Suicide after alleged Australian Ponzi ‘super scheme' collapse, as thousands left without their life savings
The individual reportedly took their life after losing their superannuation savings in the collapse of First Guardian and Shield investment funds, leaving behind a trail of devastated investors and families.
First Guardian and Shield, which are believed to have been masquerading as legitimate superannuation funds, are now being investigated for allegedly being sophisticated Ponzi schemes.
Mark Farnsworth, an investor who reportedly lost $650,000, expressed his despair telling 7NEWS on Sunday night: 'I don't even know if I can have the heater on at this stage.'
His story mirrors that of others, including food importer Juan Carlos Sanchez, who allegedly lost $120,000 in the same fraudulent scheme.
Sanchez issued a warning to Australians: 'If it can happen to 12 thousand, it can happen to the other 17 million.'
'One person has taken their life over this.
'Act now, stop being silent.'
Victim pleas ignored
Victims' desperate pleas for help have allegedly gone unanswered and they claim the corporate watchdog, ASIC, has yet to deliver meaningful results.
Slater and Gordon, a leading Australian law firm, is now investigating a potential class action that could offer affected investors a path to justice and compensation.
Australia's $4 trillion superannuation system, meant to protect the retirement savings of millions, has been shaken by the alleged collapse of First Guardian and Shield.
Allegations against the scheme reportedly date back to 2019, but it seems the investigation has only gathered momentum in recent months.
At the center of these operations were directors David Anderson and Simon Selimaj, whose assets have reportedly been frozen by the Australian Securities and Investments Commission (ASIC).
With the investigation expected to take at least a year, victims feel abandoned and left without immediate recourse. One said, 'One person has taken their life over this. Act now. Stop being silent.'
Compensation claims through the Australian Financial Complaints Authority (AFCA) are reportedly capped at just $150,000, an amount many claim doesn't even come close to covering their losses.
Investigations ongoing
In the aftermath of the collapse, David Anderson has allegedly been forced to vacate his $9 million mansion in Hawthorn, with authorities changing the locks on the property.
However, despite this, critics allege Anderson may have allegedly moved more than $270 million offshore, with ASIC's slow response allegedly allowing this to happen.
As the investigation continues, the victims' pain is growing.
Many express frustration over the delays and lack of action from both ASIC and the alleged perpetrators.
With the investigation expected to drag on for at least a year, the crisis is far from over, and the fight for justice is just beginning.
ASIC response
A spokesperson for the Australian Security Insurance Commission told 7NEWS:
'It is not the case that $270m was moved offshore after the commencement of ASIC's surveillance.
ASIC has undertaken extensive work on the First Guardian matter and has acted on the available information.
This is work is complex, and ASIC does not accept that it has delayed its investigative work in the manner alleged. In matters of this kind, we need to carefully investigate the operation of managed investment schemes before we decide what action to take in a way that does not precipitate investor losses.
ASIC has taken a range of enforcement action in relation to this type of misconduct over many years, including in 2020 against Smart Solutions Group (Aust) Pty Ltd. We have escalated our response across enforcement action and consumer education due to the scale of industrial misconduct.
ASIC has been giving guidance and warnings about super switching since super choice was first introduced in 2005.
Over the last 12-18 months ASIC has become increasingly concerned with what appears to be a significant increase in unscrupulous business models, on an industrial scale, that deprive people of their superannuation savings. This is commonly done through high pressure selling and promises of better returns, in exchange for the investment of superannuation savings into complex and risky schemes.
ASIC's surveillance activities and investigations in relation to these unscrupulous business models have been assisted by reports of misconduct. Every single report of misconduct provided to ASIC is reviewed and actioned based on the information available, and the resources available to ASIC for investigations.'
If you need help in a crisis, call Lifeline on 13 11 14.
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Rather it will come with a complex and prosaic matter that usually does not excite much attention: company tax. The test will come with how the system responds to last week's Productivity Commission report which recommends a change to company tax that so far has only excited accountants and policy nerds. The trouble is that the government has got to stay the course and get the measure through the Senate. The way the numbers are, it means it must get the backing of the Greens, or the Coalition, or all of the other crossbench senators. The recommendation is not for a cut to company taxes, despite some media characterising it that way. It is revenue-neutral. Rather, it is a change in the way companies are taxed. The proposal is not just an Australian first, but a world first. It is to be the first step in moving from taxing company profits to taxing company cash flow. It is fairly complicated, but bear with me. At present, companies can only deduct depreciation on their investment at the rate of about 20 per cent a year, so their profits and the tax on them are going to remain fairly high, especially in the year or two after making the investment. It is a major disincentive to invest. If the government changes to a cash-flow system, however, the whole investment cost is taken off taxable profits, or taken out of the taxable cash flow, from the day the investment is made. Further, if that caused the company to make a loss, the loss can be carried forward to future years and would be adjusted upwards each year by the government bond rate. Ultimately, the investment will result in a more profitable company paying more tax. At present, the disincentive means many investments are not made. It has resulted in stagnant productivity in Australia in the past decade or so. We should look at company investment not just as shareholders and managers trying to make money, but also as empowering the employees of the company who would be retrained and who would be more valuable and whose work would be more profitable. For the past 30 years or so, governments have allowed companies to bring in too much cheap labour, much of it semi-skilled or even unskilled. Like the tax system, that acts as a disincentive to invest in capital to make existing labour more productive. It has made living standards lower than what they could be. Further, the existing system favours established companies. This is because new players have to stump up a lot of investment up front and then start paying tax on notional, paper profits before they have made any actual money. Under the cash-flow system, they do not have to pay any tax until they make real money after the investment money has been