Investigations into alleged mortgage Ponzi scheme continue

The Victorian Legal Services Board and Commissioner (VLSB+C) has said it is continuing to undertake a preliminary assessment of the circumstances relating to the operation of the loan business that may have been an elaborate Ponzi scheme.

In October, concerns were raised about the regulatory oversight of managed investment funds after the Victorian Legal Services Board and Commissioner (VLSB+C) confirmed it was conducting a preliminary assessment into allegations that the principal of AMS Ivanhoe Lawyers, John Adams, may have misappropriated investment funds from first mortgage loans.

The issue was brought to light following the death of Mr Adams at the age of 81 last month. It has since been alleged that Mr Adams had raised investor capital to put into mortgages which, when later repaid, were not discharged from the asset register.

VLSB+C has said that it has since been made aware that “a number of investors” have reported financial losses as a result of investing funds in the mortgage and loan business overseen by Mr Adams.

It added: “We are also aware of allegations that mortgages have been fraudulently registered against some titles to properties.”

The independent statutory authority responsible for the regulation of the legal profession in Victoria said it was continuing to undertake a preliminary assessment of the circumstances relating to the operation of the loan business.

This includes:

• The nature of the loan business and its relationship to AMS Lawyers.
• The identities of the investors in the loan business and the amounts they invested.
• The circumstances in which they provided funds to the loan business.
• The returns, if any, they received.
• Whether there are funds remaining in the loan business.

It noted that it has not yet appointed an external intervener to AMS Lawyers as the prerequisite statutory criteria to make such an appointment have not yet been met.

The body stated: “This matter is very complex. We will endeavour to reach preliminary findings by the end of the year or in early 2024.

“We will make as much information available to relevant persons as we lawfully can.”

It flagged that its investigative powers only extend as far as conducting investigations into the affairs of a law practice with an emphasis on trust money, trust property, or trust accounts.

A number of law practices, including Gordon Legal, are currently representing individuals who believe they have suffered losses as a result of the conduct of Mr Adams.

[Related: How could alleged mortgage Ponzi scheme go undiscovered?]