Lion Property Group founders declared bankrupt as pressure mounts on ASIC over collapse

The directors of failed $122.5 million Lion Property Group, Garry Pesochinsky and John Sader, have both been declared personally bankrupt.

Filings with the bankruptcy register show shows Garry Pesochinsky, 48, was registered as a bankrupt on 27 April; and John Sader, 46, was declared bankrupt on 10 March.

The filings with the National Personal Insolvency Index show Andrew Yeo, a partner of Pitcher Partners, has been appointed “registered trustee in bankruptcy” to Mr Sader.

“This individual is an undischarged bankrupt,” the filing states.

The government register does not state who instigated the bankruptcy proceedings against Mr Sader and Mr Pesochinsky.

The revelations come amid mounting public anger over a perceived lack of action by regulators over the collapse of Lion, which had around 600 investors.

It is almost 10 months since liquidators KPMG issued a preliminary report on Lion, detailing allegations of serious wrongdoing and criminality involving the company. 

Last week in Federal Parliament, One Nation MP Barnaby Joyce attacked corporate regulator the Australian Securities and Investments Commission (ASIC) over its handling of the affair.

“Yet again I have a meeting with people who have had their money stolen. Lion Property Group has 400 victims, $250 million has gone,” he told parliament.

“The Albanese Government, under (then) Assistant Treasurer Steven Jones, said the system had to prevent collapses, malfeasance, mis-selling and catastrophic consumer losses.

 “Well you haven’t done that,” Mr Joyce said.

He also pointed to failed superannuation funds First Guardian and Shield Master Funds.

“What is going on? Who is looking after them (investors)?” Mr Joyce said.

“No answers have been given and if they can’t do the job, hand (it) over to me and I’ll do it for them”.

ASIC investigations continue

As previously revealed by Australian Property Investor Magazine, Mr Sader was previously named John Brunton, and had operated as a “life coach” and “hypnotherapist” between 2014 and 2017, before creating Lion in 2018.

In an explosive report to creditors late last year, liquidators KPMG said more than $25 million had been moved outside Lion before its collapse, with the funds moved to other entities linked to Lion’s directors.

The report identified a wide range of serious alleged legal breaches by Mr Pesochinsky and Mr Sader.

“The related party transfers relate to payments made to entities outside of the Group with similar directors to Group entities,” wrote liquidator Sarah Emily Seeckts.

The alleged illegality includes misleading or deceptive conduct; unconscionable conduct; dishonest conduct; and of improperly using a position to gain advantages for themselves or another.

Neither Mr Pesochinsky nor Mr Sader has been charged with any offence. Both men have repeatedly failed to respond to requests for comment.

In May last year API Magazine exclusively revealed the troubles facing Lion Property Group, including that a group of embattled investors had launched legal action, after ASIC failed to act.

In October last year API revealed ASIC was officially “investigating” Lion.

The corporate regulator subsequently posted to its website a section on Lion, which states it launched an investigation in September last year, but contains very little other information.

As previously reported, ASIC investigated Lion in 2020 but took no substantial action.

An ASIC spokesman told API Magazine its investigation remained ongoing.

“We have previously confirmed that ASIC has commenced an investigation into this matter,” the spokesman said. 

“While the matter is under investigation, we’ll decline to provide further comment.”

It is more than nine months since a confidential provisional liquidator’s report from KPMG detailing serious alleged wrongdoing by Mr Pesochinsky and Mr Sader was handed to Victoria Police.

Victoria Police is yet to confirm whether it is investigating, stating only that the matter had been handed to its Financial Crime Squad and was “under assessment” for potential investigation.

Victoria Police did not respond to a request for comment.

KPMG lacks funds to dig deeper

The Melbourne-based Lion spruiked 18 property developments in Melbourne, Brisbane and the Gold Coast, citing “targeted returns” as high as 65 per cent over three years.

KPMG filed its liquidators’ report with ASIC on 6 November.

It stated there had been “material co-mingling of funds within the group’s entities”.

KPMG said its forensic investigations had identified 14 external “related party” entities where Lion funds had been shifted before the collapse.

One of the entities, “LPG Property Developments”, received $6.89 million in net cash payments from Lion Property Group, the KPMG report states.

Another external entity, FCFS, received net cash payments of $5.02 million.

Further, more than $6 million had been moved to five entities (since deregistered) that had been part of an earlier property development company Mr Pesochinsky and Mr Sader ran before creating Lion 2018.

According to KPMG, the Mr Pesochinsky and Mr Sader created Lion from assets of that development company, Investments Squared, which had raised around $30 million from investors.

In its report, KPMG reiterated that it was “unfunded”, and so hamstrung as to the extent of the investigations it could undertake.