# LM Investment Management  -  Lack of  confidence



## dinga (25 April 2012)

I would like to contact fellow investors in the LM First Mortgage Income Fund (FMIF), to arrange a forum for us to discuss the proposal by LM to change the Constitution of that Fund.

There is presently no ability for investors to discuss the proposal amongst themselves, and develop other recommendations/proposals to be put to a members vote as is their right under the Fund Constitution. I have tried to make constructive suggestions about how LM can facilitate such a process but is seems none will be adopted by LM. Given this, and LM's refusal to provide me with a copy of the members' register, I can only conclude LM seeks to discourage direct investor interaction in order to restrict investors' focus to only those matters promoted by LM.

While on the surface LM's proposal appears to be simple, it seems to me the implications of the proposed changes to the Constitution are profound and will likely have significant impact on the value of my investment.

While there may be benefits to LM, in my view LM has failed to provide sufficent information to demonstrate that its proposal is in my best interests as an investor eg. where is the information about other options that were identified and analyzed, and why are they not preferred?; Where is the financial modelling of all options?; Has the bank financing facility been secured and do the terms and timeframes place any limitation on investors' position? etcetcetc

In the absence of such, I have concluded there is insufficient information for me to make a informed decision on the LM recommendation being put to members' vote. I see this as being unsatisfactory, as it seems investors will be pretty well locked into the LM process if the vote is passed, and I will have to blindly gamble on what may give me the "least worse" outcome.

In my view, the vote scheduled for 16 May should therefore be postponed until sufficient information is available. 

If there are other like-minded investors in the LM FMIF, I suggest we urgently act to:
* discuss LM's performance to date, including whether LM should be removed and replaced as the 'responsible entity'
* discuss the changes to FMIF Constitution proposed by LM, so that we can all be better informed (I see this as especially important given my understanding a significant proportion of investors are elderly and may rely on the opinion of the advisors who introduced them to LM and whose independence may be questionable if there are trailing commissions)
* identify any information deficiencies, and request such information be provided prior to the vote
* discuss the need for LM to hold Investors Forums - also prior to the vote - to provide members with the opportunity to discuss and question LM on its recommendations
* identify alternative options to be put to those Investors Forums and/or to a vote by investors

Fellow LM FMIF investors please provide urgent feedback on these thoughts.


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## dinga (25 April 2012)

*LM First Mortgage Income Fund  -  have you been shortchanged on interest?*

It seems there are many investors in LM First Mortgage Income Fund whose interest payments were treated as 're-investments'.

The Financial Statement for Y/E 30 June 2011 records that over A$12 million in interest was treated by LM as being 're-investments' in the Fund.

I assume that many/most of the investors due that interest would be very unhappy with such treatment (and the impact of the consequent +20% haircut applied to unit prices).

In my circumstances, I believed the PDS indicates that interest should be paid in the period subsequent to the submission of a redemption request and that LM's treatment was not supportable.

I took the matter up directly with LM and after extended and extensive effort had them agree to rectify the situation (despite LM stating there was no liability to do so).

Any unhappy FMIF investor in similar circumstances can contact me and I'll provide full details.


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## dinga (25 April 2012)

*LM Currency Protected Australian Income Fund  -  Calling*

I hold 2 investments in the LM Currency Protected Australian Income Fund (CPAIF), which is one of a number of feeder funds for the LM First Mortgage Income Fund (FMIF).

CPAIF investors should be aware that LM is proposing changes to the FMIF Constitution that I believe will have a substantial impact on investments in those feeder funds.

Despite this, at present LM will not allow feeder fund investors any input into those changes. This is unacceptable to me.

As Responsible Entity, LM holds those CPAIF units on my behalf. While LM will rightly will not use those Units to vote (as it recognizes the clear conflict), given the extraordinary circumstances it should afford investors in feeder funds the opportunity to vote on the proposal on the basis of their FMIF indirect investments.

In my view, CPAIF members should request a special meeting to thrash this issue out with LM and have it corrected - with the FMIF vote to be suspended until that is done.

I'd welcome any thoughts from feeder fund investors especially in the CPAIF.


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## Oscar (30 April 2012)

Dinga, I share your concerns and am surprised that no public forum activity has occurred before, for frustrated LMFMIF investors. The limited detail in their proposal to split the fund, before requiring members to decide whether to support this proposal, is lamentable. As a member of a feeder fund, I have no vote and I find this very unfair.

There was an article in the AFR on 28 April about LM's proposal, but it mainly set out the facts and included the criticisms of one investor.

Reinvesting interest payments is unacceptable - I imagine most investors are retirees like me, who need the income. But my main concern is how LM will split its assets between those for sale and those to be held, once it knows investors elections (assuming the vote to split the fund passes). The list LM have announced already may be irrelevant and it is essential that sellers and holders are treated equally and the whole process is fully transparent. 

It seems to me that LM will take the members approval, if this occurs, as rubber stamping all the changes in the constitution, some of which are very significant, and giving them carte blanche to continue managing the fund how they like, with less than adequate provision of information to members. With their ambitious plans for their other funds, I would suspect that the LMFMIF is an embarassment to them and they would like it cleared up ASAP.


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## Dudd (5 May 2012)

I'm in the same boat as you with LMFMIF.  There are certainly many unanswered questions re the current proposal.  It would be great to get some independent advice on what an investor should do.  I haven't seen anything from gurus of the financial media on this.


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## ASICK (18 May 2012)

*Re: LM First Mortgage Income Fund  -  have you been shortchanged on interest?*



dinga said:


> It seems there are many investors in LM First Mortgage Income Fund whose interest payments were treated as 're-investments'.
> 
> The Financial Statement for Y/E 30 June 2011 records that over A$12 million in interest was treated by LM as being 're-investments' in the Fund.
> 
> ...




Hi, could someone direct me to a link for the fund's financials as at 31 December 2011?  I notice the return was filed with ASIC on 15 March 2012.  I also note on 16 May 2012 that the manager lodged a notice of an amendment to the fund's constitution.

(I'm not an investor in your fund and have no financial interest in  the manager or the fund's outcome)


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## dinga (19 May 2012)

*Re: LM First Mortgage Income Fund  -  have you been shortchanged on interest?*



ASICK said:


> Hi, could someone direct me to a link for the fund's financials as at 31 December 2011?  I notice the return was filed with ASIC on 15 March 2012.  I also note on 16 May 2012 that the manager lodged a notice of an amendment to the fund's constitution.
> 
> (I'm not an investor in your fund and have no financial interest in  the manager or the fund's outcome)




I have a copy that I can send to you.  But before doing so, I would like to know why you want it since you have no interest in the fund


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## dinga (19 May 2012)

Dudd said:


> I'm in the same boat as you with LMFMIF.  There are certainly many unanswered questions re the current proposal.  It would be great to get some independent advice on what an investor should do.  I haven't seen anything from gurus of the financial media on this.




At last, an excellent article by a knowledgeable, financial journo.

http://www.smh.com.au/business/the-...-management-20120517-1ysnv.html#ixzz1v6ASmhu7

TIME TO GET RID OF THE BLOODSUCKERS


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## ASICK (19 May 2012)

*Re: LM First Mortgage Income Fund  -  have you been shortchanged on interest?*



dinga said:


> I have a copy that I can send to you.  But before doing so, I would like to know why you want it since you have no interest in the fund




Hi "Dinga", I sent you a private message in relation to your query  (see "Notifications" at the top of the message page).  Thanks.

As a matter of interest, you guys might like to browse the postings on the "Equititrust" thread here at ASF.

Just a year or so ahead of you guys, and a couple of years behind City Pacific's First Mortgage Fund.


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## ASICK (21 May 2012)

*The Adviser you have when you don't have an Adviser?*

Well, I had a look at the PDS for the FMIF, and as far as fees go, it's wide as a barn door.

A management fee of up to 5.5% of net assets at the manager's discretion.

If one invests without an adviser, then 1.1% is skimmed off into management fees - unbelieveable!  I guess that's for everyone to equally feel the pain of paying an adviser: the adviser you have when you don't have an adviser?

Even when the fund is performaning poorly, as far as I see it, the manager is able to take a fee of up to 5.5% of net assets!!

Coupled with the massive interest on fund debt, wow!!!!

Makes an elevator look slow..

Going down?


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## ASICK (25 May 2012)

Just had a look at the "Liquidity Offer".  Very interesting. Seems that in the end, after reserves for certain expenses and obligations, the residue is shared amongst the "Sellers" (SELL)  and "Buyers" (HOLD).  The Sellers share is gifted to the Buyers and then the buyers use that gift as well as their share to buy the units from the sellers.  The Sellers end up with the net proceeds of the sale and the buyers end up with the units (on a pro-rata basis and according to Distributable Net Proceeds / Actual Unit Sale Price).  

The deal seems reasonable until one looks at the LVR table in the fund's RG.45, eg. August 2011:
23 LOANS, LVR RANGE 90.01% to 100%, LOANS TOTAL $388.3m
3 LOANS, LVR RANGE 80.01% to 90%, LOANS TOTAL $21.5m
1 LOAN, LVR RANGE 70.01% to 80%, LOAN TOTAL $30.5m
2 LOANS, LVR RANGE 60.01% to 70%, LOANS TOTAL $10.1m
1 LOAN, LVR RANGE <50%, LOAN TOAL $11.2m

LVR is indicative of underlying security (lower LVR, better security, and visa versa). As "oils aint oils Sol", neither are loans, loans.  According to the table, some loans are better quality that other loans.  Since good old ASIC doesn't require a manager to disclose the LVR for each loan and doesn't require each loan to be identified, any or all the loans which comprise each range could all fall to one end (say, 100% or 90.01%) or anywhere in between.

"Base Unit Sale Price: The Base Unit Sale Price is calculated by discounting the current book price of a Unit by a factor equal to the discount on the book value of the Sale Assets that are expected to arise when they are sold."

Does the Base Unit Sale Price tell you much about the quality of the asset? I don't think so, because it doesn't disclose the Book Value, the supported loan, and of course, the LVR.

If security assets supporting loans in the high LVR ranges are sold, then Sellers could find themselves in quite a mess because of the formula:

Distributable Net Proceeds / Actual Unit Sale Price (AUSP)

To my mind, the value of AUSP would rise or fall with the quality of the asset.  Poor quality assets (that is, lower LVR, asset with little market appeal) might cause a greater number of units sold to the buyers for each $1.00 recovered - whereas good quality might create quite the opposite (and quite desirable) outcome, less units sold for each $1.00 recovered from the fund.

And what's good for the sellers is not going to be good for the buyers, and visa versa. (I refer here to the value of the units at the time of the sale - the buyers would like to get the units cheap and the sellers would like the highest possible value - only one side will win so only one side will be happy with the deal).

I just can't imagine the manager selecting all the good assets with nice market appeal to be sold for the punters who leave to walk away with the best outcome thereby disadvantaging those who stay (the buyers).

If the manager disclosed the value of the loan and the book value of the underlying security asset and confirmed the loan's LVR, then punters might have a good chance at making a well informed decision - but I'd guess if they did that, neither the sellers nor the buyers would be pleased.

My view only. (in an effort to encourage debate)


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## ASICK (26 May 2012)

To my mind, the value of AUSP would rise or fall with the quality of the asset. Poor quality assets (that is, higher" LVR, asset with little market appeal) might cause a greater number of units sold by the sellers for each $1.00 recovered - whereas good quality might create quite the opposite (and quite desirable) outcome, less units sold for each $1.00 recovered from the fund.


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## dinga (26 May 2012)

ASICK said:


> To my mind, the value of AUSP would rise or fall with the quality of the asset. Poor quality assets (that is, higher" LVR, asset with little market appeal) might cause a greater number of units sold by the sellers for each $1.00 recovered - whereas good quality might create quite the opposite (and quite desirable) outcome, less units sold for each $1.00 recovered from the fund.




AH, ASICK my head is spinning with the greater realization that we poor investors in FMIF and its feeder funds are about to be much poorer.  Many thanks for helping me muddle thought the numbers but I must admit to being mystified by the lack of input by other investors  -  WHERE ON EARTH ARE YOU???????

Am chasing LM for the February 2012 RG45 -  that should really put a spot light on the current dire position (suspect it will be something like.....
*  Net Assets:  $354mio  (fictional as pumped up by capatilized interest)
*  B+gg+r all Cash receipts pa. - maybe $0.85 mio (no surprise since most of the mortgage securities pay no interest as LM has taken possession - my guess is around 75% of 'em) 
*  over 90% of the Loans will have LVR above 90% (probably closer to 100%)
*  Continued (fire) sale of assets needed at a minimum to (a) pay DBank $13.5 mio by June 2012, to reduce the loan amount; (b) pay DBank some $9mio in yearly interest (rate of 18%); (c) pay LM its huge management and loan fees (say $12mio) 
*  expect further write-down / provisions to reduce security values (unit price is currently 73 cents - any predictions on where that will go next?)


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## ASICK (26 May 2012)

*Have I Got a Deal for YOU!*

The efforts by managers seem to comprise (1) divide and conquer, and (2) maintain or better the manager's income stream.  If a manager is compelled to sell off the fund's assets, then down goes the manager's income.  But the speil is always to provide liquidity for those who want to leave, and accommodate those who want to stay.  It's all about "choice" - or is it?

Interestingly, the LM Explanatory Memorandum doesn't affect the manager's rights - the 5.5% management fee as well as other fees (see Constitution Cls. 18.3 - 18.5) stand firm even though members (who want to stay) are asked to stay in for three years before being able to submit a valid withdrawal notice (other than hardship cases) even though such a notice would be futile in the event the fund remains frozen.   

Members are asked to give ground, to extend what's left of their respective investments, but the manager is asked to give nothing!   Same old, same old.

Keep in mind that  there is no compulsion for the manager to issue a further Investment Allocation Request/s (proposed clause 9A40)

So, it's likely that unless market conditions change radically for the better, the fund will continue on as a frozen fund in three years time - after three years of heaps of fees and costs sapping away the fund's value.

And then there's  the facility debt - The City Pacific FMF(now Trilogy's PFMF) has a 10% LVR covenant on its CBA loan and the manager (Trilogy)  returned money back to investors in priority to the CBA debt, but this move (and fund impairments) caused the forced repayment of that amount of the facility debt necessary for the fund to comply with the 10% LVR convenant - one such forced repayment of the facility in March January/February 2012 was $5.5m!

The interest on your fund's loan is quite extraordinary but I have no idea of the LVR on that loan - do any of you?   

As a fact, if the fund's value drops to a certain level (by repayments to members or impairment/losses) then the facility will have to repaid at a faster rate - that in turn reduces the amount of money that's able to go back to investors (proposed clause 9A11(a)) - repayments to hardship will also reduce that value (proposed caluse 9A11(b)) - expenses including management fee (proposed clause 9A(e)) will also reduce the value.

It seems to me that if the manager's proposal is accepted, then the sale of assets to return money to investors  (sellers) will cause further losses, losses only the sellers will suffer (those who remain will be insulated from such losses, but not from further impairments on assets that are held, and of course, not insulated from the impact of the loan, and the ongoing fund expenses, including the massive management fees)

It doesn't take too much imagination to realise that if the good assets are sold first, those who leave would gain, and if the rag assets are sold first, those who stay would gain.

So, if you want to get out, the choice is to sign for the deal and hope the good assets will go to the chopping block first, otherwise you might wish to hadn't signed up.

If you want to stay, the choice is to sign up for the deal and hope the assets sold aren't the good ones, and that the massive fees and interest charges aren't aided by a ever deceasing value in the assets.

"Choice" is wonderful - go for it!  

In my view, the only fair outcome is to sell the assets off and distribute on pro rata basis (according to unitholding) to all members.

Lastly, proposed clause 9A11(d) "the amount required for feeder fund payments for distributions and expenses allowed under the Deutsche Bank Facility Agreement,' - are the feeder funds permitted a better deal for their respective investments in the fund?


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## ASICK (27 May 2012)

An excerpt from the PIF action group update:-

"LM FIRST MORTGAGE INCOME FUND - NOTICE TO INVESTORS

Dear PIF AG members, if you are also an investor in the LM First Mortgage Income Fund (another Gold Coast property fund which like the PIF was frozen in 2008) and are feeling helpless in dealing with the continued huge unit value loss, there may be some real help available:

Tony Martin SC and Greg Drew are our barristers for the PIF class action, and have indicated that they would be happy to talk with you about LM First Mortgage - as they believe that there may be a practical way forward to recover your losses. Tony and Greg have been looking closely at LM FMF for a considerable time and are aware of the problems with the fund. 

Greg Drew and Tony Martin are ideally experienced in compromised mortgage fund matters and are very approachable. Act now - give them a call

Contact as under:
Greg Drew (Barrister)                                    Tony Martin SC
Selborne Chambers Sydney                               Selborne Chambers Sydney
Areas of Practice:                                           Areas of Parctice:
Commercial                                                    Commercial, Conflict of Laws, Contracts
Equity                                                           Defamation, Equity Inquests, Tribunals
Banking & Financial Services                              Insurance, Intellectual Property
Life Insurance                                                 Appellate Banking, Building and Construction
Intellectual Property                                         Professional Negligence, Royal Commission Tribunals
Phone: 02 8915 2117                                               Phone: (02) 9233 5188
Email: gdrew@selbornechambers.com.au                 Email:asmartin@selbornechambers.com.au "


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## banco (27 May 2012)

dinga said:


> At last, an excellent article by a knowledgeable, financial journo.
> 
> http://www.smh.com.au/business/the-...-management-20120517-1ysnv.html#ixzz1v6ASmhu7
> 
> TIME TO GET RID OF THE BLOODSUCKERS




Did they have security at the meeting?  I'm not sure I could have restrained myself if I was one of the poor bastards trapped in this fund.


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## ASICK (31 May 2012)

http://www.abc.net.au/news/2012-05-30/asic-wants-warnings-of-self-managed-super-risk/4041794

"The corporate regulator has suggested that self-funded retirees be required to acknowledge that they are not covered by the prudential regulator's guarantees for theft or fraud.

The move comes after investors in Trio Capital discovered they were not eligible for compensation when the company collapsed in 2009.

The parliamentary report into the Trio collapse highlighted an "expectation gap" among many Trio investors, who wrongly believed that their self-managed funds were covered and guaranteed by the prudential regulator APRA.

Investors quickly discovered they were "swimming outside the flags", and that managing their own super carried a much higher risk and no compensation."


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## dinga (3 June 2012)

dinga said:


> At last, an excellent article by a knowledgeable, financial journo.
> 
> http://www.smh.com.au/business/the-...-management-20120517-1ysnv.html#ixzz1v6ASmhu7
> 
> TIME TO GET RID OF THE BLOODSUCKERS




Here's the link to another article about the LM "meeting to have a meeting"

http://afr.com/p/personal_finance/s..._frozen_fund_investors_3lKdZ6kbAIJfLyvAommpAJ


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## dinga (11 June 2012)

*Re: LM Investment Management  -  RG45 Extraordinaire*



dinga said:


> Am chasing LM for the February 2012 RG45 -  that should really put a spot light on the current dire position (suspect it will be something like.....
> *  Net Assets:  $354mio  (fictional as pumped up by capatilized interest)
> *  B+gg+r all Cash receipts pa. - maybe $0.85 mio (no surprise since most of the mortgage securities pay no interest as LM has taken possession - my guess is around 75% of 'em)
> *  over 90% of the Loans will have LVR above 90% (probably closer to 100%)
> ...




An update on the RG45 issue - which I find completely extraordinary (but I guess not really surprising given the continuing littany of LM disappointments) 

Under ASIC Regulatory Guide 45, LM is required to provide updated RG45 disclosures at least every 6 months or more frequently to explain if material changes occur earlier.

The latest RG45's for the FMIF and CPAIF (and I assume WFMIF) were issued in August 2011, with the accompanying Portfolio Update as at 31 May 2011.

When I asked to be provided with a copy of the February 2012 updates, LM advised that _"ASIC only requires RG45 documents to be completed as and when there has been a 'material change' to the funds, the last time was in August 2011."_

When I asked LM to reconsider that extraordinary advice (since there had clearly been many material changes since May 2011/August 2011 including LM's radically changed strategy; arrangements with Deutsche Bank; write-down in unit values; liquidity position; LVRs etcetc), LM simply said _"We are preparing an updated RG 45 to accompany the further financial and asset information to be sent to investors with the voting information and their invitation to elect investment allocations"._

I find it very disturbing that financial information of critical interest to investors has not been updated for over a year.

Of even more concern to me is that in May 2012 LM was asking investors approve major changes to the FMIF Constitution (with profound implications for their investments) without the benefit of updated/current information.

I also think it is completely unacceptable for investors to now have to wait another 2 or 3 months before receiving such information (assuming the new vote occurs in August/September) 2012.

I have raised these concerns with LM but don't hold much hope of success since an email to me from the CEO (Mr Drake)  himself was that _"we are hardly in the mood to respond to your ongoing deluge of demands"._

Is this behaviour typical of that exhibited by REs of other frozen funds????  

Any tips/suggestions on what we poor investors can do to best protect our interests?


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## No Trust (12 June 2012)

Looks like the hallmarks of another Equititrust... Gold Coast at its best...


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## k.smith (12 June 2012)

*Re: LM Investment Management  -  RG45 Extraordinaire*



dinga said:


> An update on the RG45 issue - which I find completely extraordinary (but I guess not really surprising given the continuing littany of LM disappointments)
> 
> Under ASIC Regulatory Guide 45, LM is required to provide updated RG45 disclosures at least every 6 months or more frequently to explain if material changes occur earlier.
> 
> ...




Can you get a copy of the unitholder registry  ?

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s173.html

It would seem to me that as long as the request falls in line with s.173 (3) (a) and the information in the registry is used in compliance with the act...???

Schedule 4 (link below) sets out the fees involved...

http://www.austlii.edu.au/cgi-bin/s...tml?stem=0&synonyms=0&query=prescribed amount


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## ASICK (13 June 2012)

*LM Investment Managment Ltd.  letter to investors dated 12 June 2012*

Well, I thought I'd seen it all.  I've just read the letter LM sent to investors - what a load of rubbish.  

The law mandates that an investor is entitled to obtain a copy of the fund's members' registry for the purpose of writing to investors and expressing an opinion as well as to seek the opinions of others.  Without such a course of action, members could not get together and  pursue common goals such as changing a manager or amending the fund's constitution. 

Yes, investors are all strangers to each other until they get to know each other - I most certainly hope that members of the LMIF get to know each other sooner rather than later - get a copy of the registry - talk to each other - and do what you feel you have to do.

Good luck with it.


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## dinga (13 June 2012)

*Re: LM Investment Managment Ltd.  letter to investors dated 12 June 2012*



ASICK said:


> Well, I thought I'd seen it all.  I've just read the letter LM sent to investors - what a load of rubbish.
> 
> 
> The law mandates that an investor is entitled to obtain a copy of the fund's members' registry for the purpose of writing to investors and expressing an opinion as well as to seek the opinions of others.  Without such a course of action, members could not get together and  pursue common goals such as changing a manager or amending the fund's constitution.
> ...





