Court shuttered Lion Property Group fearing directors were luring more hapless 'investors'

The alleged misconduct of the two directors of the failed $120 million Lion Property Group — handed to police in a confidential report — was so serious it alone justified the appointment of liquidators, a court has ruled.

The Victorian Supreme Court has found Lion directors John Sader and Garry Pesochinsky either had “no insight” into the difficulties facing the group, or they had “deliberately avoided facing them” before the court.

Delivering the reasons behind her earlier orders that Lion Group be wound up, Justice Patricia Matthews said, aside from the fact Lion was “acutely insolvent”, she had “no confidence” the group would be “managed appropriately” had Mr Sader and Mr Pesochinsky remained in charge.

 “There is a serious concern that the Group would continue to be operated in the manner it has been,” Justice Matthews said.

“This would not only prejudice current investors, but it would mean that new investors may suffer the same fate.”

The court found Lion was illegally operating as an unlicensed “managed investment scheme” — and has sided with investors, who claimed it was operating as a Ponzi scheme, with money from new investors used to pay ‘returns’ to existing investors.

“The Group Scheme is an unregistered managed investment scheme operated in contravention of the Act,” Justice Matthews said.

At the heart of the matter moving forward is a confidential report liquidators KPMG have given to the court, which contains allegations of further serious wrongdoing by Mr Sader and Mr Pesochinsky. That confidential report has been handed to Victoria Police.

Justice Matthews said the those matters required further investigation.

“There are other matters concerning other allegations in the Confidential Report that I am not in a position to describe, including matters concerning the conduct of the directors,” Justice Matthews said.

“Having reviewed that material, it is apparent that many of these matters require further investigation and which themselves justify the appointment of liquidators.”

Victoria Police told Australian Property Investment Magazine the Lion matter was currently being looked into by specialist investigators.

“This matter is currently under assessment by the Financial Crime Squad,” spokeswoman and Acting Sergeant Emma Faliszewski said.

“As such, it would be inappropriate to comment further at this time.”

Stressed victim fears the guilty walk away

Lion Property Group had raised $122.2 million from around 600 investors since 2018, promising to deliver investment returns by developing luxury property projects in Melbourne, Brisbane and the Gold Coast.

The troubles facing the group were exclusively revealed by this publication in May, including that a group of investors had launched legal action to wind it up.

The group had 18 special purpose vehicles (SPVs), each tied to an individual project, however, the court found the group engaged in “intermingling” of funds.

Millions of dollars appeared to be unaccounted for, including funds transferred to other related companies, in contravention of investment terms.

Lion investor Margie Lacey on Wednesday (24 September) told API Magazine she had invested $100,000 in the group in June last year.

She was devastated to find out that the court had determined the group was in trouble but was “still sucking investors in with lies”.

Ms Lacey said she had invested in Lion’s Eden project, in the inner Brisbane suburb of New Farm.

“Now it’s all in liquidation and for myself it looks like it’s all lost, and that those responsible for the stress and illness brought on by this collapse are just walking away.”

Another victim of Lion's undelivered promises was Victorian investor Andrew Lim, who has yet to see any return on his $150,000.

“I sold two of my investment properties and I invested the profit via 28 Peerless Avenue Pty Ltd (Mermaid Beach, QLD) under LPG’s standard Investment Agreement—Class A redeemable preference shares with 12 per cent p.a. monthly distributions and a buy-back at project completion.

“KPMG’s provisional liquidators’ (redacted) report to the Court outlines a pattern where investor funds across SPVs appear to have been swept into LPG and then on-paid elsewhere—contrary to marketing representations that monies from one project wouldn’t be used in others—alongside large related-party movements and fees, with construction halting across projects in 2024.”

Lion continued advertising when broke

The findings of the court — particularly that Lion was operating an unlicensed managed investment scheme — are a major blow to corporate regulator the Australian Securities and Investments Commission (ASIC).

The court action was launched by a group of investors themselves, after ASIC failed to take any meaningful action, despite earlier reviewing concerns raised by Lion investors.

ASIC has been approached for comment by API Magazine.

Justice Matthews said the fact that Lion Property Group continued to advertise for investors via an active website, well after provisional liquidators had been appointed, further supported the case for ordering the winding up of the group.

Searches show Lion’s website has since been taken down, yet its social media profiles on Facebook, YouTube, LinkedIn and Instagram all remain in place.

Lion’s LinkedIn profile currently states: “Lion Property Group is an international property development business offering savvy investors an easy, low-risk way to invest in property developments to diversify their portfolio, create wealth, and get up to 16 per cent p.a. returns”.

Justice Matthews said Mr Sader had told KPMG both he and Mr Pesochinsky had obtained other employment, but gave no further information.

As liquidators, KPMG will issue a report to creditors by 6 November 2025, which will also be shared with investors. The report will include details such as the estimated assets and liabilities of the Group; actions taken to date and further inquiries planned as part of the liquidation process; the circumstances leading to the appointment of liquidators; an assessment of the likelihood of creditors receiving any dividend; and any potential recovery actions to pursue outstanding amounts owed to the Group.

Mr Sader and Mr Pesochinsky have not responded to repeated requests for comment from API Magazine.

Neither man has been charged with any offence.

In her findings, Justice Matthews cited the Eden project, into which liquidators KPMG said investors had contributed $11.3 million, and which Lion had used to obtain $2.08 million in loans from secured creditors.

The project had planning approval, but construction had not been started.

The property acquisition costs were $3.9 million and $1.7 million was paid out in monthly investor returns, with $235,000 in other net expenses.

“On that basis there should be around $7.4 million of investor and secured creditor funds sitting in that project,” Justice Matthews said.

Instead, the project had just $133 remaining cash “as per the general ledger”.

Company records indicated that $6.8 million had been transferred to the main Lion entity, Lion Property Group, and a further $595,000 had been transferred to another associated entity, LPG Capital Advisory.

Additional reporting by Craig Francis