LMIM ponzi scheme boss gets away with it in Oz civil court

Published:  2 Jan at 6 PM
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Founder of LM Investment Management Peter Drake has walked free from an Australian federal court after being cleared of wrongdoing.

Charges against Drake were brought by Australia’s Securities and Investments Commission after the April 2013 collapse of what has been described as an ‘elaborate Ponzi scheme’ by advisors to the 1,200 investors robbed of a total of $800 million. The investments are reputed to have been touted across the expat world by commission-hungry independent financial advisors, the majority of whom were working illegally and backed by offshore insurance companies. Most affected were expat investors in Southeast Asia, Hong Kong and the Gulf States.

The Australian regulator’s case rested on proving Drake had used his position to his own advantage, with other directors of the company failing to exercise due diligence in regard to the LM Managed Performance Fund. The specified managed investment fund was unregistered, had around 4,500 investors and had been raising eyebrows and causing heated discussion in the registered financial community for several years before its crash. Drake, now bankrupt, faced possible fines of around 1.2 million dollars as well as a ban on company management, but is now free to do as he likes.

Former charges brought against LMIM directors Eghard van der Hoven and Francene Mulder also failed to stick, and charges against directors Lisa Darcy and Simon Tickner were dropped last September. It’s not yet known how the verdict will affect the possiblity of legal action in the UK courts by British expats who’ve lost their life savings after being persuaded to invest in LM’s Managed Performance Fund. The LM Investor Victim Centre represents around 780 investors, and has been seeking advice from prominent class action lawyers based in the UK.

The mainly retired expat investors hit by the collapse were already angry over the Australian Securities and Investments Commission's decision not to charge Drake over the collapse, preferring to file a civil case. The judgement now made is devastating for all those whose lives have been wrecked in yet another expat financial scandal now believed to be the largest since Madoff.

Source – The Australian, LMIVC,
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