Well here it is  -  must admit I was astounded when I opened this email last night.

For me, this is proof positive that LM has completely lost the plot (perhaps "LM" is short for 'Lost Marbles' as well as 'Lost Money').  Such an hysterical and absurd response to investors seeking to exercise their clearly specified rights under the Corporations Act really makes me wonder if LM's motivations are solely about protecting their huge management fees, or is there something much larger in play?  

Dunno - but stay turned for the next thrilling update on developments  -  and as always, comments/suggestions really welcomed.   


_12 June 2012

RE: Investor Details and the Australian Privacy Act

We are writing to inform you of what LM believes to be a serious bypass of the Privacy Act that exposes your personal salutation, address and investment details to unknown parties within, and from outside of Australia.

As a Responsible Entity (Fund Manager), we are obliged to act in strict adherence to the Australian Privacy Act.  We employ processes of separation of information, secure password access and office shredding to ensure that investor information and account records are kept in strict confidentiality.

However, there is a component of Corporations Law that enforces us (the Fund Manager), to hand over the Fund register to any person who asks in the correct manner.  That means that we are obliged by law to pass over to someone in or out of Australia, your personal information such as name, address and investment details.

The applicant must apply for the Fund register with the intention of using the information for a ‘proper purpose’.  That purpose may be to write to investors and propagate a view that the Fund Manager has got it all wrong, and that a friend of associate of theirs (another manager) could do it a lot better.

Any person who goes to the bother of gaining possession of a register with all of your information will generally have a personal vested interest.

We are now concerned that if this information is passed on to Australian or non-Australian entities, it is not possible for the Australian government to ensure that this confidential and private information is used for ‘proper purpose’.

For you to receive a letter from a stranger who has your personal confidential details is strange, and abhorrent to say the least.

Your personal confidential details in the hands of an unknown Australian or non-Australian resident can lead to identity theft, or the impersonation of LM to gain further confidential details such as bank account and other identification information.

LM is making application to various government bodies with an urgent agenda of having the ‘loophole’ in the Privacy Act re-examined and amended.

If you do receive unsolicited emails or letters from persons unknown to you, who appear to have accessed your personal confidential information, would you please forward the correspondence to an LM office as a matter of urgency, and contact your financial adviser.

Thank you.


Yours faithfully,


LM Investment Management Ltd
The global pathway to Australian Investment Solutions_


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## ASICK (14 June 2012)

The letter opens, "We are writing to inform you of what LM believes to be a serious bypass of the Privacy Act that exposes your personal salutation, address and investment details to unknown parties within, and from outside of Australia." - the person requesting a copy must disclose his/her name and further disclose a legal 'use' of the registry before acquiring it.  The person is liable for the use of the copy.  

"As a Responsible Entity (Fund Manager), we are obliged to act in strict adherence to the Australian Privacy Act. We employ processes of separation of information, secure password access and office shredding to ensure that investor information and account records are kept in strict confidentiality." - yes, that is true.

"However, there is a component of Corporations Law that enforces us (the Fund Manager), to hand over the Fund register to any person who asks in the correct manner. That means that we are obliged by law to pass over to someone in or out of Australia, your personal information such as name, address and investment details." - and this is true too, and it was the case when LM first began dreaming up its scheme - but there's wasn't any concern to tell investors about this particular issue UNTIL A MEMBER REQUESTED THE REGISTRY a number of years later!

"The applicant must apply for the Fund register with the intention of using the information for a ‘proper purpose’. That purpose may be to write to investors and propagate a view that the Fund Manager has got it all wrong, and that a friend of associate of theirs (another manager) could do it a lot better." - yes, true, and the exampled purpose could very well be the case.

"Any person who goes to the bother of gaining possession of a register with all of your information will generally have a personal vested interest." - yes, that's true - and that vested interest could very well be the best interests of his/her investment in the fund.  If an individual is prepared to spend the money to gain a copy of the registry it probably is the case that he/she is concerned about his/her investment in the fund.

"We are now concerned that if this information is passed on to Australian or non-Australian entities, it is not possible for the Australian government to ensure that this confidential and private information is used for ‘proper purpose’." but concern wasn't disclosed when members entered into the fund, only after a member requested it with a view see a change of manager in the fund.

"For you to receive a letter from a stranger who has your personal confidential details is strange, and abhorrent to say the least." - well, it might be strange to LM, but it makes complete sense to those who understand that the information was NEVER confidential in any event.  It's a false premise to suggest the information was ever confidential - part of the deal when an investor signs up to an entity such as a listed managed fund is that the investor's information is disclosed to any buyer of the registry.    

If the 'stranger' doesn't disclose his/her name, then it would be more than strange, it would a real concern, and it's happened recently in the PIF - but members have a clear choice with such a communication, and that's to put it in the rubbish bin.  

However, if the stranger discloses that he/she is a member of the fund and is concerned about his/her investment in the fund, then as intended by the law,  the process of 'getting together' begins and members have a chance for fight for what they regard is the best interests of their respective interests in the fund - and that very well might be to oust the manager and install a mangaer who will do the job for less - perhaps MUCH less - maybe for less than a third of the current top limit of 5.5%!

The false premse that the information is "confidential" continues along its merry way, "Your personal confidential details in the hands of an unknown Australian or non-Australian resident can lead to identity theft, or the impersonation of LM to gain further confidential details such as bank account and other identification information." - again, a concern not dealt with in the PDS, nor at any other time up until a member of the fund sought a copy of the registry.  An investor is more at risk from having mail scooped from the mailbox!

Further, while LM spruiks concern about "confidential information", it doesn't offer to send the letter out at the fund's expense to all members - LM raises concerns (albetit that such concerns are raised subject to a false premise), yet offers no solution which would allow members of the fund to communicate freely with each in order to canvass votes for any intended meeting - LM wants to remain gatekeeper and in control.

Wouldn't it be terrible if members of a manager fund could never communicate with other members of the fund - the manager would be free (subject to law) to do as it pleases without any organized opposition to its schemes and plans - and we've all seen how much investors have lost even when manager's comply with the law!

"LM is making application to various government bodies with an urgent agenda of having the ‘loophole’ in the Privacy Act re-examined and amended." - that's nice - and let's hope LM is raising up its undertaking to mail investors on behalf of other members in its solution to supposed problem based on the false premise that members "confidential information" is disclosed by way of the purchase of the fund's members' registry  - but my guess it that such a solution isn't in any of the  "applications made to various government bodies".

"If you do receive unsolicited emails or letters from persons unknown to you, who appear to have accessed your personal confidential information, would you please forward the correspondence to an LM office as a matter of urgency, and contact your financial adviser."

Well, that's a fair statement except to say "unless the emails or letters are from a member of the fund who has bought a copy of the fund's registry" - ah - tell LM as a matter of urgency anyway - and phone up that financial adviser (isn't he/she the one who convinced you to invest in LM's fund?) - I'm sure they'll love to hear from you.

Get the registry - contact each other - protect what's left of your investments as you see fit and find out what others think - get together - that's your right!

For the record, the minimum information given out is - name of investor (super fund/company/person), address, and unit holding.  I'm sure everyone's mailbox will offer up much more.  In fact, think about how much personal information is given to someone in Mumbai, KL, or Manila when phoning up about telephone, electricity, or credit card accounts!


----------



## dinga (15 June 2012)

*Re: LM Investment Management:  It's Official  - The LM Crock is Full*

Urban Dictionary extract says *"crock of ****"*_   More politely known as "a pile of poo", the term "a crock of ****" derives from an ancient Roman custom that coincidentally took place in Roman times. It referred literally to a pot into which people would excrete if they were particularly bored by whichever freelance philosoper happened to be talking rubbish at the time. The Roman empire employed crock-monitors who were each assigned to a philosopher, and it was their job to monitor the pot (or crock). Should the crock become full, it would be presented to the philospher, who was obliged, by law, to announce that it bore a remarkable resembence to himself, thus proclaiming he was full of crap and was, in fact, talking a crock of ****.
"I am talking a crock of ****", Socretes 429 BC_ 

ASICK has pretty well nailed the misleading rubbish in LM's letter dated 12 June 2012, line by line and fact by fact.   I'd just add the following comments:

1.  There is no 'loophole'  - Privacy Act includes requirements concerning the circumstances under which personal information about an individual may be used and disclosed.  You'll be amazed to hear that one such circumstance is where *"the use or disclosure is required or authorised by or under law"*.    As noted by ASICK, and indeed apparently accepted in a somewhat disguised manner by LM, the Corporations Act specifically requires such disclosure, subject to very reasonable conditions and purposes as briefly outlined.  

2.  While I guess anything is possible, in my view it beggars belief that anyone could seriously promote the core matters contained in the LM letter.   Heaven forbid, but perhaps the huge management fees are something more of a consideration....

Today I sent the following email to LM:  *Putting aside the transparent nonsense in the below email, is LM now going to immediately provide me with the requested copies of the CPAIF and FMIF Members' Registers, in accordance with my rights under the Corporations Act?*

Am hoping against hope that LM is still not "hardly in the mood to respond..." as the CEO advised me on 4 June 2012


----------



## ASICK (15 June 2012)

*Re: LM Investment Management  -  Registry Request*

"Managing registry access requests

Many managers have sought to deflect this activity on the basis of privacy concerns. Generally, this defence has proved weak and the Federal Court has ordered fulfilment of requests in accordance with the relevant governing law – the Corporations Act. The list of those who have been dragged before the Federal Court include AXA, Challenger, Clime Asset Management, *LM Investment Management *and Wesfarmers (who settled on the steps of the Court).

The Corporations Amendment (No. 1) Act 2010 has introduced provisions whereby issuers of securities under the Corporations Act may limit certain access to member registers to protect investors.  However, these amendments are restricted in their application.

In addition, the amendments introduced new obligations with regard to computer access that most issuers would be unprepared for." (emphasis added)

http://www.foxrock.com.au/media/FoxTweet1.pdf


----------



## ASICK (15 June 2012)

*Re: LM Investment Management  -  Registry Request*



ASICK said:


> "Managing registry access requests
> 
> Many managers have sought to deflect this activity on the basis of privacy concerns. Generally, this defence has proved weak and the Federal Court has ordered fulfilment of requests in accordance with the relevant governing law – the Corporations Act. The list of those who have been dragged before the Federal Court include AXA, Challenger, Clime Asset Management, *LM Investment Management *and Wesfarmers (who settled on the steps of the Court).
> 
> ...




http://www.smh.com.au/business/bottom-feeder-tweed-fishing-in-court-for-register-20101108-17kmz.html

http://www.goldcoastbusinessnews.com.au/process/myviews/gcbn_article.html?articleId=2585

“Australian law was amended in December 2010, to prevent the use of member registers to make unsolicited offers to Australian investors. As a destination for international investment, Australia needs to comprehensively outlaw Tweed’s practices in order to protect all investors."

and so it should have been - a little too late for Trilogy's PFMF.

However,  the amendment does not prohibit members obtaining the registry with the view of contacting each other in order to change the manager or the fund's constitution.

"Obtaining a copy of the register of members
The responsible entity of a scheme is required under the Corporations Act to maintain a register of members of the scheme. The register may assist members considering calling a meeting by providing contact details for other members. A responsible entity must provide a copy of the members’ register within 7 days, if a person requests it and pays the necessary fee."

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/info111-information-for-investors-in-frozen-funds.pdf/$file/info111-information-for-investors-in-frozen-funds.pdf  (bottom page 4 of 12)


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## dinga (17 June 2012)

*Re: LM Investment Management  -  Registry Request*



ASICK said:


> http://www.smh.com.au/business/bottom-feeder-tweed-fishing-in-court-for-register-20101108-17kmz.html
> 
> http://www.goldcoastbusinessnews.com.au/process/myviews/gcbn_article.html?articleId=2585
> 
> ...




UPDATE  -  LM has moved on some important issues.

1.  I've been advised that the Members' Registers for both the FMIF and CPAIF will be provided to me.  I have arranged to collect the USB stick this Tuesday, 19 June and will provide a further update then.  

Call me Thomas, but I will believe it when I see it......

2.  LM has agreed to provide the minutes of the FMIF Members' meeting on 16 May 2012.  Have suggested this kind of information/documents should in the future be circulated as a matter of course, and not be dependent upon request by a member.

3.  LM has advised me that the RG45 is now being updated and will be provided 'in due course'.  While this is indeed a welcome development, I have suggested that the audited financial statements for the funds should be provided prior to the next vote on changing the FMIF Constitution.

Be great if the above suggests a more open approach by LM, but I doubt that since it's been like pulling teeth to get to this stage.


----------



## dinga (22 June 2012)

*Re: LM Investment Management  -  Registry Request*



dinga said:


> UPDATE  -  LM has moved on some important issues.
> 
> 
> 2.  LM has agreed to provide the minutes of the FMIF Members' meeting on 16 May 2012.  Have suggested this kind of information/documents should in the future be circulated as a matter of course, and not be dependent upon request by a member.




Have just received the minutes  -  haven't had time to consider (esp the implications of the vote split) but here they are....

View attachment FMIF Minutes of Meeting 16052012.pdf


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## dinga (22 June 2012)

*Re: LM Investment Management  -  Registry Request*



dinga said:


> UPDATE  -  LM has moved on some important issues.
> 
> 1.  I've been advised that the Members' Registers for both the FMIF and CPAIF will be provided to me.  I have arranged to collect the USB stick this Tuesday, 19 June and will provide a further update then.
> 
> Call me Thomas, but I will believe it when I see it......




Well Thomas, I am.....  picked up the USB stick apparently containing both FMIF and CPAIF registers of members, without any further unnecessary hindrance from LM.  

Have only had a very cursory look, but was shocked (when really I shouldn't have been - since the Federal Court noted there were a large number of elderly investors in FMIF) to see a large number of listings of deceased estates.  Let's hope there are not very many more of us in that category before we can retrieve at least some of our monies...  

Will be having a much better look over the weekend, to see how best I can try to facilitate the networking between we poor investors, and the development of options/consensus on how best to proceed to maximise the chances.  

As always, really welcome the benefit of the experience of folks who have trod similar, unfortunate paths....


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## ASICK (22 June 2012)

*Re: LM Investment Management  -  Registry Request*



dinga said:


> Have just received the minutes  -  haven't had time to consider (esp the implications of the vote split) but here they are....
> 
> View attachment 47562




Interestingly, the 'corporate representatives' voted strongly against the proposal (951,477 against : 36,500 for).

Nice outcome re: registry.  So much ado - so much time wasted.


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## ASICK (22 June 2012)

*The Two Rodgers*



dinga said:


> Have just received the minutes  -  haven't had time to consider (esp the implications of the vote split) but here they are....
> 
> View attachment 47562




Just took another look at the minutes, and in particular, the names of the attendees.

I thought "What a co-incidence?" - a "John Barry" (financial advisor) listed above a "Rodger Barnes" from Rojacan.

Trilogy Capital Group and Balmain Trilogy Asset Management Pty. Ltd. both have a common executives named John Barry and Rodger Bacon.  

Trilogy Capital Group - http://www.balmaintrilogy.com.au/directors.aspx
Balmain Trilogy - http://www.balmaintrilogy.com.au/directors.aspx

Rodger Barnes is associated with  Rojacan Pty. Ltd. - well, surprise, surprise, Rojacan is associated with Rodger Bacon - the two Rodgers are associated with Rojacan. Wow! What a co-incidence!

Here's an excerpt from the failed Trilogy Healthcare REIT (asset at Crows Nest NSW):
http://www.moneymagik.com/rojacan.jpg 

I wonder if the John Barry (financial advisor) knows of John Barry (executive at Trilogy/Balmain Trilogy)?

What a co-incidence?


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## ASICK (23 June 2012)

I suppose LM Investment Management might be wondering "Why did a represetative of a company associated with Rodger Bacon attend the Sydney meeting?" - After all, Rodger Bacon is also an executive down at CYRE Trilogy:

http://www.cyretrilogy.com.au/index.php?id=2

Hey, I just noticed, a John Barry is an executive there too.

Of course anyone interested knows that on 7 July 2009, Trilogy took over the City Pacific First Mortgage Fund (now Pacific First Mortgage Fund) together with Balmain Trilogy Asset Management Pty. Ltd. (as asset manager) - losses up to 31 December 2011 (from the value re-assessed as at 30 June 2009) of about $176.5m (-42%) and things haven't been looking good since either.

CYRE Trilogy have been successful in taking over a number of APGF funds (CYRE Trilogy executive Peter Arnold was a co-founder of APGF - see the above link) - seems the dust still hasn't settled over the latest attempt: http://www.cyretrilogy.com.au/assets/files/Note to Investors re 14 June 2012 Meeting.pdf  (seems the outcome might be disputed by APGF - no one disputes winning - so ...)

Both Trilogy and Balmain have weighed in on Equititrust's EIF too:

"Annexure C" - Balmain
"Annexure D" - Trilogy

http://equititrust.com.au/Pdfs/Admi...eports - 20120412 - Circular to Creditors.pdf

So, a hypothetical answer to the hypothetical question LM might pose might be:-

because "Trilogy is experienced in change-overs of responsible entities"
http://www.cyretrilogy.com.au/assets/files/Notice of Meeting - APS No 21.pdf
(see page 8)

Of course, it's probably the case he was simply interested in the goings-on.

:


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## dinga (23 June 2012)

dinga said:


> At last, an excellent article by a knowledgeable, financial journo.
> 
> http://www.smh.com.au/business/the-...-management-20120517-1ysnv.html#ixzz1v6ASmhu7
> 
> TIME TO GET RID OF THE BLOODSUCKERS




Attached is LM response to this SMH article.  As usual, am posting it with some very brief and initial thoughts:

1.  This communication seems very different in style to the usual LM material  -  bears the fingerprints of PR professionals????

2.  The style of this response, provision of the 16 May meeting minutes, promise of updated RG45, eventual delivery of the FMIF and CPAIF members' registers  -  do these indicate a more open and reasonable approach to valid investor concerns??? (very much hope so, although LM previously told me I would be hearing from their lawyers)

3.  Fee levels seem extraordinary - especially for the feeder funds.  If the true fees are to be totalled (ie. FMIF plus Feeder Funds), this means my CPAIF fee hit has been:
*  2008:  1.21%
*  2009:  5.92%
*  2010:  2.17%
*  2011:  4.93%

OUCH!  Why should this be so??????  What am I missing????

4.  The table of comparative performance would seem very rubbery - and especially dependent upon the re-appraisal of the realistic value of the underlying assets, and the effect on unit prices.  Awaiting that detail with much interest.

Anyhow, here it is:

View attachment LM Advice 22062012.doc


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## ASICK (23 June 2012)

*Latest LM Investment Management Communique*

Hi Dinga - It's good you're able to provide these illuminating documents.

While there is much to comment on (after reading various PDSs and financial reports), here's a few observations:-

"The holding costs of the loans increased, i.e. capitalising interest and penalty interest increased the amount owed by the Borrower to the Fund and hence has resulted in increased loan to valuation ratios across the loan portfolio.

There was a softening in values across some sectors of the property market.* As a result some sales have been at discounts to create liquidity for the Fund."

I'm a little perplexed that the author speaks to "capitalising interest and penalty interest" as "holding costs".

These additional interests increase the value of loans held by the fund, and do indeed increase the LVR and thereby, the risk for investors.  On the other hand, the softening market reduces the values of the underlying security assets which also increases risk (and LVR).  

It's a punter's nightmare - a 'sandwich' created by increasing loan values and reducing underlying security asset values. The risk of the increasing loans is compounded by the reducing security asset values.

"... some sales have been discounts to create liquidity for the Fund."  - it seems to me that such a statement should be of great concern to investors especially given the ongoing fund costs including management fees and extremely high debt facility costs.

One can only wonder how much of each $1.00 of assets at value is actually recovered.    

It's when assets are sold that one tests the holding values of assets - and as admitted by the authors - discounts are in the offering in order to gain cash, the lifeblood of the fund.

All the theory and the intended expert opinions are worthless in the end - the market is the only "expert" - and the only true value is that value returned when an asset is actually sold.  Punters might hold on and hold on, and the situtation might become worse and worse  - see the PFMF's performance:
http://moneymagik.com/performance_PFMF_Trilogy_big.jpg

It's when assets are put to the market that the real value for a fund is shown - all the rest is mere guesswork.

A fair way to see the value of assets is to put a few of them to the market - and after sale, advise members of the holding value, sale value, holding costs, fees and charges (including management fee) attributable to each asset - but, that's not going to happen - so, it's back to mere guesswork.

"One commentator has raised a concern that Peter Drake, the Chief Executive of the responsible entity for the Fund, LM, did not attend that meeting." - well, I'm sure that's fine - a representative of Rojacan Pty. Ltd. (a company associated with Roger Bacon of Trilogy, Balmain Trilogy, and CYRE Trilogy) attended.

Fees in the feeder funds - it's interesting to note while that the author of the LM document attempts to justify the increased fees in the funds, there is no explanation why there is even a single cent of management fees in the feeder funds which simply  feed  dollars directly into the LMIF - what's the excuse for fees, nevertheless an increase in such fees (as shown particularly in 2011)?

Seems that in the case of things going pear-shaped that members in the feeder funds will suffer with compounded  fees both from the LMIF and the feeder fund - from my perspective (and I don't hold any qualifications to give advice either legal or investment-wise), I think feeding from one fund to another fund should be outlawed.


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## ASICK (24 June 2012)

Too right Dinga - members of your fund who view this forum should express their respective views.

At 31 December 2011, 246.5m units were requested to be withdrawn, of which 107m  were from feeder funds. Therefore 139.5m were requested from direct investors.

Feeder funds contributed 220m units (44.09% of the fund) : 49% requested redemption
Direct investment contributed 260m units (55.91% of the fund) : 54% requested redemption.
See: fund's 31 December 2011 financial report, page 23, part of note 8.

It therefore seems to me that the bulk of investors want to leave the fund, and that's why there was little to no opposition from investors - because they think they can escape - but can they?

Well, as I see it,  if the assets which are sold off suffer a substantial loss then the number of units redeemed to each $1.00 gained by the sellers is high:

number of units redeemed = $1.00/unit price - eg. if the unit price is $0.60, then the number of units redeemed for each $1.00 is $1.00/.60 = 1.67 units redeemed per $1.00.  If the unit price is $0.40, then the number of units redeemed for each $1.00 = 2.5 units per $1.00.

It seems to me that the sale of the lesser quality assets (market-wise) would eke out more units than the sale of good assets - that is, the manager would have to sell more good quality assets to cause investors to redeem the same number of units than a lesser number of lesser quality assets.

In my view, if the best assets were sold first, then it's probably the case that the fund would have to be wound up.

What members will be redeeming at, is not $1.00 per units, but $1.00/unit price as a result of the sale of an asset/s - there is a BIG difference.

Of course, these are only my opinions.