recouped. And if the investment goes bad, the investors do not have the added burden of having paid tax on notional, paper profits. With a cash-flow tax, new players would be more likely to enter the market. It would increase competition and reduce prices. Australia's economy is one of the least competitive in the OECD. We have far too many monopolies and market sectors dominated by just a few players. The tax system is one reason for this. Politically, the change has some difficulties. If it is seen just as a company tax, the Greens and at least some of the crossbench will be against it. True, the Productivity Commission is recommending a five-percentage-point cut in the tax on company profits. But it is adding a new five-percentage-point tax on cash flow. Nonetheless, you can bet a simplistic slogan will endanger the proposal. The other danger is from existing business groups, especially big business. You would think that business would support the reform, especially as the Productivity Commission is also proposing measures to reduce the regulatory burden on business. But watch. Business, egged on by the Coalition, will be against this because they are far less interested in improving the overall state of the Australian economy than retaining their cosy monopoly positions in it. So, do not be fooled. If anything, this proposal is too modest. It would shift only about a fifth of the company tax burden from profits to cash flow, giving time for companies to adjust and to work out if there are any unintended consequences. Further, the Productivity Commission noted: "Australia's dividend imputation system makes the relationship between retained earnings and investment weaker than it is in other countries. That's because dividend imputation and franking credits will lead some shareholders to place higher value on receiving dividends than on firms reinvesting their profits." At the very least, an overhaul of the company-tax system should include the removal of franking credits being paid in cash to "taxpayers" who pay little or no tax. Certainly, franking credits should not be extended in any new company cash-flow tax. The task is not so much articulating what should be done about our defective tax system and low productivity, but rather it is about exposing the selfish, destructive behaviour of existing players, which is dressed up as national interest. The most recent example of that was the bizarre statement from Nationals Senator Barnaby Joyce that we should replace renewables with coal-fired power stations. If the productivity debate sinks to that level in the Senate, there is little hope for constructive reform, and the Productivity Commission will have wasted its time and effort. The Australian political system is about to be stress-tested. The test will not be on some visceral, emotionally charged issue. Rather it will come with a complex and prosaic matter that usually does not excite much attention: company tax. The test will come with how the system responds to last week's Productivity Commission report which recommends a change to company tax that so far has only excited accountants and policy nerds. The trouble is that the government has got to stay the course and get the measure through the Senate. The way the numbers are, it means it must get the backing of the Greens, or the Coalition, or all of the other crossbench senators. The recommendation is not for a cut to company taxes, despite some media characterising it that way. It is revenue-neutral. Rather, it is a change in the way companies are taxed. The proposal is not just an Australian first, but a world first. It is to be the first step in moving from taxing company profits to taxing company cash flow. It is fairly complicated, but bear with me. At present, companies can only deduct depreciation on their investment at the rate of about 20 per cent a year, so their profits and the tax on them are going to remain fairly high, especially in the year or two after making the investment. It is a major disincentive to invest. If the government changes to a cash-flow system, however, the whole investment cost is taken off taxable profits, or taken out of the taxable cash flow, from the day the investment is made. Further, if that caused the company to make a loss, the loss can be carried forward to future years and would be adjusted upwards each year by the government bond rate. Ultimately, the investment will result in a more profitable company paying more tax. At present, the disincentive means many investments are not made. It has resulted in stagnant productivity in Australia in the past decade or so. 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And if the investment goes bad, the investors do not have the added burden of having paid tax on notional, paper profits. With a cash-flow tax, new players would be more likely to enter the market. It would increase competition and reduce prices. Australia's economy is one of the least competitive in the OECD. We have far too many monopolies and market sectors dominated by just a few players. The tax system is one reason for this. Politically, the change has some difficulties. If it is seen just as a company tax, the Greens and at least some of the crossbench will be against it. True, the Productivity Commission is recommending a five-percentage-point cut in the tax on company profits. But it is adding a new five-percentage-point tax on cash flow. Nonetheless, you can bet a simplistic slogan will endanger the proposal. The other danger is from existing business groups, especially big business. You would think that business would support the reform, especially as the Productivity Commission is also proposing measures to reduce the regulatory burden on business. But watch. Business, egged on by the Coalition, will be against this because they are far less interested in improving the overall state of the Australian economy than retaining their cosy monopoly positions in it. So, do not be fooled. If anything, this proposal is too modest. It would shift only about a fifth of the company tax burden from profits to cash flow, giving time for companies to adjust and to work out if there are any unintended consequences. Further, the Productivity Commission noted: "Australia's dividend imputation system makes the relationship between retained earnings and investment weaker than it is in other countries. That's because dividend imputation and franking credits will lead some shareholders to place higher value on receiving dividends than on firms reinvesting their profits." At the very least, an overhaul of the company-tax system should include the removal of franking credits being paid in cash to "taxpayers" who pay little or no tax. Certainly, franking credits should not be extended in any new company cash-flow tax. The task is not so much articulating what should be done about our defective tax system and low productivity, but rather it is about exposing the selfish, destructive behaviour of existing players, which is dressed up as national interest. The most recent example of that was the bizarre statement from Nationals Senator Barnaby Joyce that we should replace renewables with coal-fired power stations. If the productivity debate sinks to that level in the Senate, there is little hope for constructive reform, and the Productivity Commission will have wasted its time and effort.
