Scale of failed Lion Property Group's 'Ponzi scheme' unveiled by liquidators, Supreme Court

Melbourne’s failed Lion Property Group, which folded owing $120 million, had “ceased trading activities” before provisional liquidators were appointed and its offices have been “vacated”, the Victorian Supreme Court has heard.

An explosive report provided to the court by provisional liquidators KPMG states construction on the group’s string of projects, in Melbourne, Brisbane and the Gold Coast, “seems to have halted in 2024”.

The report, obtained by Australian Property Investor Magazine, also reveals Lion directors Garry Pesochinsky and John Sader created the group in 2018 from the assets of an earlier property development company they operated, called Investments Squared, which raised around $30 million from investors.

The report spells devastating news for Lion Property Group’s 600-odd investors, many of whom invested their life savings in the group that was allegedly operating as a “Ponzi” scheme.

According to provisional liquidator Emily Seeckts of KPMG, it appears just $4 million of $122 million raised from investors could potentially be recovered.

 That’s before allowing for last minute secured creditors now holding mortgages over the group’s assets — including a lender of last resort with a claim of $440,000.

The Victorian Supreme Court last Friday heard Lion directors and founders Garry Pesochinsky and John Sader had recently taken out a loan from Bizcap, with lawyers for a group of investors warning assets of the company may be at risk if left in control of the pair.

On its website, Bizcap describes itself as “Australia’s most open-minded lender”, which offers “fast and flexible business loans of $5,000 to $5 million without up-front credit checks”.

API Magazine exclusively revealed the troubles facing Lion Property Group in late May, including that a group of embattled investors had launched legal action.

As reported on 28 May, the investors lodged legal wind-up applications against Lion Group and a string of related entities.

In response, the Supreme Court of Victoria appointed a forensic auditor to investigate the group.

Directors ordered to keep away from company money

KPMG were appointed as provisional liquidators to Lion Property Group and 25 related companies on 2 July, after Mr Pesochinsky and Mr Sader failed to provide certain company financial statement and reports. 

The pair allegedly said they were unable to do so because they had no funds, adding that their lawyers were no longer representing them because they couldn’t afford to pay them.

When they appeared in court last Friday, neither Mr Pesochinsky nor Mr Sader were represented by lawyers, and the pair said they were open to pro-bono representation.

The court heard there were an additional 12 companies connected to Lion that were not among the 26 in provisional liquidation.

Justice Matthews issued orders whereby Mr Pesochinsky and Mr Sader agreed they would not deal with any assets of the Lion group of companies until this Friday, when the case is to be heard again.

The men have also been ordered to “forthwith deliver up to the Provisional Liquidators any hard drives and/or servers in their possession”. 

Corporate regulator the Australian Securities and Investments Commission (ASIC) has failed to take any action over the collapse, drawing fierce public scrutiny.

“ASIC notes the appointment on 2 July 2025 of provisional liquidators to Lion Property Group in the Supreme Court proceedings,” an ASIC spokeswoman told API Magazine.

“ASIC will review the report from the provisional liquidators once it is available and consider what action, if any, it might take.”

ASIC claims it investigated Lion in 2020 but took no substantial action.

Using archived internet searches, the provisional liquidator said it had found Lion Property Group was created in 2018 from an entity called Investments Squared, which had raised around $30 million from about 130 investors.

“Before the formation of LPG (Lion Property Group), it appears Mr Pesochinsky and Mr Sader operated and/or were employed by a property development business under the name Investments Squared Pty Ltd,” wrote provisional liquidator Emily Seeckts.

“According to an archived version of the LPG website [retrieved through the Wayback Machine], LPG acquired Investments Squared, which at the time of the acquisition reportedly had approximately 130 active investors, circa $30 million in managed funds and 13 property developments in progress,” it states.

Ponzi scheme accusations

Lawyers for the investors have argued Lion was operating as an unlicensed managed investment scheme, or schemes, which Lion’s directors have denied. It is illegal to operate an unlicensed managed investment scheme, an area that ASIC responsible for policing.

The KPMG report sides with the investors.

“From the Provisional Liquidator’s investigation there are grounds to determine that the Group was operating as a MIS (managed investment scheme),” writes Ms Seeckts.

The report also supports claims from the investors in court that Lion Property Group was acting as a “Ponzi” scheme, where investors are paid returns from money raised from new investors.

Archived Lion webpages stated multiple projects had been completed with investors repaid in full, including with healthy returns. However, the Lion accounts reported millions of dollars had been written off against the same projects.

In one case, Lion Property Group (LPG) claimed “investors were fully paid out, achieving a 35 per cent return on $1.2 million raised”.

In fact, the company’s records showed a “net cash outflow of $2 million” that indicated “this $2 million owed to LPG was written off as a bad debt”.

The group had 18 projects, each associate with a “special purpose vehicle”.

Investors held equity stakes in the special purpose vehicles, although the nature of the investments is contested, with Lion alleged to have made false representations and claims to investors.

The report states there are 18 special purpose vehicles and 18 projects, of which seven have been sold, with others in possession of creditors.

“From our investigations it appears that prior to the appointment of the Provisional Liquidators the group had ceased trading activities,” says the report.

“No employees of LPG have contacted the Provisional liquidators. The office of LPG had been vacated. 

“Construction seems to have halted on active projects in 2024,” it states.

The case is listed to be heard again Friday (1 August).