Here's an excerpt from page 19 (note 7) of the fund's 31 December 2011 financial report:-
"The LM Managed Performance Fund (MPF) has second mortgages on loans that are first mortgages of the LM First Mortgage Income Fund totalling a written down value of $39,900,577 (30 June 2011: $29,041,300).  The LM PF may, on occasion, pay development and construction costs on these related loans.  As part of the normal role as second mortgage, the related scheme will fund interest payments from time to time within approved loan facility limits."

 When I read this excerpt from the fund's 31 December 2011 financials

“The company sometimes follows the fund with its own money, creating a second mortgage. "We can't end up behind a hostile lender," Mr Sullivan said”
http://www.heraldsun.com.au/busines...-at-city-pacific/story-e6frfh4f-1111114202243

Of course the term "related" refers to the manager (LM Investment Management), not the Income Fund.  So, the manager is the manager of two funds, one lending behind the other.  It seems the LM IF has already suffered losses on its first mortgage, and the second mortgage still spends money.

I'll leave members to draw their own conclusions - but the manager has two lots of obligations under Corporations Act 601FC(1) - to my mind, that's a real balancing act - to others, it might appear quite normal.
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

Are such security assets (first mortgages)  in front of the manager's related fund's second mortgages on the chopping block for sale under the proposed new deal?  If that happened, it may mean that the second mortgagee would get nothing - oh dear!

Last point of interest looking at the 2011 return on page 19 (Note 7 - Related Parties), a note is made to the fact that no originating fees were charged since no new loans were made.  However, no mention is made of the $2,590,490 is shown as loan renegotation fees (since there were no originating fees).

An extra $2.6m is a handy bit of cash flow for only 6 months on loans which are probably already in default.   It's a crazy world, the manager made the loans, the loans are losing, and the manager picks up another $2.5m on renegotating the loans!

Cash flowing out of the fund to the manager for only a six month period is at least $7.54m and then there's the fees flowing to the manager from the feeder funds.  A nice cash flow indeed.

Again,  I hope (along with Dinga) that members of the fund read the financial reports, RG 45s, and spiels from the manager and post their thoughts on the forum.   I am not a member of the fund and other than wishing the best for investors, I have no financial interest in the fund's ultimate outcome.


----------



## dinga (25 June 2012)

dinga said:


> Attached is LM response to this SMH article.  As usual, am posting it with some very brief and initial thoughts:
> 
> 1.  This communication seems very different in style to the usual LM material  -  bears the fingerprints of PR professionals????
> 
> ...




Couple more considered comments:

1.  On reflection, I must have been delusional to suggest this advice was penned by PR professionals.  For the most part it's LM typical  -  some softer expressions in the first page or two, but the rest is stock standard stuff that sadly I've come to see more as 'spin' than substance.

2.  It is important to firstly reiterate that LM's intention was to secure a binding vote at the meeting on 16 May, with investors being provided with nothing in the way of sufficient and detailed modeling and asset information to allow informed decision making on LM's recommended changes to the FMIF Constitution.  In my view, the fact that the binding vote has been delayed until after LM provides such information is a victory to investor agitation, including with ASIC.  

3.  LM presented a very simple scenario about merely seeking to allow investors to "Sell" or "Hold", and the +96% support level should be seen in this light.  In my view, investors were not provided with sufficient information to understand the profound effects of those simple choices.  My reading of the +96% support level is that the majority of investors have had a guts full and simply want out.  

4.  The sad reality is that it is by no means certain that investors will get their "Hold" and "Sell" elections.  There is a level -  presently unstated - beyond which "Sell" requests will make the remaining asset value insufficient for the Fund to continue as a viable vehicle for investors who elect to "Hold"  ie. the fund will need to be wound up if the "Hold" percentage does not reach a certain level.  

Since there is an inherent possibility that the fund could be would up, in my view it is imperative that LM provides investors with the necessary information and modeling to understand the impact of such an outcome, and to allow comparison with the other financial outcomes demonstrating different scenarios of the “hold” and “sell” weightings and expectations from these scenarios.  This would mean the next stage should be binding votes on:
*  Firstly:  Wind Up the Fund or Approve changes to the Constitution
*  Only if the Constitutional changes are approved:  investors allocate to "Sell" and "Hold"

5.  In relation to the feeder funds LM now advises "These funds will also be given the opportunity to vote for similar constitutional changes to implement liquidity mechanisms within those funds to provide the same investor choices as to “hold” or “sell”, or a combination of the two.  The LM First Mortgage Income Fund will allocate the interests of those funds to “sell” or “hold” as directed by their investors."  I am very weary of the mixed messages about whether or not the Feeder Fund investors will get a say about the Constitution changes, or just be given the "Hold" or "Sale" choice if those changes are approved by FMIF investors.  This ambiguous statement does not help and LM must state the position unequivocally.  In my view, denying Feeder Fund investors this right is itself reason enough to get rid of LM as RE.

6.  REF: DBank line of credit:  an extraordinary 18% interest rate now applies - in comparison with the 8% payable earlier to the Commonwealth.  What does such a very high interest rate say in relation to DBank's view of risk and value/liquidity of the underlying assets?    Awaiting the updated RG45 with much interest (pardon the pun) to see (a) has the $13.5 mill been paid by 30 June 2012; (b) what are the conditions of extension of the facility  -  especially the LVR requirement.      

7.  The fee level seems extraordinary  -  especially by the feeders funds in 2009 and 2011.  LM should be asked for further information.  ??how does LM judge the fees to be 'appropriate'????  What relationship is there if any to the level of these fees and the needs/operations of other LM funds?


8.  In addressing the question of loans to related parties, LM makes a big deal about the Directors having no beneficial interest in the security properties.  Of more concern to me, is that LM has a clear beneficial interest in the activities of all of the related LM funds, and I've always wondered how decisions could be made that are demonstrably in the interests of investors in each of the individual funds rather than just LM overall.  I've always been uncomfortable with these interrelationships from just the 'optics' perspectives.  Clearly detailed analysis is needed to see if there are potential concerns or not, and seek followup clarifications from LM if appropriate.


----------



## ASICK (25 June 2012)

https://www.aussiestockforums.com/forums/attachment.php?attachmentid=47596&d=1340417850

“The three feeder funds are naturally also frozen and affected by the same provision.** These funds will also be given the opportunity to vote for similar constitutional changes to implement liquidity mechanisms within those funds to provide the same investor choices as to “hold” or “sell”, or a combination of the two.* The LM First Mortgage Income Fund will allocate the interests of those funds to “sell” or “hold” as directed by their investors.”

Actually, the members of the feeders have no right to 'direct' the FMIF to do anything.  The manager (as manager of the feeder funds) will cause units invested in the FMIF on behalf of members of the feeder funds  to be “held” or “sold” according to feeder funds' members' elections.  Members shouldn't forget that members of the feeder funds are not 'relatives' of members of the LMIF. 

“With improvement in*sales activity in the Australian property market, we believe there is an opportunity for improvement in the unit price in the future.* The market will ultimately determine the value of the provision required to be utilised once the properties have been sold and settled.”

What the author is not saying is that there is also an equal opportunity for further impairments and further actual losses but it's more comforting to punters if a positive spin is put on the fund's future performance.  The existing impairments reflect  the soft market, and the author has already admitted that discounts (from holding value) were necessary to sell assets.

“Not one investor has lost all of their money in the Fund. The unit price is currently 73 cents ($1.00 prior to the GFC), reflecting a provision of 27 cents for reduction in underlying asset value, comprising a write down of 13 cents and an unrealised balance of 14 cents.”, but when punters redeem they'll lose 27 cents of each $1.00 invested, plus they lose income not earned.

The FMIF constitution  (clause 8) provides that the withdrawal price as:
(Net Fund Value / Number of Units on Issue) calculated at the last valuation date prior to the withdrawal date.
[not accounting for the so-called 'stepped liquidity option' which may provide for more or less loss per unit]

It might be very well for the manager to speak to impairments as not being losses, but impairments reduce the value of net assets (the value attributable to unitholders).  

“As we move forward, investors will receive financial modelling demonstrating different scenarios of the “hold” and “sell” weightings and expectations from these scenarios.” - I'd be surprised if the models aren't disclaimed, and of course, past performance is NOT an indication of future performance.  Crystal balls are just as helpful, but one has to be very careful with such treasures.  

Who carries ALL the risk? Well, punters, of course.  

“Every property owner recognises that you do not sell property during a downturn if you do not absolutely have to.” - not every property owner is paying a fees and extraordinarily high interest fees on a debt facility together with all the other costs associated with the operation of a managed fund.    I'd say that a smart investment property owner would have exited  the market over a year ago, especially if  burdened with unrelenting  costs in a down-turning market.  For example, the bank facility is costing members of the fund an amount of interest three times as much in interest as members would be able to earn with the same amount of money in a term investment.   Leverage is valuable in a rising market, but its pure murder in a falling market.

As to the fees, whether the manager takes 5.5% or a lesser amount is at the manager's sole discretion – and how would investors know the rate of management fees charged each period? The amount of fees is only disclosed months after the close of each reporting period.  Even 2.5% seems over the top, but that doesn't stop a charge of 5.5% if the manager so decides.


----------



## dinga (25 June 2012)

ASICK said:


> https://www.aussiestockforums.com/forums/attachment.php?attachmentid=47596&d=1340417850
> 
> “The three feeder funds are naturally also frozen and affected by the same provision.** These funds will also be given the opportunity to vote for similar constitutional changes to implement liquidity mechanisms within those funds to provide the same investor choices as to “hold” or “sell”, or a combination of the two.* The LM First Mortgage Income Fund will allocate the interests of those funds to “sell” or “hold” as directed by their investors.”
> 
> ...




My understanding is that LM (as RE of each Feeder Fund) holds those investments on behalf of the unit holders, and therefore cannot exercise those FMIF investments since it has 'an interest' in the proposed changes to the Constitution. 
*  I also understand that LM can apply to ASIC, to gain relief from this standard restriction  -  for example where there is a benefit to be gained for investors.  

Clearly if an unrelated party was RE of those feeder funds, that RE could - and no doubt would - want to vote on those changes - presumably after canvassing the opinions of the individual investors. Seems to me a similar outcome is what investors in CPAIF, WFMIF and ICPAIF should be demanding - since they collectively hold 43.8% of the value of the FMIF.

What I find bloody annoying are the mixed messages being given by LM on whether or not the Feeder Fund members will be allowed to vote on changes to the FMIF Constitution (see the latest example above)


----------



## ASICK (25 June 2012)

dinga said:


> My understanding is that LM (as RE of each Feeder Fund) holds those investments on behalf of the unit holders, and therefore cannot exercise those FMIF investments since it has 'an interest' in the proposed changes to the Constitution.
> *  I also understand that LM can apply to ASIC, to gain relief from this standard restriction  -  for example where there is a benefit to be gained for investors.
> 
> Clearly if an unrelated party was RE of those feeder funds, that RE could - and no doubt would - want to vote on those changes - presumably after canvassing the opinions of the individual investors. Seems to me a similar outcome is what investors in CPAIF, WFMIF and ICPAIF should be demanding - since they collectively hold 43.8% of the value of the FMIF.
> ...




I read the situation differently.  I understood that each of the feeder funds would attend a meeting (perhaps at a fancy hotel and at great expense to each of the funds), and members of the respective funds would elect, subject to constitutional changes in those funds in the event the proposals were successful,  to "sell" or "hold" (duh!) their respective share of the units invested by each member's respective feeder fund in  the FMIF.  What a mess.


----------



## dinga (28 June 2012)

ASICK said:


> I read the situation differently.  I understood that each of the feeder funds would attend a meeting (perhaps at a fancy hotel and at great expense to each of the funds), and members of the respective funds would elect, subject to constitutional changes in those funds in the event the proposals were successful,  to "sell" or "hold" (duh!) their respective share of the units invested by each member's respective feeder fund in  the FMIF.  What a mess.




What a mess, indeed it is so!

When I met with two of the directors late last month, I twice asked this question and both the answers I heard to mean that the feeder fund investors would indeed get to vote on the Constitution changes.  Recalling the biblical tale of the **** crowing thrice (forgive me but given the circumstances I found that recollection a little amusing), I asked the question for a third time  -  the final response making it clear that the feeder fund choices would be limited to either "hold" or "sell" only if FMIF investors approved the proposed changes to the FMIF Constitution (also earlier LM material stipulated that 'no choice' would be deemed to be "hold"). 

Given the uncertainties, and a lack of confidence borne from LM's past changes of position, I will be asking LM for formal advice to confirm the position.   Wish me luck....


----------



## ASICK (28 June 2012)

dinga said:


> What a mess, indeed it is so!
> 
> When I met with two of the directors late last month, I twice asked this question and both the answers I heard to mean that the feeder fund investors would indeed get to vote on the Constitution changes.  Recalling the biblical tale of the **** crowing thrice (forgive me but given the circumstances I found that recollection a little amusing), I asked the question for a third time  -  the final response making it clear that the feeder fund choices would be limited to either "hold" or "sell" only if FMIF investors approved the proposed changes to the FMIF Constitution (also earlier LM material stipulated that 'no choice' would be deemed to be "hold").
> 
> Given the uncertainties, and a lack of confidence borne from LM's past changes of position, I will be asking LM for formal advice to confirm the position.   Wish me luck....




While you're there, why don't you ask them why the name of the fund includes "first mortgage" when they've lent on at least one second mortgage?

Ask them how they'll resolve the matter of the loans made by the fund whereby they're lent money (as manager to another fund) to that same asset on a second mortgage security (financials 30 June 2011 - page 32 - note 11):

"The LM MPF has second mortgages on loans that are first mortgages of the Scheme totalling $46,158,276"  

Would that asset be sold off (since it's already impaired) even if the other fund loses its second mortgage loan?   

Also ask why there was a need for a "priority agreement" since the securities rank  in your fund's favour in any event.

"The company sometimes follows the fund with its own money, creating a second mortgage. "We can't end up behind a hostile lender," Mr Sullivan said."
http://www.heraldsun.com.au/busines...-at-city-pacific/story-e6frfh4f-1111114202243

It seems to me that not putting itself behind a "hostile" first mortgage holder meant that the first mortgage holder (the CPFMF controlled by City Pacific) would not act unilaterally to the detriment of the second mortgage holder - in other words, a safe place to be.

You might ask the manager why the manager put itself in such a situation. 

Then there's the gem whereby the manager has taken over the receivers' tasks and all those millions are advanced to the manager (financials 30 June 2011 - page 32 - note 11):

"Loan management fees paid to the responsible entity for loan management and controllership services provided by the responsible entity on behalf of the Scheme in replacement of appointing external receivers.  These fees are charged directly to the borrowers to facilitate future recovery."  $5,381,516

"There fees are charged directly to the borrowers to facilitate future recover" - interesting turn of phrase.

Yes, the fees are debited to the borrowers accounts, but the money goes to the manager.  If the loans are already impaired, then the $5,381,516 is an expense to the fund - an expense that seems destined to be lost.

You might ask the manager for an accounting (a list of expenses and corresponding amounts) of the expenditures to the various loans. I doubt if you'll get it, but you may as well ask.

There again, a nice little earner for the manager.

With all the fees on offering in this fund, it would surely be attractive for an alternative manager to have a look-see.


----------



## dinga (29 June 2012)

ASICK said:


> While you're there, why don't you ask them why the name of the fund includes "first mortgage" when they've lent on at least one second mortgage?
> 
> Ask them how they'll resolve the matter of the loans made by the fund whereby they're lent money (as manager to another fund) to that same asset on a second mortgage security (financials 30 June 2011 - page 32 - note 11):
> 
> ...




Excellent questions indeed - which have been included in the long list now being prepared.

Interestingly, your points contrast with direct quotes from the latest LM crock dated 22 June 2012 (RE. Liquidity Strategy - LMFMIF)  ie.  "As manager, LM has never deviated from its well documented lending on registered first mortgage..."

These guys can't lie straight in bed (along with a number of suffering fellow investors, I've moved well beyond the complementary assessment of 'lacking confidence").  

Did anyone else note the following quote also from the same LM crock?

*  "LM Investment Management Ltd is an unlisted public company and Fund Manager, not a property developer." 
Damn right - and for a moment putting aside LM's unsatisfactory performance in its claimed core competency of 'funds management'  -  WTF is LM proposing to be for its recommended "Hold" assets, if not a property developer????  [I'm a simple bloke, but it's impossible to not get giddy, attempting to follow the LM spin/nonsense]


----------



## ASICK (1 July 2012)

A couple of investors have expressed surprise to Dinga about some of the issues raised in this forum.

All the information posted to date has been gleaned from the fund's accounts, RG 45s, or communications from the manager to investors.

If the issues give rise to surprise, and you're an investor in LM's income fund, then it's time to do some reading and perhaps even to get some professional advice.

Nothing said on this forum should be taken as gospel - information contained in postings should be checked against source documents - in particular, the fund's financial reports and RG 45s.

It's not unusual for investors not to bother to read and understand the financial reports and RG45s. While such ignorance may be  fine (but not recommended)  in a fund that's paying dividends and not losing ground, it's not the same if you've an interest in LM's IF or feeder funds.

Everything posted in this thread has been disclosed by the manager - it's only a matter of looking for it, and finding it.


----------



## dinga (1 July 2012)

ASICK said:


> A couple of investors have expressed surprise to Dinga about some of the issues raised in this forum.
> 
> All the information posted to date has been gleaned from the fund's accounts, RG 45s, or communications from the manager to investors.
> 
> ...




Sadly, you're right.  I think most investors do not take sufficient care and scrutinize all of the available information prior to making investments.  Also, I'm one of the investors who is now suffering because of the over reliance placed upon fund managers and IFA's  -  and the misplaced assumptions that:
*  the best interests of both fund managers and investors must be the same, so therefore all actions by the managers must therefore be in the best interests of the investors
*  on-going advice provided by the same financial advisors who introduced investors to the funds, and who continue to receive trailing commissions, must be independent and balanced  -  and in the best interests of the investor

These misplaced assumptions remind me of the oft repeated saying by an old work colleague that "in the race of life, always back self-interest because you know it's having a fair dinkum go".  

However naive, I expect that information should be presented in a way that is clear and accurate.  LM's advice dated 22 June 2012 included a table entitled "Retail Performance Comparison of $10,000 investment since inception" in which performance of FMIF is compared against two funds which LM considers 'comparable', *and taking into consideration full performance and any unit price movements over time*  ie.  Challenger Howard Mortgage Fund and Colonial First State Mortgage Income Fund

Putting aside for the moment a detailed comparison, this table shows the FMIF as having 0.00%; 2.50% and 4.83% performance over the last 1 year, 3 year and 5 year periods respectively.

HOW CAN THIS BE SO?????????, given:
*  the unit value has fallen 27% (to 73 cents) in the last 2 years
*  no income has accrued since 1/1/2010


----------



## dinga (9 July 2012)

The latest LM 'update' dated 2 July 2012 is copied below.  Particularly welcome comments on 2 aspects:

1.  Until now, we poor investors have been variously promised "independent asset reports", "independent review of assets of the Fund", "independent property analysts are finalizing their asset review".  In the below 'update', LM now says we will receive an *expert analysis of the reasonableness of LM's views*.  To me, this is a clear departure from what was promised.  My immediate reaction is that a 'reasonableness' opinion, starting with LM's clearly less than independent view of the worth of the assets, will be a far less meaningful and valid exercise than a rigorous bottom-up, independent analysis.  To me, if LM's changed approach is NOT to the benefit of investors, who does it benefit?

2.  LM states _"LM has licensed intermediaries who wish to place new funds when the Fund is reopened"_  Does anyone believe this????????   If LM is to be believed, shouldn't this be great news?  Doesn't this indicate that there is now yet another option for current investors?  Sadly, without a lot me information to confirm this is a real outcome, within a realistic timeframe, I think it is a further deposit to the already brimming LM crock.




_Re: Liquidity mechanism is the first step towards reopening LM’s closed mortgage fund

We are progressing as quickly as possible with the liquidity strategy.  Harnessing the assets the LM First Mortgage Income Fund controls, the strategy meets the needs of investors to “sell” or “hold” (or a combination of the two), as they choose, and importantly progresses towards opening the Fund for new investment.    

The investor vote result is a clear mandate that we are “on the right track” with this strategy.  


The final steps to reopening the Fund are as follows:


Your decision: investment allocations – you can choose to stay or go, or a bit of both.
Investment allocations.
Drive a responsible sales programme across the “sell” assets for progressive realisation of investment for those investors who wish to redeem.
Commence the development programme for work on the “hold” assets to generate income and create value for the “holders” over the recommitment period.
Provide income.
Provide withdrawal periods for investors.
Reopen the Fund for new investment – LM has licensed intermediaries who wish to place new funds when the Fund is reopened.
Commence new lending in the Fund.

A Viable Market


LM has a diversified global business and through its various offices, on a daily basis, interacts with advisers and institutions about the LM product range, including this Fund.  We have already received expressions of interest for investment in the LM First Mortgage Income Fund when it reopens.  

The value proposition of the Fund will be represented in the asset information which is currently being compiled to provide to investors as part of the next step.  We are putting together the most comprehensive information we can regarding the assets and prospects, to assist investors and advisers with making a fully informed choice regarding the investment.  Please bear with us as this is completed, as we have independent parties involved for objectivity and third party, expert analysis of the “reasonableness” of our views.  There are also many regulatory and accounting requirements to be met in the provision of this information for you.

We will also be consulting with ASIC for their feedback with respect to the presentation of this Fund information.

We will be providing more information on the steps above in our regular communication and we will shortly be communicating on timeframes around this for you. 



Feedback


Thank you for continuing to share with us your opinions regarding LM and your investment. We have taken the liberty of sharing some of that feedback below.

“It gives me confidence that you have a long term vision for the Fund and have not become short sighted in a sell all approach.”

“I think LM has done amazingly in a most difficult period ...”

“I see you as a responsible / good manager but we need cash now and that's the only reason why we want to close......”



We thank you for your patience while we finalise the aforementioned asset information.  If you have any questions, please contact your financial adviser or intermediary. 


Yours faithfully,


LM Investment Management Ltd
The global pathway to Australian Investment Solutions_


----------



## ASICK (9 July 2012)

hahaha

Dinga, LM didn't include your comments or the comments of those who share your concerns.  Why aren't I surprised?

The EIF is full of various classes - before members think that new investment is a good thing, they should keep in mind that while the manager must treat all members of the same class EQUALLY, the manager need only treat different classes FAIRLY.

Which 'new investor' would stand equally with existing investors or would stand behind existing investors?

I'd hardly think that possible.

I'd be asking LM for particulars about the new investor spruik.

While you're asking, you might like to ask for public disclosure of some of the comments running against LM's planned scheme.

Isn't it all so exciting? I'm sure many lookers-on such as myself are just as interested in the expert opinions as you are.

I'll end where I started: hahaha


----------



## dinga (11 July 2012)

ASICK said:


> hahaha
> 
> Dinga, LM didn't include your comments or the comments of those who share your concerns.  Why aren't I surprised?
> 
> ...



