When a property scam hits home
A PROPERTY marketeer exposed for selling second-rate properties under the guise of independent financial advice has been fined $17,000 after repeatedly ignoring a "do not call" register designed to stop people being harassed by call centres.
A PROPERTY marketeer exposed for selling second-rate properties under the guise of independent financial advice has been fined $17,000 after repeatedly ignoring a "do not call" register designed to stop people being harassed by call centres.Last week a Sun-Herald investigation provoked detailed responses from aggrieved investors after it reported Faye Kotsis, a discharged bankrupt, had breached her legal obligations as mastermind of Heritage Financial Solutions.The report showed Heritage and its associated companies, including lenders and body corporates, had used high-pressure selling tactics while failing to disclose their secret commissions.The fine was imposed by the Australian Communications and Media Authority, marking the first public action by any regulator about a scheme that has sold more than 400 properties for about $65 million.Heritage was the subject of 75 complaints to ACMA for breaching the "do not call" legislation, resulting in warnings dating back to September 2010 before the fine was announced last week.Investigations have also revealed how Heritage and its associated companies started targeting retirement savings by offering supposedly independent financial advice. In 2009, the company started placing advertisements stating: "Learn how to use your super to buy property."According to an insider, the scheme targeted investors with at least $80,000 in superannuation savings and used that money as the basis of the deposit for a property owned and sold by companies associated with Heritage.Tax rules surrounding the use of superannuation to buy properties are highly complex, including a condition that any recovery of loans must be limited to the value of the property the loan is secured against.Complexities were disregarded by Heritage in the case of Cory French, 37, who paid $335,000 for a house-and-land package in Laidley, Queensland.Instead of a special "limited recourse" loan to buy Mr French's house from his self-managed superannuation fund, Heritage, through its lending arm, Sunpac Finance, had arranged a normal home loan.Westpac, which provided the finance, was never told the loan was for a superannuation fund.Despite assurances everything was OK from Heritage, Mr French showed his paperwork to an independent financial adviser, Tim Casey."He asked us, 'How did you get away with this?' He said, 'We're not even going to touch this.' He said the only way is to start again and get a new super fund," Mr French said.The result was an extra $10,000 in fees to set up a second fund, after paying Heritage $3600 to set up the first fund. When Westpac was alerted to the error, its staff apologised and set up a new loan."Westpac did contact us and they admitted that we have got an illegal loan through our super," Mr French said. "And they said, 'We have found a lot of the Heritage loans were wrong,' but they were admitting their mistake that they didn't pick it up either. They transferred it over to a proper loan, and they didn't charge us because they should have picked it up."A Westpac spokesman, Danny John, said: "When we became aware of the error in Mr French's loan documents, we took steps to assist him to put his self-managed super fund into a position of compliance, at no cost to him."The Frenches, who live in Woronora Heights, now believe their property is worth only $270,000, a common story among Heritage's clients."I don't know how they got my number. They sent me a text message, 'Have you ever thought of buying an investment property with your super?'"I had a fair bit of super sitting there. I talked it over with my wife because that was eventually what we wanted to get into. It sounded great."But they have totally f---ed us ... If we had the money we would take them to court or see what action we could get."Do you know firstname.lastname@example.org