Updated May 25, 2018 12:16:12When the owners of a Sydney company that made a fortune by buying properties and selling them off for cash find they have to repay a portion of the money that they got from investors, the amount they got may be worth more than the investment.
An international investor group has filed a lawsuit against a Melbourne-based real estate firm, the ATS Capital Management, and its chairman, who is facing a $25 million fine and a two-year jail term for fraudulently concealing the value of the properties they bought.
The investors are seeking more than $30 million in damages.
In March, ATS bought the property at 10 Darling St for $30.5 million, which was the value at the time, according to documents released to the ABC by the court.
The ATS said the value was inflated to $40 million.
In the suit, filed on behalf of the investors, Ats lawyers said that the $30m figure was based on “a $40 billion valuation of Australian property”, which it estimated to be inflated to the amount of $30 billion.
They also alleged that the Ats chairman, Paul Housley, had lied to ATS’s investors and that the value had not been corrected.
Housley has also been charged with two counts of conspiracy to commit fraud, which carries a maximum penalty of 10 years in prison.HOUSLEY has denied the allegations.
The property sale and the subsequent price increase were made in the early hours of January 2, 2020, and were done in contravention of the Residential Tenancies Act.
The plaintiffs allege that Housles actions led to a collapse in the value and loss of property value, with the losses going into a trust account for his children.
The court heard that the property owners had not given Housleys permission to sell the property and that HOUSLES family had told them they could only sell the properties to Housleighs wife.
The company then put up the property as collateral for loans and a mortgage for $100 million, with a total value of $70 million, the court heard.
Houses and other real estate properties were sold at inflated prices in the last two years.
On top of the $40m figure, the lawsuit said, the plaintiffs also received payments for other assets.
“It’s clear that Houlley, and his family, had been involved in the acquisition of properties through the purchase and sale of properties by ATS,” the court documents said.
“Housleys wife had also made payments to Ats, in breach of the (Regional Property Settlement) Act.”
The Ats were not named in the court document, but their lawyer, Richard Lacey, said he would not comment on the case.
The firm was listed as one of the leading real estate investors in Sydney, and had assets worth more $10 billion, including $1.2 billion in cash.
Houlley was the first person to sell a property on its own for $10 million, in 2014, when it sold a house in Sydney’s south-east for $5 million.
It was then bought by the family-owned property firm, and Houshleys family had a mortgage loan on the property.
“The property was sold to Houlleys family in a short period of time by Houshalts wife,” the suit said.
“The property then sold to Aten Capital Management and ATS.”
Aten Capital bought the house, which is owned by the Aten Group, for $4 million in December.ATS Capital, which has no business links with Aten, said it was “deeply troubled” by the actions of the Ales and would contest the charges.
“We have no comment to make at this time,” a spokeswoman said.
The Sydney Morning Herald reported on Tuesday that the Australian Securities and Investments Commission had commenced an investigation into the actions at ATS.
A spokesman for the ATC said the company would defend itself vigorously.