Ralan collapse torches Chinese investor millions

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.

Many of these buyers were Chinese, who were targeted in an elaborate ponzi scheme:

“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.”

Today, The ABC reveals that the many Chinese investors are facing millions of dollars in losses:

Mr Xie was a salesman with the property developer giant Ralan Group prior to its spectacular financial collapse that has left thousands of investors in its wake.

As a Ralan salesman, Mr Xie’s job was to spruik a form of property investment the company’s administrator now says was legally questionable.

He is speaking out about what he saw at the property behemoth in the hope it will help the 2,300 investors who have watched almost $300 million worth of deposits in off-the-plan apartments vanish.

“This is a big tragedy because for many of the clients, their money was not easy to make,” he said…

The ABC has obtained contracts that show Ralan was asking homebuyers to release their deposits as extremely risky loans to the company in return for 15 per cent annual interest.

Because the loans were not secured to Ralan’s assets, investors who agreed to release their deposits to the company are unlikely to get any of their money back now it has collapsed…

Most investors caught up in the collapse are Chinese-Australians who were targeted by Ralan’s team of Mandarin and Cantonese salespeople…

When Mr Xie was a salesman for Ralan Group, he came up with a simple method for finding new customers.

He would open the Sydney White Pages and start trawling for Chinese names.

“For example, my surname Xie. Or Wong. Or Chen,” he said.

He said some of his clients were experienced investors, while others were putting money into property for the first time.

“I had a taxi driver, a chef, even a cleaner,” he said.

Mr Xie, who said he had no role in formulating contracts for clients, also used his networks within Sydney’s Chinese community to find investors.

What an unfortunate state of affairs.

These buyers are now unsecured creditors of Ralan. They rank below a Westpac secured loan and the Wingate unsecured loan.

It is also another blow to Australia’s faltering apartment market, which comes on top of widespread concern over flammable cladding and structural 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.

Comments

  1. Listening to ACCADACCA;s beating around the bush on the headphones at work and doing a little happy dance.

  2. Good old gold coast developers, the GC bats well above it’s weight, it will never be outdone by those southern state developers or their sycophant elected officials (Tom Tate, GC Mayor actually expressed sorrow not for the owners but for the developer in his only interview on the topic!).

    • Yup, the Goldie is a special place — an utter sh1thole.

      If it weren’t for the spectacular surf I’d give it a wide berth.

  3. Not to blame the victims or condone “legally questionable” practices by Ralan, but… who the fck gets offered 15% return on their money and doesn’t have warning bells going ballistic in their brain?

    I get spammed by ads from non bank property funds promising me 6-8% on my money and those scream “trap” at me. Doubling those promised returns means “death trap”.

    Look, I’m not naive. I know the answer. The answer is most people in this world have no clue. About anything. Those who should have a clue get blinded by the greed and just tell themselves it will be ok, someone else has checked and some authority is looking out for them.

    Lambs to the slaughter.

    FFS.

    • Hey those types of returns have been available in China for years, though less so recently. I remember years ago telling someone I happened to get a 15% return on a managed fund in Australia which I was super happy with. They sneered at me, they wouldn’t accept anything below 30% (this was early 2000s). For many who don’t understand the differences between China and the ROW this would not have set of warning bells, however if they’ve been resident in Australia for a while which seems to be the profile of the people in this article then greed and all the complicated issues associated with networks, face and family relationships will be in play here. A whole heap of new Aussies are learning some harsh lessons about their new home

    • Yup, I’d sign up to the Nigerian Prince scam before I’d sign up to that old chestnut. You’ll be amazed at the number of people though who cannot resist a sneaky punt that THIS time, it’s all real.

  4. Big Australia relies on the new apartment market. TBTF. New policy suggestions:
    – New Apartment Owners Grant to cover the off-the-plan deposits
    – Relax loan restrictions for SMSF
    – Wheel Kevin Rudd out with a new Building Revolution initiative

  5. The Horrible Scott Morrison MP

    Look, the developers were given a go to have a go and now they’re gone. This was unfortunate and so they should be given another go to have a go, perhaps with a company called Ralan2 Pty Ltd offering savy investors 20% return on their deposits.

  6. This scam happens in China all the time, and they fall for it because the investment was recommended by a relative/friend, who also happens to take a cut for every sucker they can find.

    The difference is that in China, the director of the company will get arrested (if found), while the directors of an Australian company will get a slap on the wrist at most.

  7. “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.”

    Ahh yes, greed.

    And yet the finger points at everyone else except themselves

    • 15% is not that high as developer are being charged much higher than that for finance. What got them over the line is the personal director guarantee of the founder. Wonder how that is going to play out..

