A bid to turn a small beachside area into Australia’s next tourism mecca is all but over with the man behind the scheme banned from fundraising and advertising financial products for 20 years.
The Mayfair 101 group purchased a resort on Dunk Island in 2019, as well as almost 200 properties in the town of Mission Beach, 2.5 hours drive south of Cairns, as part of a plan to turn them into holiday rentals.
The company launched a slick advertising campaign and threw several lavish parties on the island and in Mission Beach, promising investors high returns.
But the plans unravelled as the cyclone-damaged island was repossessed and several legal challenges were launched by investors, some of whom lost their life savings.
In a Federal Court judgement on Monday, Justice Stewart Anderson said Mayfair 101 founder James Mawhinney had engaged in “misleading and deceptive conduct” and had a “total disregard for the Corporations Act and the ASIC Act”.
“And as a consequence, places the public at great risk of financial loss should Mr Mawhinney not be restrained,” Justice Anderson said in his judgment.
Justice Anderson also expressed concern about what had become of the funds invested and whether Mr Mawhinney “stands to benefit personally from those schemes”.
But he noted Mr Mawhinney had not been the subject of a criminal conviction, nor was there any evidence that the alleged had engaged in “conscious dishonesty or an intent to defraud”.
He banned Mr Mawhinney from advertising investments and seeking or accepting funds from the public in connection with financial products for 20 years in Australia.
ASIC deputy chair Karen Chester said the judgement demonstrated “firms need to do the right thing by their investors”.
“The online advertising is misleading by claiming to offer products that involve less risk, when in reality, investors could lose some or all of their investments.
“Advertisements also claimed investors could get their invested money out when they wanted but that was not the case.”
The ABC understands Mr Mawhinney is living in a unit at Mission Beach.
For sale signs now line the town’s streets, as houses that were initially sold to Mayfair 101 are re-listed through various receivers.
Retiree Nick Stipis sold two South Mission Beach properties to Mayfair 101 — his private residence and a holiday home.
The latter deal was honoured, but the sale of his residence was never settled, so Mr Stipis terminated the contract after multiple requests by Mayfair 101 to extend.
Mr Stipis said he was one of the lucky ones because he had not been left out of pocket.
“We have heard of people that are involved in bridging finances and sales fallen through — more than a dozen people that I know of that have done it tough,” he said.
“Most of them are elderly who were looking to downsize or sell out and move closer to family.”
Mr Stipis said there was initially a sense of “euphoria” when Mayfair 101 came to town, but that’s now changed.
Mayfair 101 was last month found guilty of making false, misleading and deceptive statements while advertising its investment products.
A penalty hearing in that case is scheduled for July.
The ABC has contacted Mr Mahwhinney for comment.
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