Sebi wins Australia court case against group accused of financial fraud

Market regulator Securities and Exchange Board of India (Sebi) has won a case against the PACL group in an Australian court.

According to sources, the regulator had appealed in Federal Court of Australia to recover dues worth Rs 4 billion stashed away by the PACL Group using several shell entities. The victory assumes significance since it forms a precedent for Sebi in approaching foreign courts to recover money of the collective investment schemes (CIS) frauds stashed overseas.

As per the order passed by the Australian court, Sebi will be entitled to receive sale proceeds of hotel and villas acquired by PACL in Australia. The group is accused of siphoning off investors’ money through 43 Indian front entities and four Australian front entities.

“This is a welcome victory since Sebi has been trying aggressively to recover the money stashed away by the PACL Group. As a market regulator, Sebi is empowered to sue in foreign jurisdictions on behalf of Indian investors. We could also use this judgment as a legal precedent for other cases in collective investment scheme matters,” said a regulatory official.

PACL is being probed by several regulatory agencies including Sebi, Central Bureau of Investigation (CBI) and Enforcement Directorate for collecting nearly Rs 500 billion from over 50 million Indian investors through ponzi schemes. In 2015, Sebi had passed an order against PACL and nine of its promoters and directors. Sebi had attached the assets of the company and the promoters since they failed to refund the money collected from the investors.

Sebi had also appointed a committee headed by Justice RM Lodha to identify and dispose the various properties owned by PACL group. Investigations revealed that PACL had tied up with Gold Coast property developers Paul Brinsmead and Peter Madrers to purchase properties in Australia.

Brinsmead and Madrers had floated a company Resort Corp, which developed large tracts of coastal land in the Tweed Shire in northern NSW before its group of 14 companies collapsed in March 2009, owing about $300 million.