  8. “This is a big tragedy because for many of the clients, their money was not easy to make,” he said…

    Yeh, a real tragedy.

    • Especially considering that for me and the other legacy citizens, money is now really easy to make.

  9. What’s not to love about this Ralan story, it’s got everything that a great narrative needs.
    It’s filled with unreasonable expectations, there’s greed a plenty, mixed with success and cooperation and of course winning
    F’me it’s got it all but they saved the best till the end, there’s heart ache coupled with resentment and resolution. There’s real fear going hand in hand with growing sense of revenge and maybe even a hint of violence
    This Ralan story has it all, Local success coupled with Global reach it’s the China story in a nutshell.
    What’s not to love about this story?
    Maybe with some slight adaption it could be part of the NSW HSC curriculum, I know they’re always on the hunt for stories that encapsulate the Aussie experience, this ones’ got it all something for everyone a real “Belonging” experience, with a few opportunities to learn.
    The only question on my mind is: What will people learn form this “experience” ?
    Isn’t it interesting that our reaction (as in the reaction of those that weren’t directly involved ) might well shape the learning experience of those that were involved. If we rescue them, than what did they learn?

    • 幸灾乐祸

      They only lost their deposit. It would be even worse if they end up settling on a faulty apartment with a bankrupt developer and builder, so they should consider it a blessing in disguise.

      • Kudos to you if you knew that without Google translate’s help!
        Triple kudos if you can write it by hand!
        I recognise the first two characters as “spicy/tasty” and “ashes”, from my failing memory of kanji (Japanese).

      • Is Chinese as nuanced as English? The English equivalent of schadenfreude is epicaricacy, the plain English equivalent is gloat. Does Chinese offer different variants?

  10. As the investors who lost money are Chinese our China loving primefool is no doubt going to dive right in and have everyone arrested and confiscate assets to reimburse these poor innocent investors. After all it would be racist not to. of course if investors were Aussie mums and dads well that’s just too bad. regardless I’m sure the CEO will be thinking about the poor losers while he shoots 18 holes at his private member’s club.

  11. “As a Ralan salesman, Mr Xie’s job was to spruik a form of property investment the company’s administrator now says was legally questionable.

    He is speaking out about what he saw at the property behemoth in the hope it will help the 2,300 investors who have watched almost $300 million worth of deposits in off-the-plan apartments vanish.”

    Xie knew he was helping rip off Chinese buyers. Actually these people are lucky – they have only lost their deposits on a vastly inflated price they were paying for a unit. Given the excessive prices the real loss could have been more than double the $70k if the properties had been completed. The loss could have been much higher if the buildings were defective.

    These scams have been happening for years back in China and its become quite normal in Oz. Nothing to see here.

  12. These findings demonstrate our entire economy has been integrated into China’s with entire residential apartment complexes built on demand generated from Chinese who arrive here via the pimped out $5mill visa or the overseas student visa program.

    • John Howards Bowling Coach

      Hardly anyone does the $5mil Visa, they tend to flock to the $250k fake business Visa in huge numbers, run a milkbar/$2 shop for 2 years or more often pay someone to run it for you, then pop, a PR arrives in your hands, just like magic. What a foolish Government we have!

      • The mainstream narrative since the early 2000’s has been China is Australia’s largest trading partner without any further comment except the potential for China to use it as leverage against Australia in trade negotiations. However that was never the intent of the Chinese, their intent was to integrate our economy into their’s which has been achieved by stealth and this is what our politician’s don’t want you to know and now, our economic policies are developed in response to whatever the current 5 year economic plan in China is.

      • Time to scrap these business visas. With remittances and the social and infrastructure cost, they are a burden to Australia. Plus, it is foreign business owners who are loving the underpayment of staff (ask the Fair Work Commissioner).

        • John Howards Bowling Coach

          What remittances? Who is sending their money back to China? The game is getting your money out not making money here to return to China. Yes it is time to scrap these Visas as the reality is almost no one from China is able to do what the stated purpose of the Visa Class is, which is to translate their business skills here to help build our economy. That is why they mostly pay someone else to run their business (a direct conflict with the stated requirement of that Visa Class) or they buy a low level business like a Milk bar and run it into the ground, usually trading at a loss. There are quite a few who just become property developers but given there is a low barrier to entry for that, and no shortage of locals able to do that, we don’t need more of them. These are the reasons on top of the fact they almost never pay tax in Australia, that when they examined these contributory Visa Classes in Canada they scrapped them, to great outcry from their own immigration industry which I presume is the same as the one here, which is largely run by and for the profit or either foreigners or recent arrivals.