A real estate agent has been ordered to pay back $7.4 million out of pocket after he misled a client to invest in what was later discovered as one of the largest Ponzi schemes in Australia.
A New South Wales (NSW) Supreme Court identified Koon Tung 'Gary' Chu as the real estate agent involved in the scheme. The amount equals the sum of the losses suffered by the Chen family, a wealthy Sydney household that he misled into taking part in a property investment opportunity, as reported by news.com.au.
The Ponzi Scheme
Chu worked as a real estate agent for the Ralan Group. At the time, the group was considered one of Australia's biggest private developers, known for building high-rise apartments in the country.
In 2019, Ralan Group collapsed, owing $561 million in debts. This jeopardized its $2 billion development pipeline for over 3,000 residential off-the-plan units.
Following the collapse, it was revealed that the Ralan Group's business was a Ponzi scheme---one of the largest reported in Australia. It was also noted that the business had already been insolvent years before it collapsed.
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The NSW Court found Chu was aware of the business's "dishonest practices." However, he continued to sell apartments to clients and earned a commission from the sales.
Chu had also approached the Chen family, who had successful businesses in Taiwan, to buy 28 off-the-plan properties from the Ralan Group worth over $7 million. He promised them "guaranteed returns" on property investments and said he became "rich" after he bought real estate properties from the developer.
In addition, Chu encouraged the Chen family not to hire a lawyer for legal advice on the investment.
Ralan Group's Fraud Case
After the Ralan Group went bust, authorities arrested the company's director, William O'Dwyer, for fraud. He pled guilty to six fraud charges related to a period between April 17, 2015, and June 6, 2018.
O'Dwyer was later sentenced to a four-year jail term, which includes a non-parole period of two years and four months, according to the Australian Financial Review.
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