As we know, developer Ralan has collapsed owing creditors at least half a billion dollars. Included among them are hundreds of buyers who bought apartments off-the-plan who are facing deposit losses of up to $70,000 or more.
Today, it has been revealed that Ralan targeted Chinese buyers in an elaborate ponzi scheme:
Ralan, which was developing billion-dollar apartment towers on the Gold Coast and in Sydney’s Arncliffe, collapsed earlier this month owing secured creditors about $200 million and unsecured creditors including hundreds of Chinese-born apartment buyers about $277m as well as sundry other debts. About 750 creditors attended the first creditors meeting in Sydney last Friday.
“It’s a quasi Ponzi scheme … and I have to work out how long this went on for,” Grant Thornton lead voluntary administrator and managing partner Said Jahani said in an exclusive interview with The Australian yesterday.
“It’s gut wrenching. We have done a number of these Ponzi scheme liquidations and the thing that tears me apart is a lot of people investing are from one community. In this case they are Chinese”…
“These people have lost a lot of money. The buyers were obviously attracted to the abnormally high returns being offered as an inducement to get them to agree to release their deposits.”
More from The AFR:
Ralan was likely “never profitable”… the funds were used to cover up losses on unprofitable projects dating back to when Ralan builder Steve Nolan went into administration in 2014.
“This suggests a Ponzi scheme,” said Mr Bransgrove, who is acting for a growing number of Asian buyers (currently at 47) caught out by the collapse of Ralan…
“Given the enormous size of the Ralan Ponzi debt (by far exceeding the cash requirements for the Ruby and Arncliffe projects) one could reasonably conclude the money came from the investors in Ralan’s Ponzi scheme,” Mr Bransgrove said…
These buyers are now unsecured creditors of Ralan. They rank below a Westpac secured loan and the Wingate unsecured loan.
It also comes on top of widespread concern over flammable cladding and faults.
Seriously, which buyer is going to buy off-the-plan now when they cannot be sure that their deposits are safe, nor that their apartments will be built to standard?
This is a doom loop.
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