Show me the money: victims of Lion Property Group collapse speak out

The failure of the Lion Property Group has left in its wake hundreds of investors who thought they were dealing with a reputable enterprise with their financial futures now in tatters.

As the winding up of Lion Property Group and its associated companies begins, the Australian Securities and Investments Commission (ASIC) is poised to assess a KPMG audit, while police investigations into potential criminal charges have gathered momentum.

KPMG, on Wednesday (20 August) appointed liquidator of the group,  reported that $12 million remains unaccounted for, leaving investors grappling with an enduring threat that their capital is all but lost. 

As has been reported in a series of API Magazine exclusive articles, the Supreme Court has ordered a forensic audit of the Melbourne-based asset managers’ businesses over fears Lion had been operating a Ponzi scheme.

At the centre of the allegations of criminal deceit are the Lion directors Garry Pesochinsky and John Sader, who created the group in 2018.

At the receiving end of their corporate demise are an estimated 600 investors, many of whom are regular ‘mum and dad’ investors who may struggle to ever overcome the loss of their outlay.

API Magazine spoke to five such victims of the $120 million collapse, each of whom is seeking justice for what they perceive as a largely avoidable financial catastrophe.

Steve Danzig of Brisbane said the behaviour of the two protagonists in the wake of the case going to court had been reprehensible.

“John Sader’s recent attempts disputing Supreme Court Justice Matthews’ ruling raise profound concerns about his judgment and the broader implications for stakeholders involved in the ongoing legal saga surrounding Lion Property Group.

“As a plaintiff, it is perplexing to witness Sader and his associate, Garry Pesochinsky, persisting in their defiance rather than accepting wrongdoing or offering a settlement after seven months of contentious litigation.”

Eagle Financial Solutions, which is representing the group of investors who launched the wind-up action, has branded Lion group’s operations as a “blatant financial scam”.

Mr Danzig detailed some of the contentious practices among the litany that have seen Victoria Police handed a secret report into the luxury developer’s collapse and the pair of directors ordered to provide the location of all servers and hard drives used in connection with the company, and all email accounts, including passwords.

“The provisional liquidator reported cross-collateralising funds between projects, that the group was operating without an Australian Financial Services Licence (AFSL), and taking management fees upfront, raising serious concerns about their financial integrity.

“Additionally, the practice of securing mortgages prior to obtaining necessary planning approvals, along with applying multiple mortgages on single developments, show a pattern of reckless financial manoeuvres.

“To compound these issues, the report showed they continued soliciting new investors even amidst insolvency, a move that raised serious ethical and legal red flags under the Corporations Act,” Mr Danzig said.

Mr Sader and Mr Pesochinsky continue to deny any wrongdoing.

Investors told API Magazine they had first raised issues with Lion in 2019 but got nowhere.

Phil Galliot, who lives on the Gold Coast, said he had spoken to more than 200 investors who have been affected by the “deceptive practices” of Lion Property Group.

“We all believed our large investments were going into projects we invested in.

“No one knew the fund would be removed from the projects and used for other purposes.

“The plaintiffs have done the heavy lifting in this case so far and it’s time for ASIC, the police and the liquidator to do their jobs; bring the perpetrators to justice and return the missing funds to the rightful owners.”

Lion Property Group’s directors dragged a corporate corpse around for at least two years while lenders queued up.

- Sonja Boric, Lion Property Group investor

While petty theft was promptly dealt with by police, Melbourne resident Andrew Boulton said corporate crime was dealt with far less effectively.

“I find it difficult to comprehend that in Australia, if I steal a chocolate bar from the corner store the police will be called and I will likely be charged with theft within hours, but if there is an organised and well-constructed fraudulent scam involving multiple millions of dollars from regular Australians, the ‘authorities’ will barely recognise the reported crime, much less provide updates or even confirmation of any action being taken at all,” he said.

“Meanwhile lives are destroyed. Many real victims of significant crime. The false sense of security provided by the title of ‘regulator’ is soul-destroying.”

That lack of regulation has likely claimed yet more investors following the collapse of the $145 million collapse of ISG Fund Management and related companies, as reported exclusively by API Magazine on Wednesday (20 August).

Bankruptcy, PTSD, legal costs

Sonja Boric, of Noosa, has been kept waiting for years to learn of the fate of a regrettable Lion investment.

Her assessment of the directors and the regulatory watchdog ASIC was scathing.

“Lion Property Group’s directors dragged a corporate corpse around for at least two years while lenders queued up as mortgagees, allowing them (Lion) to bleed the last drops of value before walking away.

“They kept taking new investor funds even as projects collapsed and mortgagees took possession.

“This wasn’t misfortune — it was calculated neglect and self-preservation at our expense.

“Where was ASIC while this was happening? The regulator was repeatedly warned yet did nothing, leaving hundreds of Australians unprotected while the directors loaded more debt, stripped more value, and worsened our losses.

“This is not just a corporate scandal — it’s a regulatory disgrace.”

Many Lion investors face the harsh realities of significant wealth loss, with consequences including bankruptcy and PTSD that often necessitate professional intervention.

Legal costs have soared, with plaintiffs incurring expenses exceeding $650,000, leaving many unable to obtain adequate legal representation.

API Magazine on Friday (22 August) spoke to an investor who had the horrendous misfortune to invest in Lion Property Group and ISG Fund Management, both of whom have collapsed.

Stephen Voukidis said his life had been ruined by these failed investments.

“I have been in depression lately due to failed investments with ISG and Lion Property Group.

“I have lost my house and separated from my partner due to the financial issues that have changed my life completely.

“Australia has no protection for investors and does nothing to help get our money back, which is shameful.

 “I genuinely don’t know what to do.

“Your thoughts range from wanting revenge to despair and there’s just no outlet that will make it right or get your life savings back; these criminals need to be held accountable and we need our money back.”

Michelle Mairet of Melbourne said the financial debacle served as a cautionary warning about the necessity for ethical business practices and accountability.

“It underscores the critical importance of transparency and adherence to legal requirements, not only for the protection of investors but also for the integrity of the business landscape as a whole.

“As this matter continues to unravel, the implications extend far beyond the courtroom, highlighting the essential need for responsibility in corporate governance.

“This exhausting dilemma has left every investor asking the same question: ‘Where has the money gone?’”