This article is from the Australian Property Journal archive
MONEY for Living promoters Stephen O’Neill and Gary O’Neill have been committed to stand trial on a number of charges relating to allegedly obtaining financial advantage by deception after a committal hearing in the Melbourne Magistrate’s Court yesterday.
Stephen O’Neill pleaded not guilty on four charges of obtaining financial advantage by deception and four charges of dishonest use of position as an officer of a corporation while Gary O’Neill has reserved his plea in relation to four charges of obtaining financial advantage by deception and seven charges of dishonest use of position as an officer of a corporation.
The brothers were bailed on their own undertaking to appear in the Melbourne County Court on May 16, 2007.
The charges follow an investigation conducted by ASIC.
The O’Neill’s marketed the ‘Money for Living’ schemes through advertisements on radio stations favoured by the elderly and glossy brochures that featuring television and radio personality Paul Cronin and Dawn Fraser. In total, the ‘Money for Living’ schemes involved buying some 120 houses from elderly vendors.
The companies involved were Money For Living (Aust) Pty Ltd and MFL Property Holdings Pty Ltd both controlled by the O’Neill’s. Administrators have been appointed to both companies.
ASIC alleges the Melbourne based brothers obtained mortgages from a financier totalling almost $1 million by submitting loan applications that failed to disclose the life tenancies attached to the mortgaged properties.
The charges are being prosecuted by the Commonwealth Director of Public Prosecutions.
ASIC alleged that between about September 2004 and September 2005, MFL and MFLPH operated the business of purchasing properties from elderly vendor clients; paying the vendor either a lump sum, monthly payments over a number of years, or a combination of both; granting the vendors a tenancy for life in their former property at $1.00 per year rent; on-selling some of the properties to third party investors, subject to the vendors’ tenancy for life.
MFL also procured mortgage finance for the investors and retaining any remaining properties which were not on-sold to investors. MFL and MFLPH obtained finance secured by mortgage over these properties.
ASIC’s criminal action follows earlier civil action against MFL.
On September 29, 2006, Justice Finkelstein of the Federal Court delivered judgment and found that MFL offered the vendors a financial product under the general definition of the law (ss 763B(a)(i) Corp Act & ss 12BAA(4)(a)(i) ASIC Act); MFL made false and misleading statements in the brochure and on the website and MFL made false and misleading statements in the Agreements with the vendors.
The judgment was significant in that it confirmed ASIC’s view that the products offered by MFL were financial products.
Significantly, Finkelstein J. also found that the vendors life tenancies are secure, that is their tenancies are ‘guaranteed’ to survive any adverse claims made, provided that they continued to pay $1 per annum rent and do not vacate their home.
MFL and MFLPH were placed into voluntary administration on 26 September 2005 with George Georges and Peter McCluskey of Ferrier Hodgson being appointed as administrators.
Stephen O’Neill was convicted in 2001 of using forged documents and theft when he was a director of a mortgage loan business in the late 1990s.
Over four years to 1999, O’Neill drew cheques worth more than $2 million from the previous business’ trust account and used the funds for his own purposes. About $1 million was not recovered. These convictions automatically barred O’Neill from managing companies or serving as a director for five years.
Australian Property Journal
