Mayfair 101 managing director James Mawhinney arrested over alleged dishonest conduct

The maximum penalty for each charge of dishonest conduct is 15 years imprisonment, but Mawhinney says he will defend the charges.

Following an appearance at the Melbourne Magistrates Court, he was granted conditional bail and is required to remain in Australia.

After an investigation by the Australian Securities and Investments Commission (ASIC), the Commonwealth Director of Public Prosecutions is leading the case against Mawhinney whereby it is alleged that on four occasions he misrepresented to the trustee of the IPO Wealth Fund that the IPO Wealth Group owned two Italian companies when it did not - Poveglia SRL and Retta SRL.

The dishonest conduct is alleged to have taken place between 9 August 2019 and 21 April 2020.

Mawhinney will next appear before the Melbourne Magistrate’s Court on 28 June 2024.

"I have been advised by my lawyers not to talk about the case. I refer to what Mr Richter KC said today in court: 'We expect to defeat these charges, and then we will consider bringing a case for malicious prosecution. Further, we want to put it on record that there is no harm alleged by the charges'," says Mawhinney.

The Mayfair 101 executive was previously given a 20-year ban on dealing in financial products in 2021 due to alleged contraventions of financial services laws in his conduct with products that led to millions of dollars in investor losses, but the following year the ruling was overturned due to procedural unfairness.

Also in 2022, the Federal Court dismissed an appeal from the Mayfair 101 Group against a $30 million fine over misleading and deceptive advertising of debentures products.

Ahead of a re-trial due to take place in October this year, Mayfair 101 recently revealed that in mid-2022 it had reached a "milestone settlement" with liquidators worth approximately $40 million at cost, thus reinstating the company with control over 80 per cent of assets that liquidators had sought, including $10 million tied up in two technology investments.

Last month Mawhinney described the settlement, approved by the Supreme Court of Victoria in November 2022 but released to the public on 15 March 2024, as "monumental".

"The liquidators have abandoned all claims against me and left Mayfair 101 with the majority of the assets. ASIC relied upon the liquidators’ mistaken claims to attack our business, causing harm to hundreds of innocent Australians," he said at the time.

"We need a Parliamentary inquiry to understand what has driven ASIC’s misconceived actions."

In a release, Mayfair 101 claimed the IPO Wealth Fund raised approximately $120 million from qualified wholesale clients between 2017 and 2020, and always met its obligations to unitholders before ASIC allegedly "launched an attack" on the investment group in March 2020.

The group noted that Mawhinney had written to the trustee Vasco Trustees and receivers in 2020 claiming the interpretation that he transferred $18 million worth of assets to the British Virgin Islands to the detriment of the fund’s unitholders was incorrect, due to an alleged misreading of the balance sheet that failed to account for a corresponding change in liabilities.

Mayfair 101 claims the trustee and liquidators did not accept they were in error and continued to press for the division of Mayfair 101 to be wound up. 

Mayfair 101 claims that the 2022 settlement that is now public "suggests the corporate regulator took the wrong position, supported false information when on notice of it, and aided the winding up of the IPO Wealth Holdings group to the detriment of 181 innocent Australian investors".

The group claims that Vasco applied for a silencing order which blocked Mawhinney from communicating with the fund’s unitholders until more than a year after the proceedings concluded.

"The IPO Wealth settlement represents a significant win for Mayfair 101’s lenders. They have been without principal and interest payments for four years while we defend against the mistaken actions of the liquidators, Vasco and ASIC," Mawhinney said last month.

"This outcome means Mayfair 101 retains assets that over time can be managed to achieve our goal of making our lenders whole. I am grateful for their patience while we get this terrible injustice sorted out."