He was selling to the very end. Even as the life savings of his investors were frozen in his foundering mortgage funds, even as his staff were fleeing the sinking ship, Gold Coast financier Peter Drake was still traipsing the world raising more money.
As his $3 billion property fund empire was cratering, Drake was enticing financial advisers with three years of commissions upfront. If they placed $1 million of their clients' savings with LM Investment Management funds, they would get $100,000 cash.
The end came quickly, though. Directors of Peter Drake's LM pulled the pin this week, calling in administrators to sort through a labyrinthine clutter of interlocking companies and trusts from here to Hong Kong.
It is estimated that up to $15 billion in savings has been blown up in mortgage funds in Australia, much of it by Gold Coast entrepreneurs such as Drake.
Not only were the financial advisers still being paid "trailing fees" on the client funds they had already placed in LM - frozen or not - but the banks were making off with penalty interest payments, and LM was ratcheting up its management fees while forking out money on expensive lawyers to muzzle the press.
Fairfax Media, publisher of the Herald, is presently defending a defamation claim brought against the company and the author of this story for a report last May exposing LM's high fees and questionable performance.
While LM's investors now face the prospect of a costly battle for control of the funds - lawyers and insolvency practitioners don't come cheap - Drake himself is unlikely to face even a moment of financial hardship.
Besides his mansion on the Gold Coast, he has property in Fiji and London that can be identified publicly, and there are likely to be many assets from the years of LM fees. For example, there is a $16 million loan from one of Peter Drake's funds to Drake himself. You can find this disclosed in the notes to the 2011 accounts for the LM Managed Performance Fund.
This loan is secured by a personal guarantee from Peter Charles Drake and a fixed and floating charge over the assets of Century Star Investments Pty Ltd.
Notwithstanding that it is an absurdity for the loan to be guaranteed by the borrower, Drake himself, but CSI is neither a resident nor registered in Australia. It is a Hong Kong company. According to sources close to LM, this mysterious CSI has limited assets apart from a shareholding in LM itself.
For its part, LM has two shareholders: one being CSI - which holds 17 ordinary shares - and the other being Oceanboard Pty Ltd as trustee for the Drake Management Trust (with 18 ordinary shares).
Peter Drake is the sole director of Oceanboard and it is likely that Drake Management Trust may be the only shareholder of CSI, say sources.
A detailed list of questions was put to Peter Drake and LM executives and the group's external advisers. They declined to respond. And that is the story of just one interesting LM transaction.