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ASIC terminates illegal investment scheme

The Federal Court has taken action to dissolve an unregistered investment scheme operated by a former AMP authorised representative.

MyWealth Manager was operated by Mustafa Mohammed, along with Mahek Mustafa, Mubashir Mohammed. The scheme related to MyWealth Manager Financial Services (trading as MyWealth Manager) and 3M Financial Planning (which traded as MCube Planners).

Mustafa Mohammed was an authorised representative of AMP from October 2013 to March 2017.

From at least February 2017, the scheme encouraged clients of MCube Planners to withdraw their existing superannuation and establish self-managed super funds to invest, by way of a loan, in MyWealth Manager.

The Federal Court found the scheme raised more than $7 million from 55 investors, with evidence suggesting nearly all of the investors' funds were misappropriated by the defendants.

"The investors have lost most, if not the entirety, of their superannuation savings through investing in the scheme," Justine Derrington said in his judgement.

"Some investors have attempted on multiple occasions to have their money returned, or recouped, however those attempts have proven unsuccessful."

During the period from  December 17 until 26 August, the defendants and their related companies received payments amounting to more than $7 million from the scheme, with many of the funds funnelled to parties that appear related to Mustafa.

Receivers report there is at least approximately $3 million in transactions between the defendants and individuals and their family which need to be investigated further.

The Federal Court found that the defendants contravened the Corporations Act by operating the unregistered scheme and also failed to hold the required AFSL to do so.

It has barred the defendants from carrying out financial services in Australia without holding an AFSL.

"The conduct which was engaged in by the defendants was of the most serious kind, directed as it was to the misappropriation of the superannuation savings of vulnerable people," Derrington said.

"It is difficult to image a clearer case for the granting of injunctive relief. That being so, injunctions should be granted to ensure that no further people suffer at the hands of the defendants as the result of the provision of financial services."

The three defendants; Mustafa Mohammed, his wife Mahek Mustafa and his brother Mubashir Mohammed, fled the country after ASIC uncovered the scam.

ASIC alleges that they are currently residing in India.

"Consumers should be wary when they are presented with investment opportunities offering high returns and should seek independent financial advice from a licensed financial advisor before making investment decisions," ASIC deputy chair Daniel Crennan said.

ASIC has also obtained an order to wind up related company MyWealth Protection, with Deloitte Financial Advisory appointed liquidators of the scheme and its related companies.

Read more: ASICFederal CourtMustafa MohammedMyWealth ManagerMahek MustafaMubashir MohammedMCube PlannersJustine DerringtonDaniel CrennanMyWealth Protection
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