Tks ASICK - I stand corrected, my education continues and I will indeed pose those questions to LM.  

Information continues to coming thick and fast, from all directions - including the latest from LM (see below).  As usual, I'm thinking that the more information that LM provides, the more questions that are raised (healthy situation, eh)  eg.

*  while FMIF windup has always been in the background, this is (I think) the 1st time that LM has explicitly stated this as being a possible outcome, depending on investors reaching a presently unspecified 'overwhelming' 'sell' level.  Since it seems to me that an orderly windup would result in the most equitable outcome for all investors, and as LM has now put this on the table as a possibility, investors should be firstly given the specific option of winding up the fund(s) *or* amending the Constitution to allow continuation of the fund(s) and then subsequent specification of 'hold' or 'sell' alternatives.

*  Ref Independent expert reports by WMS and BIS Shrapnel:  I think it is now even more important to know any past and current relationships between those firms and LM , especially as it seems 'reasonableness' is the level of opinion being sought

*  Ref Current sales campaigns:  need to refresh the memory, since I can't remember much in the way of recent updates in this regard (thought these assets were destinued for the 'sale' bucket, and the 2011 sales campaign had been pretty well unsuccessful).  Also think investors may need more information from LM, especially - for example - in relation to (a) specific assets now being actively being marketed; (b) LVRs for each; (c) likely timeframes for sale, (d) expected sale prices Vs Book/Holding Values  ie.  possible/expected 'haircut', if any; (d) likely effect on unit prices, due to likely need to allow for additional provisions/write-downs on the book values of remaining assets; (e) relationship/relevance to DBank financing conditions

As always, greatly appreciate feedback on what I've missed or misunderstood.


_RE: Liquidity Mechanism for the LM First Mortgage Income Fund


Activating the Next Steps


--------------------------------------------------------------------------------

We are progressing with the next steps to see the liquidity mechanism implemented across the LM First Mortgage Income Fund, LM Wholesale First Mortgage Income Fund, LM Currency Protected Australian Income Fund and the LM Institutional Currency Protected Australian Income
Fund as quickly as is possible.

Below, we provide a snapshot of the information which is being collated for you, which we anticipate to be completed and provided to you in August. From the snapshot you will see that it is comprehensive and thorough and as such, does take time to complete.

In addition to our report and commentary as Fund Manager, we have secured the services of BIS Shrapnel and WMS Chartered Accountants to provide their experienced, objective and independent input. They are well underway with completion of their components of the information. Our timeframe also allows for consultation with ASIC in relation to the information
being provided.


Information to be provided for Vote and Investment Allocations


--------------------------------------------------------------------------------

The information being compiled is to assist you in making fully informed decisions about the Fund, the vote and your investment allocation across:

A combination of “hold” and “sell”, or
”Sell”, or
“Hold”.
Information will be provided on all of the Fund’s assets; different financial modelling scenarios which comprise those assets and are relevant to expectations around the “sell” and “hold” pools; and updated information on the asset portfolio in general, such as the ASIC benchmark document
for mortgage funds (otherwise known as the RG45).



Financial Modelling Scenarios


--------------------------------------------------------------------------------

WMS Chartered Accountants was established in 1994 by two retired partners of Ernst & Young.

Their business offers a range of accounting services, including audit, corporate governance, corporate tax, due diligence, mergers and acquisitions, valuations. They complement their accounting services with corporate finance and legal support services.

We have secured their services to provide independent review of the financial modelling scenarios. Both the accounting standards and ASIC guidelines require that a high level of detail regarding assumptions and explanations be utilised in financial models. WMS is experienced in
the provision of financial modelling and their input will be beneficial in assisting investors understand the projections and assumptions around the models.

The assets will be weighted to each of the “sell” and “hold” pools based on the allocations received from investors.

The financial models to be provided will incorporate differently weighted scenarios, for example 50% sell / 50% hold; 70% sell / 30% hold; 100% sell; or 30% sell / 70% hold.

In the event that investors overwhelming select “sell”, then LM will wind the Fund up with an orderly sale of assets..




BIS Shrapnel – Asset Information


--------------------------------------------------------------------------------

BIS Shrapnel is recognised in Australia as a major provider of property research, analysis and forecasting. Their expertise is being utilised to supplement our report on each property the Fund has as a secured asset.

They are providing commentary around assumptions, taking into consideration product demand and trends, projected sales and operational revenues, sales rates and projected costs and sales escalations as they relate to the hold and sell pools. They are determining whether the variables
that LM has adopted are, in their opinion, fair and reasonable. Their work will incorporate macroeconomic and demographic information on the capital cities and the regions in which the assets are located. 



Current Sales Progress


--------------------------------------------------------------------------------

Whilst we are preparing all requirements for the liquidity mechanism we are simultaneously continuing with the asset sales programme. As a result of prevailing market conditions sales are slow.

We have received tenders from major national sales and marketing agencies interested in the role of managing and driving the overall sales programme for the Fund with a refreshed strategy. We will have further news for you on this as soon as an arrangement is finalised.


We will continue to keep you updated. Should you have any questions or concerns, please contact your financial adviser or intermediary.

Kind Regards,

LM Investment Management Ltd
The global pathway to Australian Investment Solutions_


----------



## ASICK (11 July 2012)

For reference:
Trilogy's PFMF engaged PKF to produce an expert report and provide some tax information for the Explanatory Memorandum - cost to the fund? $214.5k!  (PKF was the receiver for a number of the PFMF's assets - so, Trilogy didn't travel to far to find an expert).
http://moneymagik.com/PFMF_EXPERT_AUG_2010.pdf

THE LM FMIF - On top of the costs of the Sydney meeting for the LM FMIF which will turn out as a cost for the feeder funds, there'll be another meeting for each of them, and then the costs of the experts .. wow! won't that be fun?

Not only one expert, but two!

*WMS Chartered Accountants *- Financial Modelling Scenarios

Now, that's keeping it local (to the Gold Coast) - http://www.wmssolutions.com.au/s1.php?no=103

The business might have been started by two retired partners from Ernst & Young (Watter & McDermid), but the initiators don't seem to be on the management list anymore. http://www.wmssolutions.com.au/s1.php?no=20

Trilogy (as RE for the PFMF) commissioned an "Asset Review" (to some of us, aka "The Little Picture Book") at a cost of (as I best remember) over $200k but Trilogy limited the cost to no more than $100k  to the fund (I'll update the exact figure if I can find it).  Has LM limited the cost to members for one or both of the experts?

The review caused the assets attributable to investors as at 30 June 2009 to be reduced to $426m (from $630m as at 31 December 2008 when City Pac was RE).  That might have been the new valuations, but life goes on:

http://moneymagik.com/performance_PFMF_Trilogy_big.jpg
What was said in November 2010: http://www.moneymagik.com/295_million.mp3
(Balmain Trilogy Investment Management Pty. Ltd.'s Andrew Griffin at the PFMF Sydney Info Session in November 2010)
The upshot: http://www.moneymagik.com/yardy_yardy_yah.php

and we await the 30 June 2012 finanicals with a collective bated breath.

The LM FMIF - the "sell" / "hold" - and once you decide, you're locked in for a ride with LM and its up to 5.5% in management fees and the fees it collects for 'renegotiating' loans and fees it collects for acting as receiver for the deliquent loans including the loan which has a loan from another fund LM manages as second mortgage 'behind' it  .. and how about the second mortgage loan LM lent?  Now, that might be an interesting ride - what do you think Dinga?

*BIS Shrapnel* - Asset Information 

Good luck with BIS's forecasting:-

21 March 2011 - "Property Market to Regain Steam: BIS Schrapnel" 
http://www.aussie.com.au/mortgage-b...-analysis/property-market-to-regain-steam.htm

12 October 2011 - "Brisbane House Prices 'set to jump 16 percent'"  
http://www.couriermail.com.au/life/...e-by-20-per-cent/story-e6frequ6-1226164654378

25 June 2012 - "... BIS Schrapnel Predicts the Property Market to Improve Over the Next Three Years"
http://www.multi-choice.com.au/blog...-market-to-improve-over-the-next-three-years/

And don't forget, the experts will disclaim their reports - just as did the very PDSs that got you guys hooked up in the funds in the first place - can you trust the experts any more than your original PDSs? I wouldn't think so.  

I notice there's no reference to the experts speaking to new investment in the LM FMIF - why am I not surprised?

I wonder if a manager went to an expert and the expert didn't agree - would the manager tender that opinion to investors?  Heck, has that ever happened?

From my experience in certain matters, for every expert held up by one side, there's an expert who is diametrically opposed for the other side.  Of course, don't forget the old saying "Opinions are like a***h***s, everyone's got one" 

While it's true that each fund will rise or fall on the quality of its assets - it's interesting to note that both the PFMF and Equititrusts IF (as your fund) were valued at about 60% -70% when things first started to look as if they were going pear-shaped, both the EIF and PFMF have a high-end expectation of recovering $0.28 (plus any recoveries by way of litigation) - the bottom end could be very little indeed.   After 3 years, Trilogy has only repaid member $0.08 of their original investments.

It's worth having a look at the Equititrust thread on ASF.

I certainly hope your fund fares better than the others, but my guess is that it won't.

Here's another to add to the list: 
http://www.smh.com.au/business/anxious-wait-for-provident-investors-20120702-21bmb.html


----------



## ASICK (11 July 2012)

A stroll down memory lane:
http://www.lmaustralia.com/News/2011/LM-awarded-2011-Australian-Export-Awards-finalist-.aspx

"LM's total funds under management have also increased in each year of operation – totalling $809 million in FYE 2011, $757 million in FYE 2010, and $755 million in FYE 2009." - but I wonder how the feeder funds figure in the totals? (because they actual provide a total in themselves, as well as increasing the value of the fed fund (eg. LM FMIF))

Maybe the answers lie somewhere in the Documents here:
http://lmaustralia.com/Document-Library.aspx

Reminds me of the adage, "Yesterday's headlines, today's fish & chip wrappers" - perhaps that's why it's so oft disclaimed that "past performance is not indicative of future performance"


----------



## dinga (14 July 2012)

Since a number of other (than LM) Funds have been mentioned in the threads, thought the attached summary by IOOF might be of interest, since it provides a quick reference guide to the status of any frozen or illiquid investment options on the IOOF investment menus (LM Wholesale First Mortgage Income Fund being one of the 26Funds included).  

http://www1.ioof.com.au/files/docsForms/Frozen_Fund_Summary_2008-12-15.pdf


IOOF says _"Most investment managers have now re-opened frozen investment options to redemptions or have determined to terminate the investment option and redeem units automatically as funds become available_".
Interestingly, where termination was determined, seems those decisions were mostly taken in 2011.

As LM seems to be recommending a different route, I for one am even more anxious to see the financial modeling that supports "hold" / "sell" elections rather than termination - which I (a) believe should be a specific option for investors, rather than a possible default outcome; and (b) assume will likely provide the most equitable outcome for all investors.

LM apparently is holding Advisor Forums around Australia between 23 July and 3 August to "... facilitate active discussion of the proposed liquidity mechanism for the closed funds, the processes involved, the fund assets and scenarios of the financial modelling regarding the “sell” and “hold” pools  -  as an opportunity for Advisors "...to develop further understanding prior to the investment allocation step, when you will be guiding your clients in relation to their allocations".   Seems like we investors can shortly expect to receive the modelling  -  am hoping LM will repeat this exercise and provide investors with similar opportunities.


----------



## ASICK (16 July 2012)

dinga said:


> ... LM apparently is holding Advisor Forums around Australia between 23 July and 3 August to "... facilitate active discussion of the proposed liquidity mechanism for the closed funds, the processes involved, the fund assets and scenarios of the financial modelling regarding the “sell” and “hold” pools  -  as an opportunity for Advisors "...to develop further understanding prior to the investment allocation step, when you will be guiding your clients in relation to their allocations".   Seems like we investors can shortly expect to receive the modelling  -  am hoping LM will repeat this exercise and provide investors with similar opportunities.




I suppose if you take the optimistic view, then it all sounds okay, and while I have no idea whether investors would be happy to continue to take the advice from investment advisors who advised investment with LM in its LMIF (or a feeder fund), being a skeptic by nature, I'd be surprised if they were, especially given the reduction in unit holder equity and the lack of an income stream. 

Seems the identity of specific assets isn't going to be disclosed - so, what will all the figures to be tendered by LM mean? My guess (and that's all it is), not much at all.  To get a good idea of the value of an asset, one must find out each asset's location and identity and then ask a local agent.  

I'd be minded to think that the local agents would be well aware of the owner of each respective fund asset that's been put up for sale.   I think the only surprise would come to investors in the fund - from my experience it seems that fund investors are the very last to find out the particulars of a fund's assets.   A good look over previous advertisements and knowledge of the period an asset's been up for sale would be extremely helpful.

If I was a fund investor I'd be wanting to know more about the loan whereby LM manages another fund holding a second mortgage 'behind' it - and I'd want to know more about that second mortgage from a so-called "first mortgage" fund, the LM FMIF?  Things like the identity and location of the asset, and the value of the first mortgage.

I'd also be wanting to receive the audited 30 June 2012 return before going to the meeting - Methinks the fund's value as at 30 June 2012 might very well influence investor sentiment.  Consequently, I'm particularly interested in whether the meeting will be held before the release of the fund's 30 June 2012 financials as well as the disclosed unit holder equity as at 30 June 2012.

Investors should keep in mind that they're the only ones who might lose in this fund - it doesn't matter what the manager says or what the experts say, if it's disclaimed then it cannot be relied on - your loss is your responsibility. It's always worthwhile to read all the disclaimers FIRST - after reading the disclaimers, then read the content of any explanatory memorandum or expert report, and then go back and read the disclaimers very carefully again.

Then think about all the spruiks in the documents and discount them by the disclaimers - while there may or may not be guarantees or indemnities for the manager, I'd be surprised if there'll be anything for investors, other than to continue to shoulder all the risk.


----------



## ASICK (17 July 2012)

ASIC stirs: 

http://www.asic.gov.au/asic/asic.ns...mpliance+areas+and+ASIC+guidance?openDocument

Topics:
1. Compliance with key AFS licence conditions including net tangible assets (NTA), base level financial requirements, professional indemnity insurance, external dispute resolution scheme membership and key persons 
2.Inappropriate compliance arrangements for the nature, scale and complexity of the REs business and insufficient resources to undertake the compliance function
3. Poor risk management systems and plans
4. Insufficient measures to control and monitor the release of information to investors 
5. Inadequate controls to manage related party transactions


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## ASICK (17 July 2012)

ASIC cops it re: Provident Capital:
http://www.bfcsa.com.au/index.php/e...ay-up-from-asic-cash-cow-250-million-annually


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## ASICK (18 July 2012)

Thanks to a member of the LM FMIF,  here's the explanatory memorandum and supplemental deed poll (proposed constitutional amendments) spoken to in this forum:

http://www.moneymagik.com/LM_info_pack.pdf

Before reading the spruik, it's worthwhile reading all of "Important Notices" (pp 25 - 26), especially the following excerpt [emphasis has been added]:

"6.3 No investment advice
Information in this Explanatory Memorandum does not constitute financial product advice. LM is not currently authorised under its Australian financial services licence to provide financial product advice in relation to the Units and, in relation to the sale of Units under the Proposal, no cooling-off regime applies in respect of the acquisition of Units. No information in this Explanatory Memorandum constitutes “personal advice” within the meaning of that term under the Act and it has been prepared without taking into account your objectives, financial situation or needs. It is important that you read this document in its entirety before making any investment decision and any decision on how to vote on the Resolution. If you are in doubt as to what you should do, you should consult your legal, investment, taxation or other professional adviser without delay.

6.4 Responsibility for information
This Explanatory Information has been prepared by LM as responsible entity of the Fund. While all reasonable care has been taken in preparing this document, no person, including LM, accepts responsibility for any loss or damage howsoever occurring as a result of the use or reliance on this document by any person. This Explanatory Memorandum has not, and will not be, lodged with ASIC. ASIC takes no responsibility for the contents of this Explanatory Memorandum.

6.5 Disclosure regarding forward-looking statements
This Explanatory Memorandum contains both historical and forward-looking statements in connection with the Fund. The forward-looking statements in this Explanatory Memorandum are not based on historical facts, but reflect the current expectations of LM concerning future results and events and generally may be identified by the use of forward looking words or phrases suchas  “believe”,  “aim”,  “expect”,  “anticipate”,  “intend”,  “foreseeing”,  “likely”,  “should”,  “planned”,  “may”,  “estimated”, “potential”, or other similar words and phrases. Similarly, statements that describe LM’s objectives, plans, goals or expectations are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Fund’s actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements. Deviations as to future results, performance and achievements are both normal and to be expected. Investors should review carefully all of the information, including the financial information, included or referred to in this Explanatory Memorandum.

The forward-looking statements included in this Explanatory Memorandum are made only as of the date of this Explanatory Memorandum. While LM believes the expectations reflected in the forward-looking statements in this Explanatory Memorandum are reasonable, *LM does not give any representation, assurance or guarantee to Investors that any forward-looking statements will actually occur or be achieved. Investors are cautioned not to place undue reliance on such forward-looking statements*.

*Subject to any continuing obligations under law, LM does not give any undertaking to update or revise any forward-looking statements after the date of this Explanatory Memorandum to reflect any change in expectations in relation to those statements or any change in events, conditions or circumstances on which any such statement is based*.

*In relation to historical information, the Fund’s past performance is no indication of the Fund’s future performance."
*


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## ASICK (18 July 2012)

Geez, I just realised that there's no example of the procedure set out in the proposed constitutional amendments, so I thought I'd have a go at it.  This is my take on the proposed scheme:

Suppose a fund comprising 4 assets:-

Asset 1 – Original Loan (L) $60, Book Value (BV) $50, Expected Net Proceeds (NP) $30
Asset 2 – L $70, BV $60
Asset 3 – L $40, BV $30
Asset 4 – L $30, BV $20
Current Value (Unit Price $0.80 [200 x $1.00 units on issue] – this is also BP, book value unit price as at the invitation date)

Pursuant to proposed clause 9A.3, the RE must specify in a Investment Allocation Request the following items:

1.  Offer Closing Date
2. The Sale Assets (Asset 1)
3. The Base Unit Sale Price (BUSP) (proposed clause 9A.2) 30 * .8/50 = $0.48
[$1.00/$0.48, or 2.0833 units per $1.00 redeemed]
4. The Expected Sale Discount (BUSP) (proposed clause 9A.2) (50 – 30)/50 = 40%

Let's assume the asset was actually sold for $40 (yes, it did better than expected).  So, the Actual Unit Sale Price (AUSP) (proposed clause 9A.2) 40 * .8/50 = $0.64
[$1.00 / $0.64, or 1.5625 units per $1.00 redeemed]
Note: it's a tad confusing because the variable NP is used differently in both the AUSP and BUSP formulae:  in the former, it's the actual sale price, and in the latter, it's the expected sale price.

Units would leave the fund at 1.5625 units per every $1.00 redeemed ($0.64/unit).  If we assume that the whole $40 was redeemed, the number of units leaving the fund would be $40 * 1.5625, or 63 units.

Therefore 200 – 63, or 137 units now hold $110 in equity (Asset 1 now sold) with 47 units redeemed at 1.5625 units per $1.00.

Unit Price for those who “hold” is now increased to $0.803 per unit because of the reduced unit price for those redeeming in the “sell” pool.

Corporations Act 601FC(1)(d) requires that all members must be  treated equally
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

Those who stay will retain (and better) the $0.80/unit, while those who leave redeem at $0.64/unit.  I wonder how this complies with s. 601FC(1)(d) Corporations Act?  

The trouble (as I see it) it doesn't matter what the BUSP (expected unit price) is, it's the AUSP (actual unit price) that matters.  I'd be surprised if the BUSP is too far away from the unit price (BP), but I wouldn't be too surprised if the AUSP is.

BUSP (expected unit price from asset sales) is NOT BP (fund unit price as at the invitation date), as the example discloses, a BUSP of $0.48/unit might return an AUSP $0.64/unit for those who “sell” and  better  the original $0.80/unit for those who stay. 

Of course, there's a lot more to this story, because those who stay have to consider the market, any discount suffered by those who leave, and the ongoing costs of maintaining the assets. If AUSP is substantially reduced from BP, then that could very well scare the pants off those who stay.  But, since the deal is struck and they have to hold on for a further 3 years under the terms of the deal, it could be quite a hair raising ride.

If you choose NOT to sign up in the “Sell” pool, then you're deemed to be locked up in the fund for at least another three more years in the absence of further Investor Allocation Requests!!

Also, as BP (in relation to AUSP) is calculated as at the invitation date, then  if the invitation date for the unit sale program is quite some time earlier that the actual sale date (to calculate AUSP), then this very well might cause some real problems for those who stay and give a substantial benefit to those who leave (in the event that fund unit price has dropped during the period).

This is how I see the deal in the absence of any example to lead me to think otherwise.


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## dinga (19 July 2012)

ASICK said:


> Geez, I just realised that there's no example of the procedure set out in the proposed constitutional amendments, so I thought I'd have a go at it.  This is my take on the proposed scheme:
> 
> 
> Corporations Act 601FC(1)(d) requires that all members must be  treated equally
> ...




THANKS ASICK

As seems to be the norm, your analysis is far in advance of what LM has provided so far to us long suffering, and it seems largely ignorant/apathetic , investors.  

Already on my to-do list was to ask LM to provide examples of likely outcomes for the poor investors who were forced to allocate their diminishing investments into either 'buy' and/or 'sell' buckets.  Your calculation example throws great doubt on how on earth the LM proposal can ever result in an equal outcome for we PBIs (to adapt a military expression).  

I will finalize, and send, my request list (including this one) to LM this weekend - promise -  and will post the request here.

BTW - I have been counselled about the sometimes colourful language and terms of expressions I have used here.  On reflection, perhaps some posts could have been better expressed - but in my defence it should be understood they have been posted in circumstances where my LM investments have already suffered a 27% loss(and which I expect eventually will result in a total loss of 70%, at best), and where what remains of my money is managed by a firm in whom I have absolutely no confidence.

However, to make it pellucidly clear:
*  all of my comments - bland as well as more colourful - in no way relate to individuals, alive or dead, but relate  solely to LM as the RE, and my personal views as an investor in both LM FMIF and LM CPAIF
*  I have no interest apart from self-interest, in trying to maximize the return of my investments, and minimize the time within which I am reunited with (whatever remains of) my money 
*  In particular, my inclusion of the link to the SMH article entitled "The Scarlett Pimpernel of Funds Management", should in no way be taken to mean that I (a) adopt any or all of the matters/views expressed in the article or reader comments; or (b) promote as correct any or all of those matters/views.


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## ASICK (19 July 2012)

Hi Dinga, I know what it's like to lose in a managed investment fund and I can understand your frustration.

I look forward to seeing your request to LM for working examples - I'm sure they'll be able to clarify the situation.

