ASIC takes tough action

PROMOTERS of illegal fundraising schemes have received another warning that the Australian Securities and Investments Commission is gunning for them.

For the fifth time this year, ASIC has obtained an order to close down another illegal scheme.

This time, Perth investment club the Manhattan Club Ltd was targeted.

The promoters have agreed to unwind share allotments ASIC alleged to be illegal.

During January, The Manhattan Club Ltd, through Perth businessmen David Hicks and Noel Herbert, raised more than $230,000 from ninety-one investors by issuing shares in the club.

The ASIC alleged the fundraising was carried out illegally as there was no prospectus and the fundraising did not fall within the exemptions to the fundraising provisions of the Corporations Law.

The Manhattan Club Ltd is registered in the Turks and Caicos Islands.

In promotional material the company stated “it is estimated the return of the investment should be 25 per cent per quarter”.

The material also suggested that if the web site, which the money was being used to finance, became popular, the return could be much higher.

The orders obtained by ASIC set aside the contracts entered into by the investors and require all subscription monies to be repaid within twenty-one days.

In addition to civil liability, people who engage in illegal fundraising are exposed to criminal liability, including fines of up to $20,000 or imprisonment for five years, or both.

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