ASIC raids over tombstone tax schemes
July 1, 2009
THE Australian Securities and Investments Commission is believed to have raided the homes and offices of at least two financial planners over sales of managed investment scheme (MIS) products.
The action appears to be an escalation of ASIC's investigation of the financially troubled tax minimisation industry.
During the raids — in Sydney yesterday at 7.20am at a former licensed adviser's house and in Melbourne at the offices of another financial planning group — ASIC seized hard-copy files and computer hard drives concerning client records of investments in MIS group Forest Enterprises Australia.
One party subject to the raid told BusinessDay that he believed ASIC had responded to a complaint by Forest Enterprises that the financial planners fabricated investors to purchase investments in Forest Enterprises schemes — known in the industry as tombstoning.
The planner said that these investors, who contributed up to $2 million, were real and that they were financed into the investment by Forest Enterprises.
Chief executive of Forest Enterprises Andrew White did not return calls yesterday.
Last Friday Forest Enterprises issued a sales downgrade to the market, saying it would achieve significantly less than the $60 million made in 2006 and 2007 and stating that "these lower than expected sales for FEA Plantation Project 2009 are attributable to external factors beyond the control of the company".
The ASIC raids are part of the new scrutiny being applied to the MIS industry as the public relations and financial fallout increasingly hits the industry's participants.
On Monday, creditors of one of the larger MIS companies, Timbercorp, voted to wind up the 41 corporate entities and put them into liquidation, leaving shares worthless and investors in individual schemes unlikely to recover their investments.