I've been looking at the definition of Actual Unit Sale Price (AUSP):

http://www.moneymagik.com/LM_info_pack.pdf
(Schedule 1, proposed clause 9A.1)

"Actual Unit Sale Price means, as at any Trigger Date for a Unit Sale Program, the price per Unit
calculated in accordance with the following formula:
(NP x BP) + NID - SD
(BV
where:
NP means the amount in the Net Proceeds Account as at that Trigger Date,
BV means the Book Value of the Sale Assets whose sale contributed to the Net Proceeds held in the Net Proceeds Account as at the Invitation Date of that Unit Sale Program, 
BP means the Book Price of a Unit as at the Invitation Date of that Unit Sale Program,
NID means the Net Income Distributions as at that Trigger Date divided by the number of Sale Units (where that number is as adjusted under clauses 9A.4, 9A.21, 9A.22 and 9A.23),
SD means the duty (if any) payable to any Office of State Revenue on the transfer of a Unit under the Transfer Facility as at the Liquidity Date for that Trigger Date;"

I note that each of BP and BV are calculated as at the invitation date. I had previously noted that if the invitation date was quite some time before the actual sale occured that those who "sell" might benefit, but it seems that probably will not be the case because the ratio of BP/BV might probably stay the same if all assets reduce/increase in value at the same rate over time.  However, if the assets being sold were to devalue at a faster rate over time than those assets  in (as you say) the "hold basket", it will be those who "sell" who will incur a loss which is greater than they otherwise might have expected.

You might care to ask LM how the proposed scheme complies with Corporations Act s. 601FC(1)(d) since those who leave will redeem units at a price which will be less than the fund's current value (NTA/units on issue).


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## dinga (20 July 2012)

ASICK said:


> Hi Dinga, I know what it's like to lose in a managed investment fund and I can understand your frustration.
> 
> I look forward to seeing your request to LM for working examples - I'm sure they'll be able to clarify the situation.
> 
> ...




Great - thanks ASICK.  These questions will indeed be included on my list, requesting LM to clarify.


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## dinga (22 July 2012)

I've just asked LM to please clarify/respond to the following matters:


1.  In the last advice from LM, it was stated that the funds will be wound-up if there was "overwhelming" support by investors for the 'sell' option.  What is the trigger point (eg.  asset value level, total unit percentage - whatever) at which LM will wind up all of these frozen funds?


2.  My recollection is that investors have only ever been informally asked whether they preferred capital preservation or income receipt, and those indications were the basis for the proposed FMIF Constitution amendments.  It seems that many investors have already concluded the best and most equitable outcome is to have an orderly wind up of the funds and that investors should be given the opportunity to vote on that clear option  -  it should not be a default outcome, based on some decision by LM.  I therefore request that we investors:

(a)  Firstly be asked to vote for EITHER (i) Orderly wind-up of the funds; OR (ii) approval of the proposed FMIF constitutional changes;

(b)  If the vote approves the constitutional changes, only then should investors be asked to allocate to 'hold' or 'sell'

Please confirm that LM will ask specifically ask investors whether or not they want to wind up the funds, as suggested.  


3.  I now also ask that LM:

(a) Provide investors with the Pros and Cons of winding up the funds together with the relevant supporting financial modeling.  

(b)  Advise why it does not consider that winding up the funds offers the best outcome to investors, since it addresses virtually all of the Potential Disadvantages of the Proposal. 


4.  I now ask that LM provides investors with detailed information about the investment offers LM says is being received when the Funds re-open  eg:

(a)  detailing the likely conditions, especially in relation to guarantees

(b)  identifying the likely impacts on current investors 


5.  Together with the financial modeling, please confirm that LM will provide investors with example calculations showing the effects of the proceeds of asset sales for both "sell" and "hold" investors.     


6.  The following is an attempt to see the possible outcomes, in the absence of any examples being provided by LM:

*  "Actual Unit Sale Price means, as at any Trigger Date for a Unit Sale Program, the price per Unit calculated in accordance with the following formula:
(NP x BP) + NID - SD
(BV
where:
- NP means the amount in the Net Proceeds Account as at that Trigger Date,
- BV means the Book Value of the Sale Assets whose sale contributed to the Net Proceeds held in the Net Proceeds Account as at the Invitation Date of that Unit Sale Program, 
- BP means the Book Price of a Unit as at the Invitation Date of that Unit Sale Program,
- NID means the Net Income Distributions as at that Trigger Date divided by the number of Sale Units (where that number is as adjusted under clauses 9A.4, 9A.21, 9A.22 and 9A.23),
- SD means the duty (if any) payable to any Office of State Revenue on the transfer of a Unit under the Transfer Facility as at the Liquidity Date for that Trigger Date;"

Note that each of BP and BV are calculated as at the invitation date. The ratio of BP/BV might probably stay the same if all assets reduce/increase in value at the same rate over time. 

Suppose a fund comprising 4 assets:-

Asset 1 – Original Loan (L) $60, Book Value (BV) $50, Expected Net Proceeds (NP) $30
Asset 2 – L $70, BV $60
Asset 3 – L $40, BV $30
Asset 4 – L $30, BV $20
Current Value (Unit Price $0.80 [200 x $1.00 units on issue] – this is also BP, book value unit price as at the invitation date)

Pursuant to proposed clause 9A.3, the RE must specify in a Investment Allocation Request the following items:

1. Offer Closing Date
2. The Sale Assets (Asset 1)
3. The Base Unit Sale Price (BUSP) (proposed clause 9A.2) 30 * .8/50 = $0.48
[$1.00/$0.48, or 2.0833 units per $1.00 redeemed]
4. The Expected Sale Discount (BUSP) (proposed clause 9A.2) (50 – 30)/50 = 40%

Let's assume the asset was actually sold for $40 (yes, it did better than expected). So, the Actual Unit Sale Price (AUSP) (proposed clause 9A.2) 40 * .8/50 = $0.64
[$1.00 / $0.64, or 1.5625 units per $1.00 redeemed]
Note: it's confusing because the variable NP is used differently in both the AUSP and BUSP formulae: in the former, it's the actual sale price, and in the latter, it's the expected sale price.

Units would leave the fund at 1.5625 units per every $1.00 redeemed ($0.64/unit). If we assume that the whole $40 was redeemed, the number of units leaving the fund would be $40 * 1.5625, or 63 units.

Therefore 200 – 63, or 137 units now hold $110 in equity (Asset 1 now sold) with 47 units redeemed at 1.5625 units per $1.00.

Unit Price for those who “hold” is now increased to $0.803 per unit because of the reduced unit price for those redeeming in the “sell” pool.

Those who stay will retain (and better) the $0.80/unit, while those who leave redeem at $0.64/unit. 

(a)  This simple example indicates that 'sell' investors may well redeem units at a price which will be less than the fund's current value (NTA/units on issue).  Is this a valid potential outcome?

(b)  If this is so, how does LM's proposed scheme comply with Corporations Act s. 601FC(1)(d), which requires LM to treat the members who hold interests of the same class equally?     


7.  I understand that LM has advised other investors that audited 2011/2012 Financial Statements for FMIF and all of the feeder funds will be provided in advance of investors being asked to approve the proposed changes to the FMIF Constitution.  Clearly investors will need a reasonable period within which to consider the audited financial information  -  I submit that a minimum period of one (1) month is needed, and request you confirm that investors will be given such a period.


8.  I understand that LM has also advised other investors that full detailed information about all of the funds assets will be provided, including but not limited to (i) Book Value of each asset, including the latest valuation date; (ii) initial loan amount; (iii) outstanding loan amount; (iv) Actual individual LVR; (v) income received during 2011/2012  -  with amounts capitalised or received in cash specified; (vi) expected income per year  for each of the next 3 years.  

In addition, I ask request confirmation that LM will also:

(a)  Identify which assets are subject to a 2nd Mortgage held by a related party, and the amounts of those mortgages

(b)  Identify which asset(s) are subject to a 2nd Mortgage held by FMIF, and the amounts of that/those mortgages

(c)  The rates of interest being paid/accrued on every Asset

(d)  Identify which assets have been subject to active marketing, together with the detailed history on feedback/offers

(e)  Identify which assets are currently being marketed, together with likely sale prices and timeframes for sale 

(f)  Provide a detailed breakdown of expenses applied to every loan/asset 


9.  In relation to the DBank arrangements, I request that LM provides updated information about:

(a)  Conditions to be met by LM, particularly any LVR covenant

(b)  Did LM make the $13.5 mill payment by 30 June 2012?  If not, what additional conditions/penalties have been imposed by DBank? 


10.  No doubt LM has provided other investors with information, in answering specific investor queries.  I request:

(a)  All of such information should be provided to other investors

(b)  In the interest of openess and investor benefit, LM should circulate negative  - as well as positive - feedback that investors have provided to its proposals.


11.  I have previously raised my objections that feeder fund investors were not to be given the opportunity to vote on the recommended changes to the FMIF Constitution.  I understand LM is currently considering the steps that will be taken in respect of the approval of the liquidity mechanism by the feeder funds.  Please advise when LM will reach a conclusion on this very important matter.


12.  I understand LM is holding 12 Advisor/Intermediaries Forums around Australia, commencing on 23 July 2012 to "...facilitate active discussion of the proposed liquidity mechanism for the closed funds, the processes involved, the fund assets and scenarios of the financial modeling regarding the "sell" and "hold" pools.  This will be an opportunity for you to develop further understanding prior to the investment allocation step, when you will be guiding your clients in relation to their allocations".   

(a)  I understand LM has refused Investors' request to attend these forums on the extraordinary basis that LM is not licensed to provide advice for investors (surely LM is not providing investment advice to the Advisors, who may then pass that onto the investors?).   Will LM allow my nominee to attend one of these forums?  If not, why not?

(b)  I would have thought it obvious that investors should be given the first priority to 'develop further understanding'.  Does LM intend to hold similar forums for Investors, prior to the next vote on the liquidity mechanism?  If not, why not?


13.  Fee levels advised by LM - especially for the Feeder Funds - seem extraordinary.  Assuming the true fees are to be totalled (ie. Feeder Fund plus FMIF), this apparently means my CPAIF fee hit has been:

* 2008:  1.21%
* 2009:  5.92%
* 2010: 2.17%
* 2011: 4.93%

Please advise:

(a) Are these amounts correct?

(b)  If correct, why have the fees been so high for the CPAIF?  

(c)  Why were there such large increases in 2009 and 2011?

(d)  What is the basis for LM calculating its fees?  

(e)  What is the basis upon which LM judges the fees to be 'appropriate'? 


14.   In relation to the 2nd mortgages held by related parties, perhaps there is a possibility that the best outcome for FMIF and feeder fund investors is that those assets be now sold.  Presumably such an outcome may well not be in the interests of LM MPF investors.  

(a)  How does LM manage what clearly could be a conflict of interest between those two categories of LM investors?   

(b) Given that LM is the RE of both FMIF and MPF, why was there a need for FMIF to have a 'priority agreement'?  What are the terms of that agreement?


15.   In relation to WMS Chartered Accountants and BIS Shrapnel, please advise details of any past and current relationships with LM entities.  


I'm very much looking forward to LM's responses to these matters, and will post them here.


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## ASICK (26 July 2012)

Fine effort Dinga.  At least now LM Investment management will be able to have its say on this thread (after you post any reply you might receive).  I'm not surprised you're the ONLY member of your fund doggedly posting here, after all, in any group there is always only a handful who see reality while the rest remain in numbnuts land, living in hope while sinking into the mire, sometimes slowly, sometimes apace.  

I sincerely hope that more members of your fund might be motived to contribute, but alas, that's also probably living in hope.

I'm aware that LM Investment Management is concerned about this thread and in particular about links to the SMH article since a simple search for "LM Investment Management"  in Goolge discloses that ASF sometimes appears right next to LM's home site.  However, what I'm surprised about is that LM hasn't commenced proceedings against SMH  to have the article struck from public view.

Still, if LM Investment Management does reply to your letter, I'm sure such reply will make good reading and provide fertile grounds for further contributions in relation to it.  I'm sure LM Investment Management will be acutely aware of all of these things.

Again, fine effort.  Let's sit back for a few days and wait for LM Investment Management to reply.


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## Irishdan (1 August 2012)

IThe reality with this mob is that they will do anything to prolong the existence of the FMIF because that is where they are paid from. On My calculations based on the size of their other funds, FMIF accounts for circa 75% of their total topline revenue. If it were to be liquidated in its entirety which it should have been over three years ago that cashflow stops for LM. This is one of the key points where the RE I believe has breached the corporations act in that it has put its own interest ahaed of those of its investors

I would be suggesting to you all to work on a Zero return from FMIF. The debt to asset ratio of as you know is now north of 70% based on rubbery valuations. This is largely because most of the borrowers/loans are in default and interest owing has been capitalised to the point that there is areally big chance of negative equity situation. 18 months ago I was advised that they had identified properties to sell and were vigorously marketing them. I asked to see the marketing advertisements etc and who they were listed with and they would not provide that information.

Only last week they were to commence adviser briefings with more this week. None went ahead last week, would be interesting to see whether they went ahead this week.


----------



## ASICK (1 August 2012)

From one of LM's spruiks (in part) " As Fund Manager, LM has identified and proposed a well-supported strategy to bring liquidity to the Fund.   Naturally, with our extensive in-house property and funds management expertise, we have identified assets that are suitable for each of the “hold” and “sale” pools of the strategy.   

Importantly however, the hold and sale pools will be weighted according to investor elections and not as predetermined by LM.    LM does not have a vested interest in the weighting of assets to each pool.  The strategy recognises the fact that investors have this personal interest and need.  The weighting will be determined objectively and according to the investment allocations received from all investors.  Clearly liquidity is required by some investors and so assets must be sold to satisfy that need.   As well, there are investors who prefer to remain in the fund, commence earning income once again, and await improvement and potential market upside.    The liquidity mechanism aims to fairly address the needs of all investors."

LM says (in part)

1.  LM allocates assets  to the "hold" and "sale" pools.
2.  LM (Naturally, with its extensive in-house property and funds management expertise) has identified assets that are suitable for each of the “hold” and “sale” pools of the strategy.  
3.  The assets are weighted according to investor elections 
4.  LM has no vested invest in the weighting of assets to each pool.

I'm a little confused by LM's proposal.  This is how I read it:  LM allocates the assets after having identified them - the assets in each pool are then weighted.  LM has no vested interest in the weighting.   

My first question is: "What does weighting mean?" 
My second question: "Where is an example of how the weighting process works"
My third question: "As to vested interest, how about the loan behind which LM has caused another fund to lend as second mortgagee, is the security asset for the LM FMIF loan up for sale? and if not, why not?"
My fourth question: "Since the second mortgage lent by the fund can't be sold, is it fair to leave the risk to the "hold' pool?"

I look forward to seeing examples from LM disclosing how fund security assets of varying LVRs are dealt with.

I also look forward to reading LM's explanation as to why the proposed scheme complies with the Corporations Act (s. 601FC(1)(d)).

As far as I read it, LM hasn't given any reasonable explanation as to the proposed scheme's operation:  weighting is not explained  - a second mortgage is in the mix  - a FMIF loan in front (as first mortgage) of a loan from another LM fund (as second mortgage) - loan LVRs vary  - Corporations Act 601FC(1)(d) compliance.

If LM has been unsuccessfuly attempting to sell assets, how will those assets now sell to satisfy those who want to leave unless further discounting takes place? In other words, would those who wish to leave find themselves at a higher degree of risk than they might have imagined?

The real drama for sellers is that they cannot find fault with the manager for investor losses (see the disclaimer) - so, if an example indicates a loss is 10% and the actual loss is 40%, then so be it. 

I wonder (in the circumstances) why any related party loans aren't repaid immediately and that the money be returned to investors without delay.

And there's more - but, for another day.


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## dinga (2 August 2012)

dinga said:


> Sadly, you're right.  I think most investors do not take sufficient care and scrutinize all of the available information prior to making investments.  Also, I'm one of the investors who is now suffering because of the over reliance placed upon fund managers and IFA's  -  and the misplaced assumptions that:
> *  the best interests of both fund managers and investors must be the same, so therefore all actions by the managers must therefore be in the best interests of the investors
> *  on-going advice provided by the same financial advisors who introduced investors to the funds, and who continue to receive trailing commissions, must be independent and balanced  -  and in the best interests of the investor
> 
> ...




LM provided the following response to my query about FMIF 'performance'

_"I confirm that the unit value of the fund is currently 0.73cents.  The Fund declared zero distributions from 1st January, 2011.  Further information was provided in the letter sent to investors with the 2011 Taxation Statements which is copied below for your information.


In relation to your comments on the  table, I advise that the performance percentages are provided on the same basis across the three funds and the full result incorporating unit value is summarised in the dollar column.




Dear Investor, 



RE: Taxation Statement


Please find attached your Taxation Statement for 1 July 2010 to 30 June 2011.


We report that the LM First Mortgage Income Fund will record an accounting and tax loss for the year ended 30 June 2011, due to the write down in mortgage security values.


Payments and Accruals for the period 1 July 2010 to 31 December 2010 are of a capital nature and will NOT need to be included in the assessable income on an investor's tax return for the current year.


Accordingly, as LM First Mortgage Income Fund has no income to distribute, the ordinary monthly cash and accrued payments received by investors, including the feeder funds (LM Wholesale First Mortgage Income Fund, LM Currency Protected Australian Income Fund and the LM Institutional Currency Protected Australian Income Fund) in the period 1 July 2010 to 31 December 2010 (once we catch up) are all partial repayments of capital and not income, and therefore will not need to be included in the assessable income in an investor's tax return for the current year.


Please note that you should speak with your accountant regarding the distributions of capital, as they usually need to be taken into account when calculating any capital loss realised on the disposal of your investment in LM First Mortgage Income Fund."_

Now I understand  -  the table displays FMIF 'performance' in two ways  ie.  'income' shown as a percentage return over 1/3/5/7 and 10 Year periods; and "full performance" over a 12 Year period, expressed in $terms and which presumably represents the total of 'growth' (or in the FMIF case, reduction in Unit Value) and 'income' in  that time period.

Of course it would be much clearer if the FMIF 'full performance' for each of the 1/3/5/7/10 Year periods was shown as a percentage incorporating BOTH 'income' and 'growth' elements.  In my case, the 'full performance' of my investments are to date (and no doubt the eventual results will be far worse):

*  FMIF (investment made in August 2006):  LOSS 12.7% in almost 6 years

*  CPAIF (investment made in June 2007):  LOSS 15.28% in 5 years

*  CPAIF (investment made in October 2008):  LOSS 21.7% in 3.5 years

For me at least, this presents the stark reality better than the LM table.


----------



## ASICK (3 August 2012)

*The "Three-legged Race"*

Hi Dinga.  I took a look at the table you refer to and note that LM cites investing $10,000 in November 1999 which ends up as $16,943 on 30 April 2012.  LM compares that to a Challenger Fund and Colonial First State with outcomes of $23,292 and $16,804 respectively.  I assume that all capital losses and interest returns have been treated the same for the same period as the LM fund.  The table lacks detail, so it's impossible to check the validity of the outcome. I also assume that investors have (for the most part) reinvested the interest into the fund.

To my mind, it's like comparing a three-legged racer to other three-legged race contestants and saying "well, we performed well" - but, there's no comparison against someone  able to run without hindrance.   The LM FMIF is a frozen fund which is substantially impaired: The fund is no longer able to the compared to well performing liquid funds (the runners), it can only be compared to impaired funds (those in the three-legged race).

It doesn't matter which way LM presents the data, the $16,943 comprises $7,300 ($10,000 - $2,700 (27%)) of capital and $9,643 which remains of $13,210 of reinvested interest (discounted at 27%).   The table takes no account of inflation: $1.00 in 2012 is worth far less than $1.00 in 1999.

If one would have taken the interest out of the fund and put it in the bank, one would have much more money than $13,210 since bank rates have performed much better than LM, and of course no losses would have occured.  No tax implications have been considered.

Equity = All invested in LM $7,300 capital + $9,643 reinvestment 
Cash equity = 0
Amount at risk = $16,943

Equity = Invested in LM $7,300 capital + > $13,210 if interest placed in a bank
Cash equity = > $13,210
Amount at risk = $7,300

Clearly reinvestment with LM would have been quite a mistake.

Yes, LM is running a "three-legged race", and perhaps it's not losing, and it's not winning either, but it's not in the race comprising those "running" without losses while making decent returns for investors.  Further, the outcome for investors is far from certain with the "three-legged race" yet to be completed.


----------



## ASICK (3 August 2012)

*"Nice to see Property Trust Bosses Sharing the Pain"*

http://www.smh.com.au/business/nice...t-bosses-sharing-the-pain-20120802-23ibm.html


----------



## dinga (3 August 2012)

Irishdan said:


> IThe reality with this mob is that they will do anything to prolong the existence of the FMIF because that is where they are paid from. On My calculations based on the size of their other funds, FMIF accounts for circa 75% of their total topline revenue. If it were to be liquidated in its entirety which it should have been over three years ago that cashflow stops for LM. This is one of the key points where the RE I believe has breached the corporations act in that it has put its own interest ahaed of those of its investors
> 
> I would be suggesting to you all to work on a Zero return from FMIF. The debt to asset ratio of as you know is now north of 70% based on rubbery valuations. This is largely because most of the borrowers/loans are in default and interest owing has been capitalised to the point that there is areally big chance of negative equity situation. 18 months ago I was advised that they had identified properties to sell and were vigorously marketing them. I asked to see the marketing advertisements etc and who they were listed with and they would not provide that information.
> 
> Only last week they were to commence adviser briefings with more this week. None went ahead last week, would be interesting to see whether they went ahead this week.




Some comments:

1.  Absolutely agree that there are real question marks about whether or not the RE has breeched the Corporations Act in a number of respects.  Understand there are a number of folks looking at this aspect - including the Sydney office of the law firm Piper Alderman.  Any investors interested in supporting a detailed examination and possible subsequent Class Action can contact Ms Shaan Palmer at <SPalmer@piperalderman.com.au>

2.  Interesting to hear that the Advisor Briefings didn't go ahead last week.  Perhaps the poor sods running them are as confused as me about the content and purpose, which seem to be in a state of mutation.  

*  Firstly, the invitation sent by LM to Advisors was *"The forums will facilitate active discussion of the proposed liquidity mechanism for the closed funds, the processes involved, the fund assets and scenarios of the financial modelling regarding the “sell” and “hold” pools.  This will be an opportunity for you to develop further understanding prior to the investment allocation step, when you will be guiding your clients in relation to their allocations."* 

*  In response to investor request to attend, LM advised the meetings were *not suitable for investors as they were informal and LM is not licensed to provide advice to investors and must be very careful of the manner in which information is presented to investors.  *

*  Lastest version is that the meetings are *business meetings covering a range of topics, not only those of FMIF and the feeder funds*

Giddyness means I'm less interested in any further clarification, but greatly interested in hearing EXACTLY what is said at these meetings, if they indeed go ahead

3.  We should have a better appreciation of exactly how badly the Funds are placed when the audited accounts are released (which apparently will happen before we are asked to vote (again) on LM's proposals.  Would love to be a fly on the wall during the discussions with the Auditors.  

