‘Business as usual’: Trial dates set for Linchpin

In a correspondence to his staff and members, Beacon Group managing director Peter Daly said that the Federal Court had this morning conducted a directions hearing. As a result, a four-day trial will commence on 14 March.

"Between now and the 14 March there are a number of procedural deadlines leading to a case management hearing on the 7 March,” Mr Daly said in an email.

“Beacon is not the subject of the ASIC investigations nor have there been any allegations made against directors,” he said.

“Receivers were originally appointed to Linchpin and Endeavour to conduct a report, but neither their powers nor the court orders apply to Beacon or our subsidiaries. It remains business as usual.”

Mr Daly said that Linchpin tabled its submission in response to the ASIC allegations on 15 January

“I am relieved we will finally have the opportunity to bring everything to a head,” he said.

ASIC commended proceedings against Linchpin Capital Group, the parent company of non-bank licensee Beacon Group, back in July 2018.

The regulator was concerned about two managed investment schemes operated by the company.

Both investment schemes listed by ASIC are called “Investport Income Opportunity Fund”, ASIC said.

ASIC said an investigation found Linchpin was operating the scheme “without holding an Australian Financial Services Licence as required by the Corporations Act” and used investor funds for its own purposes “without disclosing this use to investors”.

Additionally, the regulator said Endeavour Securities had entered into “related party transactions in contravention of the Corporations Act” and failed to properly disclose those transactions to investors, and that “monies invested in the schemes managed by Linchpin and Endeavour have been misapplied or misappropriated by Linchpin and Endeavour.”

At the heart of ASIC’s investigation is an unregistered managed investment scheme called the Investport Income Opportunity Fund, of which Linchpin is the trustee. Linchpin is also the sole shareholder of Endeavour, the responsible entity of the scheme.

As part of its year-long investigation into the complex web of companies, court documents revealed that ASIC conducted an examination of Ian Williams, Peter Daly and Paul Nielsen – who have all been directors of Linchpin, Endeavour and a number of other companies in the Linchpin Capital Group.

ASIC’s investigation found that the Investport Income Opportunity Fund has made personal loans to directors Mr Daly and Paul Raftery.

Court documents reveal that in the period 14 September 2015 to 25 July 2017, Linchpin, as trustee of the unregistered fund, entered into a number of written loan agreements whereby it made loans to Mr Daly.

By the written loan agreements, it agreed to advance to Mr Daly a total sum of $125,000. The terms were the Linchpin standard terms. Mr Daly gave as security the shares held by him in Linchpin.

“No purpose for the loans was stated in the loan deeds,” the documents noted. However, they later reveal that “during his examination, Mr Daly said that he was advanced the funds to assist him with personal financial difficulties”.

Meanwhile, in April 2016, Linchpin entered into a loan agreement with Mr Raftery for the sum of $30,000, with an initial advance of $10,000. Linchpin entered into the written loan agreement as trustee of the unregistered fund. The security given by Mr Raftery was the shares held by him in Linchpin.

“During his examination, Ian Williams (who signed the loan deed and specific security agreement on behalf of Linchpin) said that the purpose of the loan was to pay for Mr Raftery’s divorce,” the court documents revealed.