Investors face $145 million in losses as ISG Fund Management folds amid fraud allegations

Liquidators for a failed $145 million Brisbane funds management company — which had been trading while insolvent for over a year — have discovered the “destruction of books and records” and cases of “falsifying documentation”.

Olvera Advisors have been appointed liquidators to ISG Fund Management and its two schemes, the ISG Real Estate Equity Fund and the ISG Private Access Fund, as well as at least 24 other connected companies.

The entities — which collectively owe around 1,600 investors about $145 million —have been placed in liquidation in various stages over the past year, according to corporate filings.

In a notice to creditors, liquidators Olvera said they had alerted corporate regulator the Australian Securities and Investments Commission (ASIC) after discovering the alleged fraud.

“In…our Receivers’ Report, we outlined the limitations of books and records received,” the liquidator wrote.

“Since the Receivers’ Report we identified instances of destruction of books and records and falsifying documentation.

“We have notified ASIC of these incidents,” it states.

The group had raised “approximately $145 million” from investors since 2019.

No one has yet explained where the money went.

- Geoff Goldab, ISG investor

According to its since-deleted website, ISG Fund Management was founded in 2014 by its director Ben Godfrey and invested in “medium to large property projects and small-to-medium sized businesses”.

“As trusted custodians of our customers’ money we seek out lucrative business opportunities in which to invest, from medium to large property projects with strong fundamentals in quality locations, to small-to-medium sized businesses with strong prospects and a history of solid performance,” it states.

“Opening up high performing private sector investment opportunities to all investors was the vision of Ben Godfrey and Maree Hawcroft when they founded the organisation 2014.

“Our team has since grown to include a team of specialist financial professionals, each bringing a wealth of knowledge and decades of experience from leading Australian and overseas financial institutions,” the deleted website states.

Olvera Advisors said ISG had likely been insolvent since 2022, when ASIC revoked its Australian Financial Services Licence over it having failed to file required company documents.

“Our preliminary view is that the Companies were likely insolvent on or around 22 September 2022, being the date the Companies lost access to funding from the Schemes,” the liquidators stated.

At time of publication, ASIC was yet to respond to a series of questions put to it by Australian Property Investor Magazine. Attempts to contact Godfrey and Hawcroft were unsuccessful.

ISG investor Geoff Goldab said he had invested his and his late mother’s superannuation in the group.

It had offered “highly attractive” returns of 20 per cent, with the funds to be lent to property developers.

“I invested my super and my late mother’s super and personal money starting in September 2019 in various schemes,” Mr Goldab told Australian Property Investor Magazine.

“The supposed 20 per cent returns were highly attractive and the projects being in property gave us assurance.

“We were told our invested money was secured against the assets,” he said.

Investigations show ISG spruiked its ISG Real Estate Equity Fund as giving investors “access to property projects in strategic, high growth locations”.

“We directly invest in a range of property assets, including many property development projects located in strategic, high growth areas,” its since-deleted website states.

“Our team has extensive experience investing in this asset class and offers special insights and know-how into its analysis and management.

“You can invest with us and benefit from our team’s specialised private real estate experience, via the ISG Real Estate Equity Fund,” it stated.

Investor pessimistic about refund prospects

The group advertised its ISG Private Access Fund to “those looking to access unlisted investments with low volatility, managed risk and solid returns”.

“As the sole owner of our financial services licence, we are directly responsible for its proper management and maintenance, which means our customers can be confident we always have their best interests at heart,” its deleted website stated.

Olvera Advisors and liquidator Tony Wright have been approached for comment.

In a report to creditors, the liquidators said they were close to obtaining funding from ASIC to conduct “examinations” of ISG’s directors and further investigations.

According to its since-deleted website, founder Mr Godfrey was a “trusted and dynamic Executive Director, Non-Executive Director, Investment Director and Responsible Manager”.

“Ben has helped private companies achieve unprecedented growth in the financial services, property, technology and medical/health industries,” it stated.

“Ben has deep experience in the funds management industry, currently managing a multitude of wholesale and retail funds within the regulatory environment of an AFS Licence”.

Mr Goldab said he didn’t expect to recover much, if any, of his money.

“I doubt any significant funds will be recovered. No one has yet explained where the money went,” he said

“Hopefully the truth comes out one day and Olvera are able to reveal what has transpired and if there is evidence of corporate crime, those responsible (ISG directors) are punished accordingly.”

The plight of the ISG group of companies emerges as Lion Property Group facing ongoing legal action over its misuse of investors’ investment funds, as has been exclusively reported on by Australian Property Investor Magazine in a series of articles.