4.  Am hoping that the audited 2011/2012 financials will remove any doubt that the best and fairest outcome is to wind-up the Funds, albeit it very late (call me optimistic but my hope is that I'll eventually retrieve 30% of my total amount of capital & re-invested interest  -  which would mean a further write-down of 59% from the current stated Unit Price of 73 cents)

Time to call upon Saint Jude.....


----------



## ASICK (4 August 2012)

*The "Fiscal Drip"*

And then we have the financial advisors on the drip feed - it'll be interesting to see (if possible), the number of advisors who say "liquidate the fund  LM - give punters back their money": translated as, "we know that we're severing the fiscal drip, but we think it's the right thing to do.   

Others might say "hang in there LM - the market'll improve": may be translated by some investors as "we care, we want punters to have a fair crack at recovery - we're not thinking of that handy fiscal drip, we think it's the right thing to do", other investors might come to a very different translation.

"Irishdan", you're right about those accruals  - it might be comforting for investors to see a lift up in fund value as a consequence of any level of accruals (interest receivable), but if such accruals don't translate to cash, there'll simply be a price to pay (for investors) in the future, and that future might be quite near.   

However the substantive losses will probably be incurred when assets are actually sold - as I've previously mentioned, if such assets aren't being sold because the market isn't willing to pay the price, then bringing down the price to meet the market in order to make sales and return money to investors (and to repay bank debt) could every well be a real shocker for investors (whether they hold or sell).


----------



## dinga (6 August 2012)

*Re: "Nice to see Property Trust Bosses Sharing the Pain"*



ASICK said:


> http://www.smh.com.au/business/nice...t-bosses-sharing-the-pain-20120802-23ibm.html




Question 13 in my email to LM dated 22 July 2012 asked about the level of fees being charged to the frozen funds in which I am invested (FMIF and CPAIF), including how LM judged the fee levels to be 'appropriate".

Putting the past aside for a moment, am hoping that these examples will spur LM to reduce its fee levels go-forward (especially if fees have been calculated on past NAVs that need to be subject to further drastic reduction, as is widely expected).

Which also makes me wonder about trailing commissions (or "drip feeding" in ASICK's words).  Am also curious about how any Advisors could remain comfortable if they continue to receive the same level of trailing commissions both pre and post the freezing of the LM funds.  Surely conscience would have dictated that Advisors would also have felt the need to "share the pain", and rebated all (or all least a substantial part) of those commissions.  Or is that simply too naive a notion.....


----------



## Irishdan (8 August 2012)

*Re: The "Fiscal Drip"*



ASICK said:


> And then we have the financial advisors on the drip feed - it'll be interesting to see (if possible), the number of advisors who say "liquidate the fund LM - give punters back their money": translated as, "we know that we're severing the fiscal drip, but we think it's the right thing to do.
> 
> Others might say "hang in there LM - the market'll improve": may be translated by some investors as "we care, we want punters to have a fair crack at recovery - we're not thinking of that handy fiscal drip, we think it's the right thing to do", other investors might come to a very different translation.
> 
> ...




Hi Asick, 

I am an adviser although I have never directly recommended LM to anyone. I am involved in this through trying to assist people who have LM exposure to get out of it and through a previous purchase of another advisory practice. I work on a flat fee/retainer basis and not commission or % based fees but I have spoken to other advisers and most of if not all that I know have been agitating to have fund liquidated and whatever assets remaining returned to investors (for over 3 years). What would be interesting is to see where the mythical "advisers waiting to put money into the fund" are licenced through because as far as I am aware LM is not covered by any of the fund researchers such as Morningstar &lonsec and never have been but for abrief period that Lonsec did initiate coverage several years ago. In fact the only reference to research on the websitewas to their "advisers introducer day" which was the same modus operandi as the "tree People" in WA like Great Southern where you would get flown into the GC, put up in 5 star digs after a limo ride and then sold the LM spin and then wined and dined until you got on your plane again 2 days later. In fact I know of one firm where the entire staff including the receptionist were treated to this "research". !!! Indeed I doubt very much whether LM is on any approved product lists currently other than licencees who are "mates" with Mr Drake et al

All unit holders should be encouraged to contact Piper Alderman and get their name on the list to vote to change the RE. It might be their only hope of realising some of their investment


----------



## Invstr (9 August 2012)

*Re: The "Fiscal Drip"*

Thanks for all research Dinga, ASICK, Irishdan.

I also happen to be an unlucky investor who has been led down the LM garden path by their financial advisor. I actually asked for the funds to be redeemed before the GFC and subsequent LM freeze, but was refused redemption once the fund was frozen, even though an redemption application was subimitted 6 months earlier. Like many others, I'm tearing my hair out about this.

So Piper Alderman are looking into action re: LM and the frozen funds? I also heard this firm (http://www.9selborne.com.au/bio_anthony.html) were also interested in representing investors. Is there a consensus yet as to which firm would be the best to represent investors?

Additionally, has anyone been in contact with the financial ombudsman regarding this? http://fos.org.au/centric/home_page.jsp

As an aside, I'm sure you all know about LM's expansion plans...

http://www.moneymanagement.com.au/product-news/2012/lm-investment-management-s-singapore-play

Please excuse any ignorance on my behalf regarding this - I've only just come across this forum.

Invstr


----------



## ASICK (9 August 2012)

for the information of members and guests - the Managed Investment Scheme Report - July 2102:
http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFFinal+Reports+2012/$file/MIS_Report_July2012.pdf

See page 18, "only a registered liquidator be permitted to conduct the winding
up of an insolvent scheme"

[note: only a recommendation, and I might add, a good one - there's no reason why members should be compelled to suffer a manager who caused damage to a fund to enjoy fees (at members' expense) while winding it up!]


----------



## dinga (12 August 2012)

In chasing up LM for responses to my questions (see my post dated 22 July 2012), I took the opportunity to also ask the following questions [thanks ASICK!):

Can LM also please answer these questions, based on the following background understanding (from material provided by LM)

* LM intends to allocate assets to the "hold" and "sell" pools.
* LM has identified assets that are suitable for each of these pools. 
* The assets are to be weighted according to investor elections 
* LM has no vested invest in the weighting of assets to each pool.

1.  What exactly does "weighting" mean?

2. Please provide an example of how the weighting process will work

3.  Another LM Fund holds a second mortgage over FMIF asset(s).  Doesn't LM therefore have a vested interest in whether that/those asset(s) are allocated to the "hold" or "sell" pools?  If so, shouldn't LM declare its interests?

4.  Is that security asset for the FMIF loan up for sale?   If not, why not?

5.  If the 2nd mortgage lent by the fund can't be sold, is it fair to leave the risk to the "hold' pool?

6.  In the circumstances, why aren't any/all related party loans repaid immediately and the money returned to FMIF investors without further delay?


On 7 August, LM said it was preparing a full response to the first lot of questions, and it would be provided shortly.


----------



## dinga (21 August 2012)

*Re: The "Fiscal Drip"*



Invstr said:


> Thanks for all research Dinga, ASICK, Irishdan.
> 
> I also happen to be an unlucky investor who has been led down the LM garden path by their financial advisor. I actually asked for the funds to be redeemed before the GFC and subsequent LM freeze, but was refused redemption once the fund was frozen, even though an redemption application was subimitted 6 months earlier. Like many others, I'm tearing my hair out about this.
> 
> ...




Firstly a hearty, but belated, welcome to this Blog.  

I think investors have approached a number of law firms who are looking at matters LM.  I contacted Selbourne Chambers earlier (refer to the details posted by ASICK on 27 May) and Greg Drew was very helpful.  They are barristers and are/have worked with a number of referring solicitors including Piper Alderman.  I got the impression that the consensus arrangements are worked out by the law firms involved, and a joint collaborative approach is usually agreed between them about how such matters are taken forward.

Still no answer from LM to my earlier questions posed on 22 July (guess "shortly", is in the eye of the beholder...)  Will chase LM up again now


----------



## No Trust (21 August 2012)

It seems these schemes all have striking similarities:

Emanate from the Gold Coast

Founders have a penchant for Luxury Beachfront Homes

Ordinary investors get screwed royally


My advice is keep *pushing for answers *as we did on the *Equititrust Forum*, it was amazing what was unearthed despite the company's denials and founders attempts to protect *his luxury lifestyle*... There was no regard for the investors just a *survival mentality *that centred around the founder's personal welfare...

Equititrust was a wreck that was being propped up by lies, when the truth was revealed it collapsed.

*Piper Alderman *may be your only recourse.


----------



## ASICK (21 August 2012)

All the funds crashed as soon as assets had to be disposed of.  The inability to convert interest accruals (receivables) into cash and the inability to convert asset value to equal value of cash were the prime reasons for the losses.  Like air gushing from burst balloons, value gushed from the funds at a rate investors found had to believe.  

As to the rest, "No Trust" said it all.


----------



## dinga (23 August 2012)

Well, LM have - sort of, loosely, kind of.... - responded  _"Various of your questions properly require information currently being finalised for all investors, including the BIS Shrapnel report.

Please bear with us while BIS shrapnel finalises that report and it is fully considered by LM and integrated into our financial modelling; to then be included with all the information for investors,  with a two week consultation period with the regulator regarding same,  following which it will be ready to send to investors."_

To which I've replied:

*I was disappointed to receive your email, which is inconsistent with the advice provided on 7 August that I would receive a full response 'shortly'.

While some of my questions are dependent upon the modeling, many aren't  - and they are fundamental to my concerns and indeed those of many other investors.  LM has had ample time to respond in relation to the following matters and I again request that LM urgently does so.

A.  What is the trigger point at which LM will consider the fund(s) should be wound up?

B.  Will investors be given the opportunity to specifically vote on winding up?  If not, why not?

C.  When will the Audited 2012 Financial Accounts be available?

D.  What is the current status of the DBank funding arrangements, especially including the requirement tp pay $13.5mio due by 30 June 2012.  Did that happen?  What are the impacts/implications/penalties following non-payment?

E.  Will feeder fund investors be given the opportunity to vote on the proposed changes to the FMIF Constitution?  If not, why not?

F.  What is the status of the Advisor Forums proposed by LM?  

G.  Answer the questions concerning the basis for, and level of,  CPAIF fees

H.  Answer the questions concerning related party 2nd Mortgages.

When will LM provide full responses to these matters, as it promised?*


Am thinking of running a book on the likelihood and timing of a 'full response being shortly provided'.

Anyone care to suggest some starting odds???


----------



## ASICK (23 August 2012)

dinga said:


> ... _"Various of your questions properly require information currently being finalised for all investors, including the BIS Shrapnel report.
> 
> Please bear with us while BIS shrapnel finalises that report and it is fully considered by LM and integrated into our financial modelling; to then be included with all the information for investors,  with a two week consultation period with the regulator regarding same,  following which it will be ready to send to investors."_ ...




Isn't the 'financial modelling' the very thing you're seeking information on?

An analogy might be "We're waiting for the numbers to add BEFORE we're prepared to show you how to add numbers".

Dinga, Methinks more BS from LM - to my mind there's no transparency in anything you've posted from LM.   :1zhelp:


----------



## Irishdan (24 August 2012)

ASICK said:


> Isn't the 'financial modelling' the very thing you're seeking information on?
> 
> An analogy might be "We're waiting for the numbers to add BEFORE we're prepared to show you how to add numbers".
> 
> Dinga, Methinks more BS from LM - to my mind there's no transparency in anything you've posted from LM.   :1zhelp:





Just revisiting the numbers in the 2011 statements and am eagerly waiting to be able to compare 2012 numbers. 

Fund had net assets at the time of $382m. ($167m was investments made through the related feeder funds)

Net default loans $353m at the time

At that time there were redemptions lodged amounting to $291m however these rank behind DB loan of $62m at the time. 3 assets of the fund were transferred to LM MPF totalling $29m via a non cash settlement ( a reduction in loan amount receivable from LMMPF and therefore excluded from the statement of cashflows)

So unit holders representing 77% of the assets in the fund wanted their money out and the bank would have needed to be repaid as well  

Difference between  lodged redemptions + DB Loan (291m + 62m = 353m) & net assets of fund at $382 = $29m

Value of assets transferred via non cash settlement therefore not included in statement of cashflows = $29m

Assets remaining in the fund $353m

Net default loans $353m

Investors wanting money back (Including DB) $353m

further on in the statements they refer to being mortgagee in possession of of $415m worth of security that secures $405m worth of loans.(effectively 97% LVR on these assets over twelve months ago)

These are taken straight from the 2011 financial statements on the LM website.


----------



## No Trust (24 August 2012)

All the hallmarks of another Equititrust... Lack of information, banks breathing down their necks, delay in audited accounts... Looks like a dead canary at the bottom of the cage...

The Gold Coast never fails to disappoint...


----------



## Irishdan (27 August 2012)

Dinga,

another question for them might be to ask why CFO Lisa Darcy appears to have left the company. She no longer appears on their website...

She usually signed off on the financials..


----------



## dinga (3 September 2012)

dinga said:


> Well, LM have - sort of, loosely, kind of.... - responded  _"Various of your questions properly require information currently being finalised for all investors, including the BIS Shrapnel report.
> 
> Please bear with us while BIS shrapnel finalises that report and it is fully considered by LM and integrated into our financial modelling; to then be included with all the information for investors,  with a two week consultation period with the regulator regarding same,  following which it will be ready to send to investors."_
> 
> ...




Well, here's the latest 'response' from LM - no answers as usual.  In relation to comment about me supposedly 'taking bits and pieces of information' [which ain't correct as the practice has been to provide LM's responses verbatim], am sure we'd all welcome LM's participation in this forum (fat chance, eh).  Indeed, I'll invite LM to use this forum to provide investors with the quality information we are so loudly crying out for - *and promptly (as was promised to me on 7 August)*.  


_I note I have already replied to your previous emails. 

 We consider that it is the right of every investor in the fund to be provided with information and to have questions answered.    As we have replied several times, your questions are being addressed.   It is important for the fund and all investors that information they have about the fund is correct and clear.    The important information you request is to be  provided as part of a whole package and in the context of LM’s strategy for the fund not just for your benefit but for that of all investors.     I note that the online forum you have initiated takes bits and pieces of information, some of which is correct and some of which is not correct, posting that information in a manner we believe is “out of context with the intended fund strategy”; that is  potentially confusing for anyone participating in said forum and therefore detrimental to the outcome of the fund.  

 Since the shareholder meeting LM has issued investor communication which  you should have received.

 In relation to the financial information, I note that BIS Shrapnel expects to have finalised their report by early September.  On receipt, it will be integrated into our financial modelling and forwarded to investors together  with other relevant information on the fund.  Ernst & Young has also commenced the 30th June audit.

There will be a clear announcement with timeframes released to investors shortly.

In relation to this email, I advise that Ms Lisa Darcy has not held the position of CFO since March 2008.  Mr. Grant Fischer was appointed CFO in March 2008.  We have attended to the relevant notification in this regard. 

 Ms Darcy’s resignation in no way impacts the timeframe in which investors will be provided with the end year financials for the funds.     _


----------



## chrisfe (4 September 2012)

Hi,

This is my first post on the forum. I am an overseas investor in the LM frozen fund and have all my savings tied up in it. Like many it was sold to me as a liquid safe fund similar to a bank account - obviously we now know better. Is there any legal recourse we can take against the fund to get our money or force liquidation? I really am at a lose here on what to do, especially being outside Australia, so any advice or pointer would be much appreciated.

thanks,


----------



## Irishdan (6 September 2012)

Hi ChrisFe,

I suggest you contact Shaan Palmer at Piper Alderman Lawyers on 02 9253 9900


----------



## dinga (9 September 2012)

*Re: The Two Rodgers*



ASICK said:


> Just took another look at the minutes, and in particular, the names of the attendees.
> 
> I thought "What a co-incidence?" - a "John Barry" (financial advisor) listed above a "Rodger Barnes" from Rojacan.
> 
> ...




*Well, well, well.  Seems ASICK was spot on.  I'm waiting with bated breathe to receive something in my mail.  In Africa, I understand vultures perform a very useful cleanup task in feasting on carcases of the deceased (and near deceased).  Understand Trilogy is hardly a 'white knight', but is their apparent action possibly good news/bad news/neutral to we long LM sufferers? *


_RE: YOUR PERSONAL INVESTMENT DETAILS


--------------------------------------------------------------------------------

You may recall that we recently told you about a section of Australian Corporations Law that makes it obligatory for a manager of a managed fund to pass over all of your personal investment details to anyone who properly requests same.  The Australian regulator enforces this, and so we at LM were obliged to pass on all the investor details in the LM First Mortgage Income Fund and the LM Currency Protected Australian Income Fund to a few parties.

The Corporations Law does not preclude non-Australian residents from being handed your information.

We believe that one or more of those parties has handed all of your personal information to an entity based in Sydney, Australia, with whom we have not had any business dealings in relation to the Funds.

It has come to our attention that this Sydney group is Balmain Trilogy and that they are writing to investors in the Funds seeking further personal information from them.

As mentioned above, LM has had no personal dealings with Balmain Trilogy in relation to the Fund.  Information on the track record of Balmain Trilogy is publicly available.  

If you receive a letter or contact from this or any other group, we strongly recommend that you do not confirm any bank, investment or address details as such details can be sold on to scammers and identity thieves.

LM is making enquiries to determine how your personal investment records were passed on to a non-related group operating out of Sydney.

Please contact your financial adviser or intermediary if you have information that you believe we should be aware of.

In relation to the Funds, we are in the last stages of Fund asset profiling. BIS Shrapnel expects to have finalised their report by early September.  On receipt, it will be integrated into our financial modelling and forwarded to investors together with other relevant information on the Fund.  Ernst & Young has also commenced the 30 June audit.

As a result of marketing sales activity, asset sales now in the pipeline for the last quarter of 2012 have strengthened.  On the back of that activity, we anticipate that the recommencement of investor income catch up payments will commence moving towards the end of the year.

There will be a clear announcement with timeframes released to investors shortly. 

If you have any questions, please contact your financial adviser or intermediary.



Yours faithfully

LM Investment Management Ltd
The global pathway to Australian Investment Solutions_


----------



## ASICK (9 September 2012)

*Balmain Trilogy*

Yep .. put your glad rags on .. there's gonna be a hootenanny ... hoot hoot !
http://www.youtube.com/watch?v=R7EHL5HNYoo

BalmainTrilogy's performance to 31 December 2011?  
http://www.moneymagik.com/performance_PFMF_Trilogy_big.jpg
(update coming soon)

BalmainTrilogy spruiks?
http://www.moneymagik.com/yardy_yardy_yah.php
(update coming soon)

Trilogy?
http://www.moneymagik.com/three_part_trilogy_funds_management_tragedy.php
(update coming soon)

and then there's LM ...

27% of investor value gone and they're paying INCOME? really?

To my mind, LM seem to do a lot of talking about what they're gonna do, rather than actually doing what they're talking about.

Actual sales figures might have merit, but otherwise, what's the point of LM's spruik about sales if they don't disclose the figures? Dangling a carrot?

Hang on, BS is coming .. is that how it goes?

The Sydney Meeting  - if Mr. Drake had attended the Sydney meeting he might have noticed the man from Rojacan Pty. Ltd., a company associated with Rodger Bacon of Balmain Trilogy - ah, nevermind, it's all happening now - just like CYRE Trilogy and APGF .. and BalmainTrilogy and City Pacific.

I gotta say that I like the line about the identity theives ... nice penmanship from LM.

As to who gave BalmainTrilogy the information? Could it be someone who's not happy with LM? (just a guess)

"Oh the games people play now
Every night and every day now
Never meaning what they say now
Never saying what they mean"

http://www.youtube.com/watch?v=MAGyENr3_44

Just for laughs (note: "Be aware of similar approaches") - http://balmaintrilogy.com.au/pdf/BTI 4964 UnitholderUpdate.pdf


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## ASICK (10 September 2012)

geez .. I forgot .. on my last check, Balmain Trilogy (Balmain Trilogy Investment Management Pty. Ltd.) didn't hold a financial licence and wasn't an authorised representative of an AFSL holder, so I couldn't imagine investors would be getting investment advice from them.

You'll have to check from time to time to see if things have changed:-
https://connectonline.asic.gov.au/R...&_afrWindowMode=0&_adf.ctrl-state=5iwiofgau_4
(if the link doesn't work, then try this one: http://www.asic.gov.au/asic/asic.nsf/byheadline/Introduction+to+ASIC+Connect?openDocument
click on "Professional Registers" at the RHS of the screen when it opens, and check for financial licence AND then check for authorised representative)


----------



## ASICK (11 September 2012)

*Balmain Trilogy in Asset Manager*

LITIGATION & SUING A DEAD MAN

Trilogy, along with Balmain Trilogy, took over control of City Pacific's First Mortgage Fund.    The fund was revalued and a loss of about $0.52 for each $1.00/unit was assessed.  Investors were angry and hopeful that legal action would recover some or all of their losses.

Here's a bit of the history of litigation in the PFMF:
http://www.moneymagik.com/litigation.php

You'll note they sued a man who died two years ago!  I guess they figured that out when they were told his new address, and yes, they discontinued but they didn't tell investors about this story.  You'll also note that after all these years, time for filing of evidence has been extended - in my view, not a good look at all.

TRILOGY/BALMAIN TRILOGY AND THE GROUP

The fund become a *group *because the managers decided to buy an apartment in "King Tide". Note 4 of the fund's 2011 annual return discloses (in part), "On 7 April 2010, the Group established a separate wholly owned subsidiary named King Tide Management Pty Limited (King Tide), giving it a controlling interest in the shares of the company."

Note 8 discloses (in part), 
"Balance as at 1 July 2010  419,823
Acquisitions - residential apartment (i) 47,029
Acquisitions - management rights (ii) 44,307
Balance as at 30 June 2011 511,159
(i) The Group acquired a residential apartment to maximise returns to unitholders on realisation of mortgage loans and paid a deposit for the acquisition of the managers unit in King Tide apartments; and
(ii) A deposit has been paid to acquire the management rights of King Tide apartments:

http://moneymagik.com/PFMF_return_jun_2011.pdf

Yes, it was all about maximising return to unitholders - but let's see how it turned out - let's see how they fared:-

Note 5 (b) of the fund's mid-term financials (31 December 2011) discloses that the men with the experience lost about $150k out of an initial investment of $500k - $500k which I might add would have done much better paid back to investors.

Looks like some of the deposit on the unit and the management rights were thrown away since the purchases didn't proceed.  Is this what one would expect from Trilogy and Balmain Trilogy?  To my mind, a resounding YES!

http://www.moneymagik.com/PFMF Half Year 2011 V4 FINAL.pdf

WHO'S THE BLAME

Want to play a game? Try this:
http://www.moneymagik.com/who_done_it.php

THE TRILOGY HEALTHCARE REIT 

Want to take up a mission? If you do, try this:
http://www.moneymagik.com/extraordinary_stuff.php

ABOUT THE TRILOGY HEALTHCARE REIT:
http://www.moneymagik.com/analysis_REIT.php


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## Irishdan (11 September 2012)

Thanks Asick. 

