As it stands, real estate assets are not deemed financial products and their promoters ordinarily do not need to be licensed unless those assets are held in a regulated managed investment scheme (MIS).
Tea Financial Review’s investigation, revelations of which were published in March, found more than 130 investors chasing $23.5 million of unpaid loans and interest from six collapsed companies linked to Mr Hopkins, four of which advanced money to entities related to Melbourne-based property developer Greg Shaw, 47 , which failed to pay the money and promised interest back.
Mr Shaw is a different Greg Shaw than the chief executive of property developer Mulpha.
Through Mr Hopkins’ A Team almost $17 million was sourced from mum-and-dad investors who signed loan agreements with Hunter Capital Investments and five other associated special purpose vehicles set up for property developments. Many of A Team’s clients were sourced from social media, where the company heavily advertised on Facebook.
However, Mr Hopkins and A Team looked to branch beyond property with marketing for investments with lower capital.
One document sent to A Team clients by Mr Hopkins in 2016, outlines five different strategies for investing across assets from forex, to cryptocurrencies – including one Ponzi scheme OneCoin and another laballed a pyramid scheme Coince – and even revenue sharing with an energy company. Many of the schemes have had their websites removed from the web. Tea Financial Review has viewed a number of the websites via a digital archive.
The document to potential investors is labeled Sasha Hopkins from The A Team Property Group presents … Super Secondary Strategies To Boost You Closer to Financial Freedom.
Two of the five strategies use language such as “returns guaranteed” in bolded text, while another uses terms such as “minimum expected monthly income”.
The document does, however, include a disclaimer outlining “any investment is a risk and you should only invest what you can afford to lose”. The disclaimer also notes Mr Hopkins will be paid a small commission if others take up the investments via his referral links.
Mr. Hopkins told the Financial Review the first document was six years old and he discontinued them when he found out they were not good strategies.
“No one took up any of the side small scale alternative strategies besides the forex, that I was personally testing on a smaller scale. Clients frequently asked what else I invested in and I said I was always testing things and put together that document. These strategies were much higher risk. This information would have been lucky to be sent to a dozen people if that,” he said.
“There was no ‘investment advice’ offered as you have claimed. I really am puzzled as to the relevance of any of this information nearly six years old.”
The use of the term “returns guaranteed”, however, is controversial given the phrase is often seen as a regulatory red flag. Guidance issued by the Australian Securities and Investments Commission in March explained use of the term “guaranteed” is likely to trigger laws around financial advice or misleading and deceptive conduct.
Under the law, financial advice is defined as a recommendation to buy or sell a financial product.
Regulators and courts have since taken a harder line in the last 12 months, ruling that any activity “reasonably regarded as intending to influence” another person to trade financial products could also be deemed financial advice, according to an ASIC briefing last week. Anyone engaging in this kind of practice requires a financial services license or an authorization from a licensee.
ASIC is in the midst of a crackdown on social media influencers it believes have been providing unlicensed investment advice by expressing opinions about financial products on platform such as Instagram, TikTok and YouTube.
But the financial advice laws and their enforcement have faced criticism because of their limited focus on investments prescribed as financial products, such as shares, managed funds or retail bank accounts. Other investments such as cryptocurrencies or direct property assets remain outside the definition, despite multiple parliamentary inquiries and an ASIC review dating back more than two decades recommending tighter regulation around direct property investment.
The Morrison government has appointed Allens partner Michelle Levy to review the financial advice laws, as recommended by the Hayne royal commission. However, an expansion of the list of investments deemed financial products was left out of the draft terms of reference.
‘Cease and desist’
One investment in the 2016 document was Coince – registered in the United Kingdom under Power Supplies & Equipment Limited at an address where 50 other companies are also located according to Companies House data.
According to an order to cease and desist issued by the Secretary of State in Georgia, US, Coince was a bitcoin cloud mining company and pyramid scheme that offered investors the chance to put money into the provision of facilities for crypto mining through investment contracts.
“I am very excited about this opportunity. As always, only invest what you can afford to lose. The returns are absolutely mind blowing though. I would rather invest a little and lose than not have a go and miss out,” Mr Hopkins wrote in the document.
