Police are investigating a massive NDIS-related financial fraud that used a forged letter purported to be from former assistant minister and Australian Senator Sarah Henderson to convince Korean investors to part with $395 million.
Source: Simon Johanson, Fairfax Media
Extortion police probe massive NDIS-related financial fraud
A joint federal and state police probe, led by Victoria’s fraud and extortion squad, is under way into company Living Bright Australia which is accused, along with a related firm, LBA Capital, of operating a “large-scale sophisticated fraud” against multibillion-dollar Korean investment house JB Asset Management.
The companies allegedly tricked the Koreans into thinking they were investing in specialist disability accommodation (SDA) supported by National Disability Insurance Scheme funding, convincing JB Asset Management to tip $395 million into eight separate funds to purchase SDA-approved properties.
The NDIS has a mandate to provide $700 million a year in funding for up to 12,500 specialist dwellings modified to suit the needs of people with disabilities.
The Age and Sydney Morning Herald have obtained a copy of official federal government correspondence, which has been confirmed as a forgery, that helped convince the Koreans of the legitimacy of the investment.
The glowing assessment is written on the official letterhead of the former federal member for Corangamite, Sarah Henderson, who late last year was the assistant minister tasked with overseeing the NDIS.
In a letter replete with her signature, now Senator Henderson purportedly backed what the Koreans later allege was a large-scale embezzlement.
“I applaud your focus on providing much needed single occupancy housing for young disabled persons … I will ensure that my Department, the National Disability Insurance Agency (NDIA) provides you with their full support,” the forgery said.
“To track progress and address any potential project constraints, I will organise regular briefings with Living Bright Australia, the NDIA and myself,” it went on.
Senator Henderson, who after losing her Corangamite seat in May this year was appointed to the Australian Senate, confirmed the letter was forged and said the matter had been immediately referred to the Australian Federal Police.
“The Department of Social Services and the NDIS have no record of this letter ever being sent,” Senator Henderson said.
Senator Henderson said LBA Capital contacted her last year requesting a meeting about their proposal, which she refused.
“I wrote back on March 14, 2019, declining to meet and, without commenting on their investment proposal, conveyed publicly available information about specialist disability accommodation,” she said.
Once the Koreans had set up the eight Australian SDA funds, LBA Capital allegedly transferred large sums to related companies and went on a property spending spree, purchasing multiple “unauthorised” development sites unsuitable for NDIS accommodation, including putting a $2.1 million down payment on Sorrento’s historic Continental Hotel in Melbourne’s Mornington Peninsula.
JB Asset Management said it had referred the matter to Victoria Police and was “assisting with their investigation.”
“Many ordinary Korean investors have suffered, and continue to suffer, as a result of this very serious misconduct,” the company said through its Australian lawyers, Allens.
“The Victoria Police Fraud and Extortion Squad is currently investigating allegations of fraud and false document offences relating to property investment,” a police spokesman said.
Fraud or forgery convictions could attract hefty fines for the companies.
In a writ filed in the Supreme Court, JB Asset Management says it managed to claw back $340.6 million after gaining a freezing over LBA’s assets and bank accounts, but $54 million of the investors’ money is still missing.
Major property developer Caydon caught up in alleged Korean investment fraud
Other high-profile individuals and businesses have been dragged into the case.
The Koreans allege they were supplied with forged title documents and signatures to prove LBA paid $32.2 million for 41 non-existent SDA apartments in the luxurious Australia 108 Southbank development.
Another non-existent purchase involved forging the signature of Caydon property developer Joe Russo to prove that LBA bought 48 one-bedroom units in Caydon’s Moonee Ponds project.
Lendlease is considering taking action after LBA allegedly passed-off one of its companies as a Lendlease entity to give corporate weight to its investment thesis.
A sophisticated “information memorandum” given to the Koreans by LBA to justify their investment strategy, also obtained by The Age and Sydney Morning Herald, outlines a return on investment of up to 43 per cent from purchasing multiple one-bedroom SDA apartments.
The document uses Lendlease, Macquarie Bank, builder Hickory and other firms’ logos in a “partnerships” section