You are right Balmain Trilogy have not exactly covered themselves in glory as the "Saviour" of City Pacific investors and indeed their actions might look somewhat opportunistic in their previous takeovers and indeed in this case should it actually materialise. 

I still believe the best course of action is to apply to wind up the fund ASAP and by changing the RE at least investors might have a chance of this happening.It won't happen under LM until it is forced which can't be too far away anyway given LVR's, capitalization of interest on default loans and revaluations fo properties.

The FUnd should have been wound up in 2009/10 an action that would have saved investors around 20m in fees paid to LM. Of course by doing that LM lose their biggest source of funds and would be out the back door with the rest of yesterday's rubbish


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## dinga (12 September 2012)

Irishdan said:


> Thanks Asick.
> 
> You are right Balmain Trilogy have not exactly covered themselves in glory as the "Saviour" of City Pacific investors and indeed their actions might look somewhat opportunistic in their previous takeovers and indeed in this case should it actually materialise.
> 
> ...




Am thinking you guys are dead right  -  regardless of Trilogy's chequered history, if they commit to windup the Funds, over a reasonable time period and at a reasonable nett rate (ie, greatly discounted to the rates imposed by LM) it's likely to be an extremely powerful proposition to all we longtime sufferers.


----------



## ASICK (12 September 2012)

dinga said:


> Am thinking you guys are dead right  -  regardless of Trilogy's chequered history, if they commit to windup the Funds, over a reasonable time period and at a reasonable nett rate (ie, greatly discounted to the rates imposed by LM) it's likely to be an extremely powerful proposition to all we longtime sufferers.




With respect Dinga, I wouldn't recommend Balmain Trilogy to my worst enemy .. hang on .. yes, I would.  But other than my worst enemy, I would NEVER recommend Trilogy or Balmain Trilogy to anyone.

You guys are faced with the same dilemma some of us in the City Pacific fund were - whether to take on someone you don't trust (for one reason or another), or stay around and suffer the potential consequences of oppressive fees and endure other issues of concern such as second mortgages, at least one loan lent 'behind' your fund's loan, the manager taking over the role of managers and/or receivers at extra cost, and loans to relatives.  

As I see it, both LM and City Pacific take/took fees, which  compared to the market, are/were simply far too high.  I guess high fees are a concern to investors when times are good, but it's hard to justify more than about .7% FUM when there's no income distribution and capital losses are incurred - after all, even if more effort is required to manage the assets in bad times, to offset that effort,  there's little investor administration since there's no new investment and redemptions (if any) are paid on a pro rata basis at the same time.

If any "hunters" come calling, they'll come calling because investors are dissatisifed by the lack of income distribution, lack of ability to redeem, dropping unit price, high management fees,  and lack of communication by the manager.  I think the LM fund is one such fund where one would expect a mob like Trilogy or Balmain Trilogy to come calling.

Geez, I would have thought that when guys associated with Rodger Bacon turned up at the last fund meeting it  would have set alarms bells ringing in the ears of LM's management team - did they really need letters to investors to confirm what might have been obvious to some? that is, that some entity associated with Rodger Bacon might be interested in the fund and that some disaffected member find comfort in Bacon and company?

When Trilogy (and Balmain Trilogy) come calling on members of City Pacific's First Mortgage Fund, there was little support in the forums for Trilogy since we'd found out about Philip Ryan's breach of trust and were generally concerned about that (note case two):
http://www.moneymagik.com/trilogy1.php

At that time we didn't know about Trilogy failures at Dee Why & Crows Nest:
http://www.moneymagik.com/analysis_REIT.php

However, even though we thought Trilogy was a company which should not manage our fund, many of us voted for Trilogy.  I remember characterizing it as us running from a "shark" (City Pacific) and into a "Fisherman's Net" (Trilogy).

And so it goes, we now see this mob (Trilogy and Balmain Trilogy) (as at 31 December 2011) has lost 42% of the fund value they commenced with (and it was their re-valuation which set the start value as at 1 July 2009), sued a dead man, lost money investing in a single unit on the Gold Coast, lost a futher $15m on a second mortgage fund (which City Pacific had already lost $17m, to make a total of $32m) and who had made representation after representation which have proved not to have any legs at all, and to boot have received nearly $18m in fees!

There were those among us who just wanted the fund wound up (one such fellow was "Terry") - he didn't support Trilogy, rather he supported City Pac because he wanted the fund wound up and so he didn't want another manager.   I didn't agree with him at the time but only to because  City Pac's fees would have "killed" us in the process.  Had City Pacific reduces its fee and gave certain undertaking, I (and others) would have not supported Trilogy.

That's where you are today - you're faced with a similar dilemma, it could be that LM's fees will "kill" what's left of your investment, so my guess is that, regardless of Trilogy and Balmain Trilogy's track record, some of you will find them an attractive alternative manager - doesn't anyone think that's sad? 

I note with concern that LM states that the auditors have only just started auditing the fund's return - I hope that's not a sign investors won't get the fund's 2012 financials before going to the next meeting.  The market is not good - eg. Wellington Capital's PIF fund reported a loss of about $94m from an about $200m fund in 2012 - I think LM and the PFMF are going to report massive losses, but only time will time.  Given the potential for massive losses, it seems to me that members of the LMIF should strenuously resist any meeting until they're had time to digest the 2012 return.

I would also add that members should also not place any interest in Trilogy and Balmain Trilogy before nothing the performance (or lack of performance) of the PFMF, and for Trilogy, its Healthcare REIT:
http://www.moneymagik.com/analysis_REIT.php

In any event, it seems to me that LM finds itself where City Pac was in 2008, a hunter at the door - investors are dissatisifed because the fund is frozen, no income distributions, capital losses, at least one second mortgage loan, the manager (as manager of another fund) lending "behind" the PFIF, loans to relatives, the manager earning additional fees due to  taking over the roles of managers and/or receivers on various loans, and high management fees.  

If LM doesn't make a lot of changes, and make them fast, then  LM stands to lose its fund to such a predator as Balmain Trilogy (perhaps with Trilogy as RE) even with their respective track records, records which at times are quite troublesome even without considering Ryan's breach of trust - note: Philip Ryan is Managing Director of Trilogy Funds Management Limited and sits on the Compliance Committee:-
http://www.trilogyfunds.com.au/site/index.php?id=2

So, what's the upshot? 

Well, LM risks losing all - investors risk being in the joyous position members of the PFMF are today.  A position I really wouldn't wish on anyone (except of course, my worst enemy).

To recap, here are the spruiks from Trilogy / Balmain Trilogy, the representations and the outcomes:
http://www.moneymagik.com/yardy_yardy_yah.php

I think LM would be wise to drop its fee to about .7% FUM (funds under management), pay back the loan to the relatives, assign managers and/or receiver to loans (or manage such loans for the base fee), as manager of the other fund lending "behind" the PFIF seek alternative funding, and wind up the fund asap.

I don't suppose LM will do those things, and if it doesn't, then I guess the battle will be on.

There's more to post on this issue - and I'll do that at a future time.


----------



## ASICK (12 September 2012)

*Making Waves on the Gold Coast?*

http://www.redorbit.com/news/entert...ment-in-talks-with-kelly-slater-wave-company/


----------



## dinga (13 September 2012)

*Re: Making Waves on the Gold Coast?*



ASICK said:


> http://www.redorbit.com/news/entert...ment-in-talks-with-kelly-slater-wave-company/




_"LM Chairman and CEO Peter Drake says Maddison has several groundbreaking aspects to change the face of residential community living “as we know it,” whilst optimising returns for investors in the LM Funds.

LM is a privately owned, Australian fund manager that holds significant property expertise through the management of its investment funds. Via the LM Funds, LM provides senior debt funding and participates in equity opportunities across prime assets spanning the residential, commercial, aged care, industrial and retail sectors of Australia. Over the past 14 years, LM has financed the successful delivery of some 400 projects on behalf of investors in the LM Funds. LM holds only Australian assets with a gross realisable value of approximately A$3 billion under management. "_

*Lofty expectations indeed -  but as an investor in two (2) LM Funds that have been frozen since early 2009, with a Unit Price currently reduced by 27% (and additional losses for opportunity costs, inflation, 'deemed re-investments' etc), I wonder if my sad  experience is indicative of LM 'optimising returns for investors'?  *


----------



## ASICK (13 September 2012)

*Re: Making Waves on the Gold Coast?*



ASICK said:


> http://www.redorbit.com/news/entert...ment-in-talks-with-kelly-slater-wave-company/




Dinga, it's only a spruik - note the bottom of the document:-

"Contact:

Michelle Ballard 
M: + 61 402 085 231 
E: mballard@LMaustralia.com

This press release was issued through eReleases ® Press Release Distribution. For more information, visit http://www.ereleases.com.

*SOURCE LM Investment Management Ltd*

redOrbit (http://s.tt/1n3fa)" (emphasis added)

See where it popped up:-
http://www.google.com.au/#hl=en&out..._pw.r_qf.&fp=512fb598185929c7&biw=952&bih=821

Later today I'll put together something on Trilogy and BT's spruiks - I wonder if you'll find some similarities (in tenor) with those of LM?

I'd love to see a list to the investments that total up to AUD $3m - yes, it'd be fascinating. (or does the added term "gross realisable value" pump the actual value under management - and I wonder if the feeder funds are counted in the fed fund?


----------



## ASICK (13 September 2012)

*Trilogy & Balmain Trilogy*

I said I was going to make a comparison between BT/Trilogy and LM but I couldn't find some of the earlier documents I wanted (from the public record).  I'll post something in due course if (and when) I find all the information.

In August 2009 (BRW), BT spruiked that in 18 months to  2 years it hoped we'd agree with them that the fund was strong - well, it's not - it's crashed like a lead balloon - from a unit price of $0.48 on 1 July 2009 (fund revalued by BT) to a unit price of $0.28 as at 31 December 2011 (including $0.08 repaid to investors) - that's a 42% loss.

http://www.moneymagik.com/bullsh1t.jpg

On respective starting values, City Pacific lost 52% and Trilogy/BT lost 42% (to 31 December 2011) - of course, the $$$$$$ are much higher for City Pacific, but the percentages are close - I'm expecting that the figures for 30 June 2012 will put Trilogy at a number greater than 52% - let's see.

BT spruiked that it was going to pay back $295m by 31 October 2012 by making a $0.04/unit payment every April and every October - they made ONE such payment.  They said there'd be 'additional' payments - there were NONE.

http://www.balmaintrilogy.com.au/pdf/BTI 4512 CEO Address.pdf (see page 12)

"• Balmain Trilogy is targeting to repay $295m, or 71% of the current assets of the Fund, to Unitholders prior to October 2012."

The $295m was not intended to include only a small part of the fund's assets at Martha Cove (Vict). Martha Cove was valued at about $86m in March 2012.  As at 31 December 2011 the ENTIRE fund was valued at about $200m, so it's clearly it's not only impossible to repay investors $295m by 31 October 2012, it's impossible to get anywhere near it without disposing of Martha Cove !

http://www.moneymagik.com/MCIS_re_295.mp3

Over the two years since repayments have been made, there's been 1 x $0.04/unit repayment, and 4 x $0.01 repayment, and NO additional repayments.   The next payment is spruiked to be $0.0075.   A member phoned Trilogy and was told that the CBA was getting $0.0025/unit for each $0.0075 repaid to investors.  This has not been verified with Trilogy.

Repayments to date amount to about $72m ($0.08 * 887m), so the shortfall in the representation at this time is about $223m ($295m - about $72m).  

When Protect PFMF ran for the fund, BT responded in August 2011 (in part) by spruiking that not only could it repay the shortfall in the $0.04/unit payments  by December 2011, but they still felt they could make the $295m target as represented - ho hum - mission impossible? you bet !

http://balmaintrilogy.com.au/pdf/BTI 4882 Unitholder Letter.pdf (see top of page 4)

That's over ONE YEAR ago, and neither Trilogy nor Balmain Trilogy have mentioned the $295m repayment since then ! Even BT's ICC didn't think that the $295m rated at mention in its April 2012 'report'.

http://moneymagik.com/IC LetterToUnitholdersApril2012.pdf

The repayments to members have gone like this:-

http://www.moneymagik.com/down.jpg

In the link http://www.moneymagik.com/yardy_yardy_yah.php it's easy to see the representations made by Trilogy and it's easy to see the outcome.   The dwindling away of the repayments over time has been a hallmark of Trilogy's management of the PFMF.

At the link http://www.moneymagik.com/litigation.php it's easy to see the spruiks about the litigation - how the "more than $300m, more than enough" spruiked at the fund meeting of 1 September 2010, to the "hopeful $100m" at the fund info session in Sydney in November 2010, and to the "absolute utopian $100m" at the Martha Cove info session in April 2011 [audio clips are provided]

The complete member recordings are also available at:

For the Sydney info session:

http://www.moneymagik.com/audio.php

For the Martha Cove info session:

http://moneymagik.com/audio_MCIS.php

Of course members were hopeful, but the outcome has been far far different that they might have anticipated.

When I think of your consideration of Trilogy and/or Balmain Trilogy, I'm reminded of the old adage - "be careful, you might get what you wish for".

If anyone is interested, most documents relating to the PFMF may be found here:-

http://www.moneymagik.com/general_information.php
http://www.balmaintrilogy.com.au

(sorry about the speeling errors - touch typing is easy for me, but sadly, as I age, my mind and fingers don't seem to be in sync all the time - however, I'm sure readers are smart enough to get the drift and are able to make the necessary corrections.)

UPDATE - This is where Trilogy was going to run the fund for .85% FUM - 

http://www.theaustralian.com.au/arc...hes-takeover-bid/story-e6frg9gx-1111118150961

''...Trilogy, which operates its own Trilogy first Mortgage Fund, made the offer to City Pacific last week and is seeking to gain control of the First Mortgage Fund cash flows.

Under the offer, Trilogy said it would charge an annual management fee of 0.85 per cent of funds under management.

It would charge no other management fees and not introduce poison-pill provisions that could make it difficult for Trilogy to be removed as manager...''

However, it didn't end here - there's more but I have to try to get the information.  There was another spruik, and then the final figure of 1.50% FUM management fee + .12% FUM custodian etc.  = 1.62%.


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## ASICK (13 September 2012)

The previous posting should be amended thus:-

"The $295m was intended to include only a small part of the fund's assets at Martha Cove (Vict). Martha Cove was valued at about $86m in March 2012. As at 31 December 2011 the ENTIRE fund was valued at about $200m, so clearly it's not only impossible to repay investors $295m by 31 October 2012, it's impossible to get anywhere near it without disposing of Martha Cove !" 

by the deletion of word "not" between "was" and "intended" (market in blue).

Also, I forgot to include the fact that when litigation eventually was proceeded with, the claim was for $60m [not the "hopeful $100m", nor the "absolute utopian $100m"].  Since one of the defendants had died two years prior to the lodgement of the claim and a discontinuance was subsequently filed, this claim may (in my view)  be reduced by $12m if the intention is to recover primarily from an insurer [assuming there's nothing in the kitty elsewhere].


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## dinga (16 September 2012)

ASICK - am feeling more pessimistic than usual about LM after now having had the time to read through your posts and the info at moneymagik.  While I think we LM sufferers may only be at the early stages of what may well be a financial process akin to a stroll at Sandakan; the beacon showing the City Pacific, BT, et al experiences may perhaps foretell what we have to look forward to.  Some of the stuff certainly strikes a cord even at our early stage....

Seems my choices are pretty much limited to:

* Stick with LM:  An RE in whom I have no confidence at any level; PROVIDED LM AGREES TO:  1. Wind up the Funds, in as timely a manner as possible - for the sole benefit of the investors;  2.  Independent, professional recommendations be urgently provided about how to best achieve windup (including priority disposal of the  2nd Mortgage assets); 3.  LM to reduce its fees and charges to more reasonable levels for the windup process; 4.  Investor Meetings be held one month after the provision of the above and the audited 2011/2012 Financial Statements to discuss and agree on how to proceed; 5.  Investor Committee be established to provide investors with on-going independent check/feedback of/on LM's performance; 6. Capital repayments be made progressively as circumstances allow (no further payments be made of interest/dividends)

* Find a new RE:  Willing to act as above.  Process for achieving such a change is likely to be a very messy and time-consuming one -  with the question marks about the comparative performance/outcome anyway.  Change in RE would no doubt greatly facilitate any possible Class Action - but even if successful, that would likely taken many years.  

No good choices - but the best outcome seems clear  ie. Windup these Funds


----------



## ASICK (16 September 2012)

Good afternoon Dinga,

What a dilemma. You fear a "shark", yet there seems only "fishermen's nets' to run to.

Stacks Finance have a good reputation - they run for the PFMF last year, but sadly the ex-CEO Phil Sullivan was involved and many investors couldn't (for one reason or another) distinguish Stacks from Sullivan.  I supported Stacks and was quite disappointed that Stacks' pushe failed.  I'm confident it failed because Stacks didn't take the forefront - the convening members (which I assume included Sullivan) seemed to take take on which might be regarded (in the circumstances) as an impossible task.

Here's Stacks ' website: http://www.stacksfinance.com.au/

A lot of good managers won't want to get involved with a fund that's badly damaged - such funds have the potential to take the new managers down with them (unless a liquidator is appointed - note the liquidator of Equititrust's IF is doing quite nicely - in fact, very nicely indeed - check the Equititrust thread here on ASF).

A view I've always held has just been recently posted on equititrust/ASF, and that's the reality that fund value really becomes more realistic when assets need to be sold - sales at below holding value give rise to a reduction in unit price - a fund shows its true colours only when stress tested by asset sales.  Such stress testing cannot be avoided because the only source of $$$$$ is by way of asset sales.    While a manager might hold off and hold off, there must come a time when any bad news has to be disclosed, as I suspect such bad news will be disclosed in your fund.

It's clear to me, and I'm sure its clear  to you, that  the value a manager places on the assets in a frozen fund really means nothing unless every investor is free to take his/her money at value and leave the fund - they can't, so the value is meaningless.  On the other hand, that value is REAL to the manager because it's the value on whch  the manager's fee is calculated -  that's a great deal for the manager ! but not for investors !

I agree that the fund should be sold off and that the manager should be replaced if its not interested in giving investors a better and more transparent deal.  But you need a successful manager, not a manager which has lost investors' money (in part or in full) - more importantly, in my view, you don't need a manager which doesn't disclose its failures or any adverse court finding against one (or more) of their directors (even it's not mandatory to disclose such a finding).

Do a search of various funds and contact some of the managers - speak to those manager who have a successful track records - there aren't too many, but if you get one of them, it'd be the best thing you could possible do.

No one is going to do the job for free - they all want to make a buck.   The trick is to find a manager you're able to trust while ensuring that you get more bang for your buck : without trust there will be no peace for you with what's left of your investment.


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## ASICK (16 September 2012)

*It's a Small World After all !*

Dinga, it really is a small world.  Can you believe MDRN Investments Limited (now called Trilogy Funds Management Limited) lent BEHIND LM?

We're had some documents in our possession for a couple of years, but it's only now that they're being re-examined.

Some documents already disclosed about Trilogy's Principal Mortgages Mezzanine Mortgage Fund (PMMMF):
http://www.moneymagik.com/dee_why_new.php

This is a link that's being reconstructed:
http://www.moneymagik.com/

Part of the reconstruction of the link is the story  of Trilogy, and part of the story of Trilogy is the story of the  PMMMF, so we went back and re-examined the documents - a name we'd seen before and didn't know suddenly stood out like a sore toe - it was that of LM Investment Management:
http://www.moneymagik.com/lm_trumps_trilogy.jpg

Yes, it is a small world after all !
http://www.youtube.com/watch?v=2UytZO8D2d4


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## sherlock (18 September 2012)

*Re: It's a Small World After all !*



ASICK said:


> Dinga, it really is a small world.  Can you believe MDRN Investments Limited (now called Trilogy Funds Management Limited) lent BEHIND LM?
> 
> We're had some documents in our possession for a couple of years, but it's only now that they're being re-examined.
> 
> ...






Well now seems like CFO Grant Fischer has also gone. No longer on board or exec committee on website. Interesting timing and no announcement or disclosure from LM. Cards seems to be falling. Worth investigating?


----------



## Irishdan (18 September 2012)

2 long term directors resign/leave in a matter of months.!!! Maybe neither wanted to sign off on the financials and or know what is going to be in the audit report.

Lisa Darcy signed off on the 2011 reports even though Grant Fischer was the CFO.

Looking grim...


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## ASICK (18 September 2012)

I think it's obvious that if  things go pear-shaped, what career-minded director wants to be associated with a failed fund: certainly not good for the CV in the modern internet age.

In saying this, I have no idea why the good folk at LM are no more with the fund - maybe LM will disclose why they left - it really isn't a good look.

Time for a liquidator?


----------



## dinga (18 September 2012)

Irishdan said:


> 2 long term directors resign/leave in a matter of months.!!! Maybe neither wanted to sign off on the financials and or know what is going to be in the audit report.
> 
> Lisa Darcy signed off on the 2011 reports even though Grant Fischer was the CFO.
> 
> Looking grim...




Board of Directors 

Grant Fischer - Executive Director Finance 
As Executive Director Finance, Grant is responsible for the overall financial management of LM and its registered schemes. Grant works closely with the CEO, Portfolio Manager and Board to position LM for further growth. 

Grant's experience as a financial executive for over 20 years has covered many different industries with extensive exposure to business operations within the Asia Pacific region. Having worked for many large multinationals, Grant has a solid understanding of financial compliance and strong internal systems to manage company growth and informed decision making. 

Grant is a member of LM's Board of Directors, Credit Committee, Funds Management Committee and Arrears Management Committee. 

Grant is a Certified Practising Accountant (CPA) and holds a Bachelor of Commerce and Master of Commerce, majoring in Accounting and Taxation.


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## dinga (18 September 2012)

Irishdan said:


> 2 long term directors resign/leave in a matter of months.!!! Maybe neither wanted to sign off on the financials and or know what is going to be in the audit report.
> 
> Lisa Darcy signed off on the 2011 reports even though Grant Fischer was the CFO.
> 
> Looking grim...




Here's Mr Fischer's CV as it was before he was deleted from the LM website (Grim?  I'd be looking grim too if I was responsible for the matters proclaimed)

_Board of Directors 

Grant Fischer - Executive Director Finance 
As Executive Director Finance, Grant is responsible for the overall financial management of LM and its registered schemes. Grant works closely with the CEO, Portfolio Manager and Board to position LM for further growth. 

Grant's experience as a financial executive for over 20 years has covered many different industries with extensive exposure to business operations within the Asia Pacific region. Having worked for many large multinationals, Grant has a solid understanding of financial compliance and strong internal systems to manage company growth and informed decision making. 

