenth defendant is a company within the Macro Group controlled by Ms Macpherson.
31 The eighteenth defendant's accounts indicate that in the period 1 July 2015 to 31 March 2016 the eighteenth defendant made a net loss of $2,266,640 and had a total deficiency of assets against liabilities of $4,551,021 as at 31 March 2016.
32 The nineteenth defendant is a company within the Macro Group controlled by Ms Macpherson and Mr Macpherson, which, until 6 February 2017, was the registered proprietor of the property at 49A Sutherland Street, Port Hedland.
33 On the sale of the property at 49A Sutherland Street by the nineteenth defendant, all of the proceeds of sale were paid to Westpac Bank.
34 The nineteenth defendant's accounts indicate that in the period 1 July 2015 to 31 March 2016 the nineteenth defendant had no income or expenses and had a total deficiency of assets against liabilities of $9,435 as at 31 March 2016.
35 Each of the sixteenth to nineteenth defendants has failed to comply with:
its obligation to keep written records that correctly record and explain its transactions and financial position and performance, contrary to s 286(1)(a) of the Corporations Act;
its obligation to keep written records that would enable true and fair financial statements to be prepared and audited, contrary to s 286(1)(b) of the Corporations Act; and
the requirement to produce books and records under s 30 of the ASIC Act, contrary to s 63 of the ASIC Act.
36 The sixteenth defendant has failed to comply with its obligation to have a registered office in this jurisdiction, contrary to s 142(1) of the Corporations Act.
37 The financial position of the defendants as summarised above does not make any allowance for:
(1) depreciation expenses;
(2) accrued but unpaid interest liabilities;
(3) withholding tax liability;
(4) fringe benefits tax liability; or
(5) contingent liability arising by reason of the giving of guarantees;
which any of the defendants may have had as at 31 March 2016 as those matters were not recorded in the accounts prepared by the head of finance for the Macro Group.
38 Furthermore, to the extent that the assets of any of the defendants consist of land in the Newman Estate or Kurra Estate recorded in the accounts of those defendants 'at cost', the actual value of that land is likely to be significantly less than the value recorded in those accounts.