Even as Securities Exchange Board of India (SEBI) announced that the Lodha Committee had collected a large number of documents related to the PACL Ponzi scheme, class action lawyers in Australia have gone a little further in securing the rights of 50,000 Indian investors by filing caveats in court. Acting on behalf of these investors, the lawyers have lodged caveats over the Gold Coast's $100 million-plus Sheraton Mirage resort and a $4 million-plus luxury waterfront mansion at the Gold Coast's Sanctuary Cove, reports The Australian.
These caveats have been placed in a bid to preserve money for Indian investors stung in the $10 billion Pearls Group Ponzi scam, the report says. Uncontested, the caveat means Pearls Infrastructure Group is not permitted to sell the mansion, says the paper, which has been at the forefront of uncovering the Australian end of the PACL scam and providing crucial information to how the Bhangoo family transferred its wealth abroad. .
It is learnt that the caveats were filed in Australia without waiting for approval from the three-member Justice RM Lodha Committee appointed by market regulator SEBI. The Committee was set up to dispose land purchased by PACL so that the sale proceeds can be paid to the investors, who have invested their funds in the Company for purchase of the land, SEBI had said in a release. In fact, the caveats may have been filed because SEBI does not seem to be keen on engaging with investor groups with regard to the overseas assets.
The Australian has reported that over $130 million, raised by Pearls and its founder, Nirmal Singh Bhangoo from Indian investors, have been transferred to Australia from 2009, with $82 million of that used to buy and refurbish the resort. Much of that money came to Australia via Pearls Infrastructure Projects, a company owned and controlled by Bhangoo and his family.
PACL which has been asked to repay about Rs55,000 crore by the Indian regulators, also paid almost $300,000 to cricketer Brett Lee to promote its Ponzi scheme, the newspaper had reported earlier.
In 2011, Pearls Infrastructure Projects bought and combined two adjacent land parcels on Edgecliff Road in Sanctuary Cove - which included a mansion with five bedrooms, six bathrooms and a five-car garage - for $4.95 million, the report says.
Mr Bhangoo and several of his associates have been sentenced to prison in India and two schemes they controlled - Pearls Agrotech Corp and Pearls Golden Forest - have been placed in the hands of Indian receivers and administrators. However, despite Bhangoo's jailing, Pearls Infrastructure Projects remains controlled by the Ponzi scheme founder and his family, prompting Queensland barrister Niall Colburn and Shine Lawyers solicitor Alex Moriarty - who are running the Pearls class action - to lodge caveats on Monday over the Sheraton and the mansion to prevent them from being sold.
Mr Colburn, who was in India, told the newspaper, ""We now have sworn affidavits from over 50,000 Pearls investors and we expect to have many more in the near future. We aim to have these assets sold and the proceeds returned to the investors in Pearls who have suffered terribly."
There were an estimated five crore investors in Pearls, making it the biggest Ponzi-scheme in history, based on victim numbers.
Mr Colburn said the move to lodge caveats - which can be contested in court by the property owners - became urgent because the mansion was advertised for sale and the Sheraton was also understood to be quietly on the market.
On Saturday, the Edgecliff Road mansion was auctioned by Tony Trpeski of LJ Hooker Sorrento, but was passed in at $4.62 million.
Contacted by The Australian on Wednesday, Mr Trpeski said he was aware the property was connected to Pearls but unaware of the caveat placed over the property on Monday. He said there was "strong interest" in the property. "I am pretty confident we will have a result by the end of the week," he told the newspaper.
If a sale agreement for the property had been reached at the weekend, Monday's caveat would still have prevented it changing hands because legally the sale occurs only when full payment of the property settles, usually 30 days after the initial sales agreement is entered into.
The Sheraton was bought in 2009 by a newly created company called Pearls Australasia.
Mr Bhangoo's Pearls Infrastructure Group owns half of Pearls Australasia, with the other half owned by Gold Coast property developers Paul Brinsmead and Peter Madrers.