Court nominated Robert Michael Carman and Robert Conley McGrathNicol’s Brauer is joint and multiple trustee of all properties of Chris Marco, AMS Holdings and AMS Holdings as trustee of AMS Holdings Trust.
In November 2021, the Liquidators submitted an interim application for various orders and instructions relating to the liquidation of AMS and the planning and distribution of the assets and properties of the Scheme which are deemed to be the property of Mr Marko, AMS and the Scheme. submitted.
In response to the application, the federal court has now issued a series of orders regarding how the scheme will be liquidated and how the assets and property of Mr. Macro, AMS and the scheme will be treated and distributed.
Judge Michal Feutrill held that the liquidator was justified in treating the managed investment scheme operated by Mr Marco as a Ponzi scheme.
“The evidence relied upon by the liquidators in their application indicates that the scheme was operated as a Ponzi scheme, rather than a true managed investment scheme,” Feutrill Judge said.
“In other words, the ‘returns’ promised to earlier ‘investors’ were paid out of the capital invested in the scheme by later ‘investors’. The scheme is insolvent from the outset and the remaining property of the scheme is insufficient to meet the ‘investor’ demands for capital and the unpaid promised ‘returns’. ”
Judge Feutrill held that the liquidator would not allow competition among investors or groups of investors in relation to the limited funds originally deposited in a number of bank accounts operated by Marco and AMS as operators of the Ponzi scheme. He said he faced “classic bankruptcy conundrums” including: .
“The conundrum concerns how funds are limited. [bank accounts] Funds are deposited and distributed among mixed investors [those accounts] Where there have been countless deposits and withdrawals from accounts over the years[s] in the meantime. ”
He noted that due to the nature of Ponzi schemes, many investors, especially early investors, would have received returns in full or substantially all or in excess of their original investment.
“Other investors may have decided to rollover or reinvest all or part of the returns, and as a result received little or none of their original stake. may have entered the scheme shortly before its operation ended by freezing orders placed on November 1, 2018,” he said.
“These investors may have received no or very little capital contribution.”
As a result, Judge Feutrill said many investors involved in the scheme would be “bad luck” and lose all or a significant portion of their original capital.
He concluded that the liquidator should treat the remaining property of the scheme as a trust property as a single mixed fund for the benefit of the members of the scheme.
“It is not reasonably practicable or economically viable to trace the property of individual scheme members into identifiable parts or portions of their composite fund. It would be more appropriate for the liquidator to distribute the scheme’s remaining property in a manner that reflects the scheme members’ equitable ownership of that property,” he said.
“Thus, for the purposes of determining the distribution of the plan’s wealth, plan members’ asserted personal rights to accrued interest and interest rolled over or reinvested should be disregarded. Payments made out of property should be treated as a transfer of plan property to members of the plan, regardless of how the payment was characterized.
“Scheme members are entitled to retain their property interests as follows: bona fide Recipients of values without notice. However, any Scheme Member who receives a transfer of Scheme property while the Scheme is in operation must be “brought” into the Hotpot. [sic] Interest in that property before entitlement to an equal share of the remaining property of the scheme. ”
Marko was indicted in July 2022 on 50 counts of fraud under Section 409 of the Penal Code.
In an investigation, ASIC alleges that between July 2013 and October 2018, Marco defrauded nine investors out of $36.5 million. It is also alleged that of the $36.5 million, one investor invested in Marco and he was defrauded of $10 million.
Mr. Marco traded banking products as a private investor. He invested in a private placement program (PPP). The program required capital as proof of funding to trigger credit lines to facilitate arbitrage trading involving US and European banking products.
He began raising money from outside investors to raise his proof of funds to the level required for trading.
Ordered by Mr. Marco Pay damages to the SMSF trustee In September 2020, SMSF investors filed a lawsuit against him and AMS Holdings over unpaid returns and money held in trust.
another SMSF, Marks Auto Superannuation Fund, Also, in early 2020, Marco sued the court for failing to repay the trust money.
