The Federal Court has ruled an unlicensed scheme to raise money, that recommended investments via an SMSF, should be wound up and has placed injunctions on the operators of the scheme from carrying on a financial services business in Australia.
The court made the ruling against MyWealth Manager, which from early 2017 advised clients of MCube Planners to roll out of their superannuation funds, establish an SMSF and invest in MyWealth Manager.
According to ASIC, which brought the case, the scheme raised around $7 million from 55 investors, but the funds were not invested as promoted and, according to the court, nearly all of the funds were misappropriated by those operating the scheme.
The scheme was operated by three former financial advisers – Mustafa Mohammed, his wife, Mahek Mustafa, and his brother, Mubashir Mohammed – and related companies – MyWealth Manager Financial Services, trading as MyWealth Manager, and 3M Financial Planning, trading as MCube Planners, who were all named as defendants in the case.
The court made declarations that the three former advisers, who currently reside in India, and related companies contravened the Corporations Act by operating the unregistered scheme and failing to hold the required Australian financial services licence (AFSL).
It also granted injunctions against the defendants, restraining them from carrying on a financial services business in Australia without holding an AFSL, and ASIC also obtained an order that a related company, MyWealth Protection Pty Ltd, be wound up.
In his judgment, Justice Derrington stated: “The conduct which was engaged in by the defendants was of the most serious kind, directed as it was to the misappropriation of the superannuation savings of vulnerable people.”
ASIC took action against the defendants on 21 November 2019 by obtaining interim orders to restrain them from operating a financial services business without a licence, managing, directing, controlling or otherwise operating the unregistered scheme, and any handling of investor funds received in connection with the unregistered scheme.
The regulator commenced the court action in December 2019 and its investigation is continuing.