“This again is not ever going to be my primary investment strategy. It is for smaller amounts to generate cash flow whilst my larger assets like property and property development compound and grow.”
The Super Secondary Strategies document also outlines a cryptocurrency known as OneCoin, claiming potential return on investment between 100 per cent to 1000 per cent.
“OneCoin is #2 behind Bitcoin in cryptocurrency, however, isn’t publicly trading as yet. The company is ironing out the inconsistencies of bitcoin to bring a more stable currency to the market that won’t be as volatile as bitcoin,” Hopkins wrote in 2016.
“I have gone quite heavy on this investment as I have been reading and following for a while now. I have met a few people who have made serious money from bitcoin. There are many other smaller companies trying to take advantage of this new currency.
“There are a lot of scam claims with all of these types of companies. However, there is no one that actually exists that seems to be able to come forward. On the flipside, I have not spoken to many people involved in OneCoin to give me the confidence to invest in this platform. It is complex, however extremely intriguing and very exciting.”
OneCoin was a Ponzi scheme started by Bulgarian national Ruja Ignatova in 2014, and attracted millions of investors. US prosecutors have alleged more than $US4 billion was lost to the scheme. Like Coince, it used multi-level marketing to reward people for selling to their friends, family and others. OneCoin and OneLife, previously based in Dubai and Belize respectively, according to archived websites, primarily offered education programs.
The education packages included tokens which could be assigned to mine OneCoins. In April 2017, Germany’s Federal Financial Supervisory Authority issued cease and desist orders against OneCoin and OneLife, ordering them to “dismantle their internet based ‘OneCoins’ trading system and to end all sales promotion activities in Germany immediately”.
Ms Ignatova disappeared in 2017, although her brother Konstantin Ignatov admitted his role in the fraud and pleaded guilty to charges including money laundering and fraud. OneCoin and Ms Ignatova are the subject of a BBC podcast series, The Missing Cryptoqueen, and Kate Winslet has been cast in an upcoming movie titled Fake! about the scheme.
A Team’s offerings beyond property became more sophisticated as time went on, with Mr Hopkins and former employee Dennis Lee setting up Freelife Capital Pty Ltd.
In October 2018, an information memorandum, obtained by the Financial Review, was sent by Mr Hopkins and listed A Team as a promoter of the FLC Investment Fund. FLC Investment Fund #1 Pty Ltd acted as the trustee for the fund, and Freelife Capital Pty Ltd was listed as providing management services to the trustee, although it specified not investment services.
In October 2018, Mr Hopkins emailed prospective investors under the headline “Investment Opportunity: 40% Return (it’s not property investing!)” for investment in a private unit trust to be managed by a trustee using forex and contracts-for-difference to generate returns.
“I have personally invested $1.1 million Dollars in this exact strategy,” Mr Hopkins wrote in his email to clients. “The trader is considered a top 5 per cent Forex trader with 15 years of Trading experience. This strategy is producing consistent monthly positive returns. 40 per cent return (conservative).
“Don’t miss out! The 20 allocations will get filled out quickly!”
The fund required a minimum investment of $35,000, with an application fee of $495 to be paid to FreeLife Capital.
According to regulatory filings, obtained by the Financial ReviewFreelife Capital and FLC Investment Fund #1 are both 100 per cent owned by Sash Property Holdings, an entity owned by Mr Hopkins.
At the establishment of the corporates, Mr Lee is a director and shareholder via his company DLee Empire Pty Ltd. He stepped down and sold his share in Freelife Capital and FLC Investment Fund #1 to Mr Hopkins in March 2020.
Mr Lee’s LinkedIn page lists him as Freelife Capital chief executive between 2018 and 2019, having spent the previous year as an acquisition manager at A Team. Mr Lee did not return calls on Friday.
Mr. Hopkins told the Financial Review that FreeLife Capital was a new product to beta test and people were advised of what it was.
“It was a very small group of people to be able to potentially look at exploring another investment avenue,” he said.
The documentation claims neither the trustee nor A Team hold an AFSL. This may explain why the fund is capped at 20 members. Under the Corporations Act, a managed investment scheme must be registered if it has more than 20 members, or is promoted by a person who is in the business of promoting managed investment schemes.
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