Lion investors furious as police refer $122 million collapse back to ASIC

Victoria Police will take no action over the failed $122 million Lion Property Group despite being given a secret dossier containing allegations of serious illegality, and have instead handed the matter back to the beleaguered corporate regulator.

That refusal is also despite explosive public findings by liquidators KPMG that, before its collapse, more than $25 million dollars was shifted from Lion to entities controlled by its directors Gary Pesochinsky and John Sader.

The failure of police to take action has outraged investors, who were forced to take action themselves to have Lion wound up, after corporate regulator the Australian Securities and Investments Commission (ASIC) refused to act.

Victoria Police’s Media Manager for Crime and Counter Terrorism Investigation Services, Natalie Webster, told Australian Property Investor Magazine the matter had gone to ASIC.

“Detectives from the Financial Crime Squad have completed a review into this matter and it has subsequently been referred to ASIC,” Ms Webster said in a statement.

“As such, all further enquiries should be directed to ASIC.”

After refusing to act, ASIC in September last year — following heavy public criticism — launched an “investigation”, but has refused to comment since.

Lion, which raised $122.5 million from around 600 investors, spruiked 18 property developments in Melbourne, Brisbane and the Gold Coast.

In its first report to creditors, in July last year, KPMG said it had found Lion was operating an unlicensed managed investment scheme; that construction appeared to have ceased on the group’s projects in 2024; and that just $4 million of the $122 million could potentially be recovered.

It found Lion’s offices had been vacated, and supported the claim from investors that Lion had been operating an illegal Ponzi scheme, where returns paid to some investors were in fact funds from new investors.

There was also a confidential version of that same report that contained further allegations so serious Victorian Supreme Court Justice Patricia Matthews said, “they themselves justify the appointment of liquidators”.

The secret version of the report was also given to ASIC. It has not been made public.

Money misappropriated

In early November, KPMG delivered a second bombshell creditors’ report, which contained no redacted component.

The liquidator had discovered that $25.29 million had been shifted before Lion’s collapse, to entities linked to Mr Pesochinsky and Mr Sader.

Its forensic investigations identified 14 “related party” entities outside the Lion group where funds had been shifted, including one entity which had received $6.89m.

A further $5.02 million had been shifted to an entity, which is deregistered, called “FCFS”, while a further $816,071 had gone to Mr Pesochinsky and Mr Sader themselves, KPMG said.

The widespread alleged illegality by the directors that it had discovered included “misleading or deceptive conduct”; “unconscionable conduct”; “dishonest conduct”; and having improperly using a position to “gain advantages for themselves or another”.

The allegations against Mr Sader and Mr Pesochinsky that have been made public are extremely serious, and are substantially beyond those typically associated with large corporate collapses.

Neither man has been charged with any offence. Mr Sader and Mr Pesochinsky have not responded to requests for comment.

Lion investors dismayed at lack of action

Lion investor Andrew Lim, who lost $150,000 in the collapse, said the refusal by police to investigation was “exactly the pattern” that investors had “come to expect”.

“Six months ago Victoria Police were handed a dossier from liquidators containing allegations of serious illegality,” Mr Lim told API Magazine.

“And Victoria Police’s response is it’s not their problem.

“When serious criminal allegations sit unactioned for six months, the message to those who may have perpetrated financial crime is that the system will not pursue them,” Mr Lim said.

Sonja Boric, representing a family member in his late 60s who lost most of his retirement savings in the collapse, said the failure of Victoria Police to take action was a “catastrophic failure of victims’ rights”.

She said victims had been forced to take action themselves after ASIC refused to act, then police had “dragged things on”, with the police refusal to act a “catastrophic failure of victims’ rights”.

“We went to extreme lengths to be well informed about the system and did everything the system told us to do,” Ms Boric told API Magazine.

The troubles facing Lion were exclusively revealed by this publication in May last year, including that a group of investors had launched legal action to wind up the group, after ASIC refused to act.

That action by the investor group, which included Ms Boric, saw the Victorian Supreme Court put Lion in provisional liquidation on 2 July, appointing KPMG.

KPMG provisional liquidator Emily Seeckts delivered the first creditors’ report, along with the “confidential” version of that report, three weeks later, on 24 July.

Her second explosive creditors’ report, detailing the shifting of $25.29 million from Lion to entities controlled by Mr Pesochinsky and Mr Sader, was completed on 6 November.

Justice Matthews, when delivering her findings regarding her decision to place Lion in provisional liquidation on 2 July last year, said the group had been “acutely insolvent”.

“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.”