PHOTO: FILE
A “thoroughly unscrupulous” real estate agent has been ordered to personally repay $7.4 million to a family after encouraging them to invest in a property opportunity that turned out to be one of Australia’s largest Ponzi schemes.
On Friday, the NSW Supreme Court ruled that Koon Tung ‘Gary’ Chu, a real estate agent from Sydney’s north shore, made “misleading” representations to a wealthy local family, obligating him to compensate them for their total losses.
Mr. Chu was employed by the Ralan Group, one of Australia’s largest private developers, known for high-rise apartments in Sydney and the Gold Coast. In 2019, Ralan collapsed into liquidation with $561 million in debt, jeopardizing its $2 billion pipeline of over 3,000 off-the-plan residential units. It was later revealed that Ralan had been insolvent for years and was operating a Ponzi scheme, leading to the imprisonment of the company’s director, William O’Dwyer, for fraud.
The Ralan Group collapsed in 2019 owing half a billion dollars.
The Chen family, who lost $7.4 million due to the collapse, had been fighting to recover their money for five years. The court found that Mr. Chu had been aware of Ralan’s “dishonest practices” but continued selling properties to the family, earning commissions in the process.
The Chen family, who had amassed wealth in Taiwan through successful businesses, had moved to Australia to invest in property. Mr. Chu initially helped them purchase a property in Lindfield, Sydney, which they could afford outright. However, he then persuaded them to buy 28 off-the-plan apartments from Ralan, worth over $7 million, promising “guaranteed returns” and falsely claiming that he was “rich” from his own investments with Ralan. He also discouraged them from seeking legal advice, claiming it would be a waste of time and money.
William O’Dwyer of the Ralan Group is now serving a four year jail sentence.
Justice David Hammerschlag, in his ruling, stated that Mr. Chu saw the Chens as having “a significant amount of cash” and exploited the situation for personal gain. The judge further described Mr. Chu as an “unsatisfactory witness” who knowingly passed on false information to the family, blaming Ralan for misleading him. The judge noted that Mr. Chu was “indifferent to the truth” and solely responsible for the family’s losses.
One of Mr. Chu’s deceptive tactics was encouraging the Chens to participate in Ralan’s ‘Released Deposit Scheme,’ where buyers would release their deposits from a trust and lend them to Ralan in exchange for a 15% interest return. Mr. Chu convinced the family that they would earn $2000 per day, or $720,000 annually, through this scheme. However, as the properties were never completed, the family lost their entire investment.
The court heard that Mr. Chu misled the Chens into believing that only ‘VIPs’ like them could access the 15% interest scheme, when in reality, it was open to all. This dishonesty, combined with Ralan’s falsified trust account ledgers and secretive handling of funds, ultimately led to the Chen family’s financial ruin.
A real estate agent has been found to have been selling apartments despite knowing of Ralan’s ‘dishonest’ activities. Picture: A Current Affair/Channel 9
Despite Mr. Chu’s claims that he did not earn commissions from the release of deposits, Justice Hammerschlag found that he received commissions on other sales, even when deposits were reassigned. The judge ordered Mr. Chu to pay back over $7 million, stating, “The plaintiffs’ damage was caused by Gary, and Gary alone.” Mr. Chu, through his solicitor, has disputed the findings and is considering an appeal.
SOURCE: NEWS.COM.AU