Grant is a member of LM's Board of Directors, Credit Committee, Funds Management Committee and Arrears Management Committee. 

Grant is a Certified Practising Accountant (CPA) and holds a Bachelor of Commerce and Master of Commerce, majoring in Accounting and Taxation._


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## dinga (18 September 2012)

ASICK said:


> I think it's obvious that if  things go pear-shaped, what career-minded director wants to be associated with a failed fund: certainly not good for the CV in the modern internet age.
> 
> In saying this, I have no idea why the good folk at LM are no more with the fund - maybe LM will disclose why they left - it really isn't a good look.
> 
> Time for a liquidator?




Time for a liquidator?  Apparently looks can sometimes be deceiving - here's the latest rosy news from LM (seems to have been pretty hastily written and I can't see any mention of Mr Fischer's demise).  ALL AHEAD FULL it seems on the good ship LM

_RE: UPDATE ON THE CLOSED LM MORTGAGE FUNDS


We are happy to provide some further information for you regarding the activity we have been undertaking across a number of areas which are important for the management of the Funds and to the realisation of liquidity for investors. . 


Update on Asset Report and Financial Modelling


Due to the scope and detail of work included, the BIS Shrapnel review has taken a little longer than originally expected.   We now have that report, and are currently conducting a thorough analysis of that information for integration into the financial modelling which is to be provided to you.  This process will take our portfolio manager and our asset and development managers a couple of weeks, following which we are allowing a two week period for consultation with ASIC in relation to its presentation for investors.  As you would appreciate, it is important that ASIC has sufficient time to consider the information and we wish to have their input in finalising its presentation for you.

At this stage, we envisage being in a position to provide further information for you within the next four weeks.


Deutsche Bank


We have further reduced the Deutsche Bank facility to AUD 33 million and are in discussion with them regarding a renegotiated facility specifically for facilitating the work on the “hold” assets.  We will provide further information on this as we proceed.

We maintain a good working relationship with Deutsche Bank and appreciate that though the interest rate is commercial, it is matched by the professional and commercial approach they have demonstrated since refinancing the Fund to allow the Commonwealth Bank of Australia to be repaid. 


Managment Fees



We have reviewed our fees and detail the forward fee plan as follows:

1.50%pa calculated on the FUM of the “sale” assets; and
2.50%pa calculated on the FUM of “hold”/development assets.
We have received some criticism in relation to our management fees within the Fund.  We are mindful that our fees are fair and reasonable for the work undertaken in managing the Funds.   

The perception that there may be less attention required in managing a closed Fund, totally contradicts the reality.

The Fund is in control of the majority of assets, and managing those assets is an important and intense part of our daily focus.  We have the expertise required to do this and as an active Fund manager, we utilise our experienced asset management and asset development teams to optimise assets and the outcomes to be realised by Fund investors.    

LM has taken on the role of ensuring proper maintenance, expenditure, sales and control of the assets with a firm hand on what needs to be done to protect and enhance the property value.  Whilst receivers can fulfil the sale of assets, they lack the specific property skills required to manage optimum outcomes.  This is why we fulfil this role inhouse.



Management of Foreign Currency


Investors in the Funds have invested in several different currencies and the relationship and arrangements we have in place with our four foreign exchange providers have ensured that the hedged position required for the benefit of the Fund, is maintained. 

We have a currency team of five personnel with expertise in managing this on a daily basis.  We have specifically tailored our funds administration system to facilitate the reporting and management of the foreign currency.  We feel the management of foreign currency and the system we have developed to administer it are unique to LM.   


Updated ASIC Benchmark Document


We are currently updating the ASIC Benchmark Disclosure document to release to you, together with the asset and financial information.


Audit

We advise that Ernst & Young has commenced the financial year end audit of the Fund, to deliver the financials by the end of September.


Investor Income Catch Up 
We have continued with the sales program of assets within the Fund.  The pipeline of settlements of those sales has strengthened in the last quarter of the year, and as a result we expect to recommence the catch up of investor distribution payments moving into the end of this year.


Assets
Whilst you await the information above, we attach a profile of the assets of the Fund, which also includes brief information on the skills and duties of the team responsible for managing the assets. Photographs of the properties we have prospectively earmarked as "sell" as well as artist’s impressions of "hold" assets, are included.

We hope you find this useful for a better understanding of the nature of the assets.  Market values have softened and the unit price has been adjusted downwards to reflect this.  Sales rates are generally slow as is market recovery.

All asset classes have been affected as a result of the financial crisis.  Whilst Australia has fared well when compared with the other developed economies of the world, we are generally still dealing with issues.  Specifically for the Fund, issues related to the credit crunch, a lack of readily available funding across the commercial property sector, as well as softened property market conditions remain to be managed.

Our commitment is to creating liquidity and managing the assets for the best results in the prevailing market conditions. 

We thank you for your patience.  We are doing all we can to ensure that you receive the information as quickly as possible, and that the information covers all the detail you require whilst being presented in a format that is as easy to understand as possible.




We will provide further information shortly.  In the meantime, should you have any queries, please contact your, please contact your financial adviser or intermediary. 


Yours faithfully


LM Investment Management Ltd
The global pathway to Australian Investment Solutions_


----------



## ASICK (19 September 2012)

Thanks for providing the latest update Dinga.  Yes, you're right, it's upbeat, and it even mentions the security of ASIC.

“As you would appreciate, it is important that ASIC has sufficient time to consider the information and we wish to have their input in finalising its presentation for you.” - You'd be forgiven if you thought that ASIC's input would protect you - but then you'd have to ignore  the reality that ASIC is NOT a prudential regulator.  Whether one makes a profit or a loss is not a matter of concern for ASIC.  ASIC's task is all about form, not substance.

I note that after some extensive fund raising efforts (paid for pre-existing investors), that new investors bought into Trilogy's Healthcare REIT. In 2009, $3,555,000 was invested into the fund and 3,555,000 new units were issued, that's $1.00 per unit.  The fund raising was quite effective – but how did the new investment fare?  The unit price as at 30 June 2008 was $0.63 and so  the new investment lost $0.37/unit the very moment it was made.  So, I thought I'd have a grumble to ASIC – it just didn't seem right – they didn't care: Buyer beware & don't rely on ASIC.
http://www.moneymagik.com/

“We have further reduced the Deutsche Bank facility to AUD 33 million and are in discussion with them regarding a renegotiated facility specifically for facilitating the work on the “hold” assets.” - Of course they're “renegotiating” – does anyone think that LM has much negotiating power? - when a prudent lender lends, that lender makes sure the security is right for the loan, unlike a great number of managed fund managers.  The bank probably holds a charge of some sort over some or all of the fund's assets, so it's probably the case that nothing is able to be sold without the bank's say-so.  

It seems to me that bank loans to managed funds demand quite low LVRs.  For example, up until August 2012, the PFMF's loan from the CBA had a 10% LVR covenant – eg. $30m debt requires $300m in security assets – if the assets drop to $200m, then $10m of the debt has to be repaid.

“We maintain a good working relationship with Deutsche Bank and appreciate that though the interest rate is commercial, it is matched by the professional and commercial approach they have demonstrated since refinancing the Fund to allow the Commonwealth Bank of Australia to be repaid.”  - I'd say that the rate reflects the risk – While I've only looked into a couple of funds, I've never seen a fund paying such high interest rate on debt as paid in the LMIF.

“”it is matched by the professional and commercial approach” - of course it is - it's not lending with LVR's over 70%.

LM says,  “We have received some criticism in relation to our management fees within the Fund.” - Let's hope there's a lot of grumbles coming from other investors about interest rates. 

LM adds, “We are mindful that our fees are fair and reasonable for the work undertaken in managing the Funds.”- of course they are, but I wonder how many others are so-minded? 

More on fees, “We have reviewed our fees and detail the forward fee plan as follows: 1.50%pa calculated on the FUM of the “sale” assets; and 2.50%pa calculated on the FUM of “hold”/development assets.” - My view? Over the top – way, way over the top unless they increase value – actually, I think it's quite an impost in a fund which has suffered such an enormous loss.  

0.75% FUM is much fairer – keep in mind, FUM includes bank debt (and LM cites its fee is calculated on FUM (funds under management) – debt is sometimes a nice earner for fund managers – to my mind, there's more incentive for a  manager to maintain debt than to pay it down – although the spruik is quite often the opposite.

Also, it's plain to me that if punters are paid back something, they generally become placid and compliant, but if the bank is paid back first, punters become aggravated.  If the bank is paid back first, punters press for some money, but if punters are paid back first, the manager is free to make fees on the bank debt (where fees are calculated on FUM).

LM says, “The perception that there may be less attention required in managing a closed Fund, totally contradicts the reality.” - that's an interesting statement, especially when LM is making bucks of the delinquent loans it took over from the receivers and managers, and those bucks are made ON TOP OF it's excessive management fee – after all, it was LM which made the loans, such loans now defaulting, and as a consequence, bemoans the effort rather than making the least effort to console punters for the losses it (LM) has inflicted on them !  Crikey, even with such pain for investors, it still saps investors money with over-the-top fees !

LM says, “The Fund is in control of the majority of assets, and managing those assets is an important and intense part of our daily focus.” - and, as I understand it, LM is charging EXTRA for that control (– a really nice little earner.  LM adds, “We have the expertise required to do this and as an active Fund manager, we utilise our experienced asset management and asset development teams to optimise assets and the outcomes to be realised by Fund investors.” - let's hope it's not that same experience which has already lost 27% of the fund ! 

“LM has taken on the role of ensuring proper maintenance, expenditure, sales and control of the assets with a firm hand on what needs to be done to protect and enhance the property value.“ - now, how the hell is a 'firm hand' able to “enhance the property value”?  I know, it's magic – after all, without magic, it just wouldn't be possible.

“Whilst receivers can fulfil the sale of assets, they lack the specific property skills required to manage optimum outcomes. This is why we fulfil this role inhouse.” - this seems to me to be an effort to justify the fact that they're making some serious money on top of the management fee by taking over from receivers and managers whose expertise is getting the best value from defaulting loans. 

LM says, “We hope you find this useful for a better understanding of the nature of the assets. Market values have softened and the unit price has been adjusted downwards to reflect this. Sales rates are generally slow as is market recovery.” - *there, it had to be said sometime !* After all, the fund is stressed and assets have to be sold in a depressed market to pay fund expenses including bank interest, bank repayments, and of course all those fees to LM, as well as LM's charges on, and the maintenance expenses of, all those defaulted-on loans - punters are queued right at the rear behind EVERYONE else, behind general creditors, auditors, lawyers, custodians, LM etc. etc. 

However, if a real crash in unit price is going to happen, it'll happen when assets are disposed of to repay investors – as I've previously posted, WC's PIF lost over $94m in what was an about $200m fund.  

“Specifically for the Fund, issues related to the credit crunch, a lack of readily available funding across the commercial property sector, as well as softened property market conditions remain to be managed.” - it's magic again – now LM is managing the “softened property market conditions”.   

“Our commitment is to creating liquidity and managing the assets for the best results in the prevailing market conditions.” - Could it be that investors might form quite a different view?

“We thank you for your patience.” - really? What else are investors able to do?   Are investors being “patient”? Or are they simply trapped in what they perceive as a hopeless situation? My view is that it's the latter. 

“We are doing all we can to ensure that you receive the information as quickly as possible, and that the information covers all the detail you require whilst being presented in a format that is as easy to understand as possible.” - as an outsider (and non-unit holder), I think the whole deal has been slower than investors deserve.

“in a format that is as easy to understand as possible”? - let's hope so. However it seems it's might be a tad complex, “Due to the scope and detail of work included, the BIS Shrapnel review has takena little longer than originally expected. We now have that report, and are currently conducting a thorough analysis of that information for integration into the financial modelling which is to be provided to you.”


----------



## Irishdan (19 September 2012)

More spin than a merry go round!!!

Liquidate!!


----------



## Irishdan (19 September 2012)

Another senior person who would have been involved with disclosure and reporting issues....

Bruce MacKenzie (LinkdIn profile)

CFO Minpac Properties Pty Ltd 
July 2012 – Present (3 months) Brisbane Area, Australia 

Previous

Business Standards & Compliance Manager LM Investment Management Privately Held; 51-200 employees; Financial Services industry 

March 2011 – September 2012 (1 year 7 months) Surfers Paradise, Australia


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## ASICK (19 September 2012)

And another:-

http://au.linkedin.com/in/kenscotthamilton

''Ken Scott-Hamilton's Experience
State Manager WA/SA/VIC/Qld
LM Investment Management

Privately Held; 51-200 employees; Financial Services industry

July 2011– August 2012 (1 year 2 months)Australia

Based in Perth, responsible for WA, SA, VIC & QLD
General Manager MEA
LM Investment Management

Privately Held; 51-200 employees; Financial Services industry

April 2008– August 2010 (2 years 5 months)United Arab Emirates

Based in Dubai, responsible for the Middle East & Africa region"


----------



## ASICK (21 September 2012)

*HAPPY "10,000th VIEW" ANNIVERSARY DINGA !*

Well, things are moving along - slowly, but surely, even with a small number of contributors things are moving along.  At least a place has been established for members of the LMIF (and feeder funds) and others (like myself) to have a say about the issues which in some way relate to the fund.  There is no doubt that without threads such as this, investors have no other source of information other than from the manager.

I don't know if the view counter is smart enough to make sure that each IP is limited to one count per 24 hour period regardless of the number of views from each IP, but if it does, then about 100 unique IPs are looking in each day. Of course the number varies and a number of the viewers might be looking in from more than one IP.

The bottom line - the move by Dinga to start the thread was a good one - and I for one wish him and all other LM investors the best possible outcome for what's left of their respective investments. 

Happy "10,000th View" Anniversary Dinga !


----------



## dinga (22 September 2012)

*Re: HAPPY "10,000th VIEW" ANNIVERSARY DINGA !   (Sub-Title:  The Joke is on us)*



ASICK said:


> Well, things are moving along - slowly, but surely, even with a small number of contributors things are moving along.  At least a place has been established for members of the LMIF (and feeder funds) and others (like myself) to have a say about the issues which in some way relate to the fund.  There is no doubt that without threads such as this, investors have no other source of information other than from the manager.
> 
> I don't know if the view counter is smart enough to make sure that each IP is limited to one count per 24 hour period regardless of the number of views from each IP, but if it does, then about 100 unique IPs are looking in each day. Of course the number varies and a number of the viewers might be looking in from more than one IP.
> 
> ...




Many thanks to all who have contributed to this great result  -  special thank you to those who have contributed such great advice  -  especially ASICK.  

While I'm chuffed that my humble attempt to create some networking and critical discussion has reached such a milestone, I am still baffled as to why the vast majority of my fellow sufferers remain mute.  

Perhaps LM is right <http://www.lmaustralia.com/news/2012/the-joke-is-on-us.aspx>


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## ASICK (23 September 2012)

*"A Frozen Fund is a Manager's Delight"*

I'm really pleased to assist in any way I can - Don't feel too bad about lack of fellow investor support, it's the norm - most investors do very little.  While some understand, and some of us want to learn more, the vast majority do nothing other than await the next mail out by the manager.

Many investors believe managers because they (the investors) are fearful of wind-ups because they think winding up is firesaling the assets - such fearful thinking is of great benefit to any manager who wants to remain on the drip feed - and it's so often quoted in explanatory memoranda to drive fearful investors to support the aims of managers (The PIF is a good case in point where the manager cited massive losses if the fund was to be wound up - in the end, I'm sure most investors would not believe that it would have been much better to wind up the fund rather than have gone thru what they've endured).  

I'm sure there's a myraid of reasons why investors stick with a manager, eg. sticking with Trilogy as the unit price slips away into the sunset.  I think that for PFMF members, not taking up Stacks was a BIG mistake, but then, I can understand investors' collective fear about Phil Sullivan, even though (in my view) such fear was entirely irrational - fear of fear itself has a strong influence on the decision making process.

It's important to collect information and to have that information available to investors, even though they remain mute.  We can only learn from the past, and hope that those lessons protect us in the future.  Many of us had no idea of the extent of lost possible - but we know now.   Your fund is down 27% and the manager's foreshadowed more losses.  Second mortgage, loans "behind" LMIF loans, a substantial loan to a relative, a HIGH interest bank debt,  over the top management fees -  in the meantime, investors suffer - such is what LMIF (and feeder fund) investors endure in a frozen fund (see below my submission to the Senate Finance Inquiry, in particular to "A Frozen Fund is a Manager's Delight").

There's some news and updates on; http://moneymagik.com/

Next week's a BIG week for the PFMF - a claim for $81m begins against the fund, and Trilogy has to file evidence in its case against four of the former directors of City Pacific Limited (links to the matters are provided).  Balmain Trilogy took its most recent update of 20 September 2012 off its website - we wonder why? (of course), and Balmain spruiks a return by BT to investors of $295m by October 2012 when at one month out, Balmain Trilogy is $216.4m away for making its spruiked target (Balmain Trilogy hasn't spoken to the $295m for THIRTEEN MONTHS!):-
http://www.moneymagik.com/yardy_yardy_yah.php

On the front page of moneymagik.com you'll notice on the table with links relating to City Pacific that there's some links to submissions to the Senate Finance Inquiry.  There's only TWO submissions.  I made a submission (182)(and two supplementary submissions 182a and 182b) - another member made another (355).  That's out of thousands of investors in the (then) City Pacific First Mortgage Fund.  Trilogy did not make a submission on behalf of members of the PFMF (Pacific First Mortgage Fund, renamed from the City Pacific First Mortgage Fund).

As I understand it, only a couple also made submissions from the thousands of investors in the Premium Income Fund (PIF).  That fund lost $90m from its (about) $200m value in fiscal year 2012! Of course investors in the Equititrust and LM funds were feeling quite comfortable in those days.

Many investors in Storm made a submission, some in writing, some writers showing the signs of age by way of shaking hands. I'm sure emotions were evoked in the Inquiry members.  Storm members were smart to make those submissions, because as a result of the large number of Storm submissions, the Inquiry become known as the "Storm Inquiry" - if a few hundred City Pac investors would have made submissions it might have been known as the "City Pac Inquiry" and our outcome might have been entirely different.  

Still, we struggle and I'm sure we all  look forward to seeing an end to it all.

"A Frozen Fund is a Manager's Delight"


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## ASICK (24 September 2012)

Thanks to "No Trust" on the Equititrust thread here at ASF:
http://s2.webtemplate.com.au/bridgehead/PiperAlderman/media/files/9506.pdf


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## ASICK (25 September 2012)

*Trilogy and The Trust Company*

While we've awaiting LM or another posting in relation to the LMIF (or feeder funds), a little more about Trilogy (one half of Balmain Trilogy which has reportedly (by LM) written to a number of members of the LMIF) - this time Trilogy as responsible entiity for the Pacific First Mortgage Fund (PFMF) and The Trust Company as custodian for the PFMF.

Here's an excerpt from Bransgrove's case note (linked below):

"The lender sought judgment for $20m against the guarantors. The guarantors argued that the Trust Company which was suing them, had no standing to sue them as it was not the company they originally contracted with.

... The judge decided in favour of the guarantors, commenting:

*The steps which the lender took on the question of standing, ought to have been taken long before. The issue of standing had long been pressed by the defendants, in the face of obvious deficiencies of the original statement of claim*." (emphasis has been added)


http://www.bransgroves.com.au/banking-and-finance/the-trust-company-v-perry-2012-nswsc-604.html

The full judgment is linked in the Bransgrove case note.


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## No Trust (25 September 2012)

*Re: HAPPY "10,000th VIEW" ANNIVERSARY DINGA !*

You have our *support* Dinga... Each one of these funds from the "*Gold Coast*" has to be scrutinised and *brought to account*. When we applied the pressure to Equititrust and their *false claims *the cracks started to appear... In the end we were proven to be right despite repeated attacked by company stooges... 
Forums like this are an invaluable tool for the sharing of information. The funds hate it but if they have *nothing to hide* they have *nothing to worry about*...





ASICK said:


> Well, things are moving along - slowly, but surely, even with a small number of contributors things are moving along.  At least a place has been established for members of the LMIF (and feeder funds) and others (like myself) to have a say about the issues which in some way relate to the fund.  There is no doubt that without threads such as this, investors have no other source of information other than from the manager.
> 
> I don't know if the view counter is smart enough to make sure that each IP is limited to one count per 24 hour period regardless of the number of views from each IP, but if it does, then about 100 unique IPs are looking in each day. Of course the number varies and a number of the viewers might be looking in from more than one IP.
> 
> ...


----------



## dinga (26 September 2012)

Got sick of waiting for detailed and substantial information, so I've just sent the following email to the Director who provided the advice dated 27 August 2012 (see above).  Hope she's still with LM....

_As usual, it seems what LM says it will do isn't what it does (ie.  on 7 August I was advised that "We are preparing a full response for you which you will have shortly").

The latest Update of 18 September 2012 contains only very general information  -  I live in hope that investors will indeed shortly be provided with all of the necessary and detailed information that we need - including that specifically requested in my emails.  

Given the level of investor discontent, I was not surprised to receive LM's 'warning' that investors may be approached by Balmain Trilogy.  Given the Funds'  performance in comparison with the level of fees and charges (and my recollection of the consistent failure to meet predictions/forecasts), little wonder others may think they can do better for the long suffering investors in these frozen funds.  

In my view there are two fundamental questions that demand urgent answers, and I request that LM urgently provides investors with clarity on the following:

1.  Will the investors in the feeder funds be given a vote on the future of the FMIF?  If not, why not?

2.  Will investors in FMIF and the feeder funds be specifically asked whether or not they want the funds to be wound up?  If not, why not?

Regards

BTW  You mentioned the online forum  -  LM's participation would no doubt be welcomed by all; if LM thinks information is incorrect, out of context - whatever - correct it.  _


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## No Trust (26 September 2012)

dinga said:


> Got sick of waiting for detailed and substantial information, so I've just sent the following email to the Director who provided the advice dated 27 August 2012 (see above).  Hope she's still with LM....
> 
> _As usual, it seems what LM says it will do isn't what it does (ie.  on 7 August I was advised that "We are preparing a full response for you which you will have shortly").
> 
> ...




Dinga, you are absolutely correct, let the fund manager participate in the forum and correct what they feel is misrepresented... Don't hold your breath...


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## ASICK (27 September 2012)

Dinga, I'll bet that LM doesn't want to give investors too much time to think about the scheme it's attempting to win over investors with.  Yes, I agree, LM seems slack with regard to providing members with a RG45 - I note the following excerpt in the article you provided:-

"Zenith Investment Partners senior investment analyst Dugald Higgins has been cautious about the LM fund’s prospects for some time but advised clients before the meeting that “there is no real merit in voting ‘no’ [to the split]* as far as I can see as you get locked into a non-performing fund getting eaten up by prioritised external debt payments and severely impaired assets*”. *[and he didn't mention the over-the-top fees rewarding LM for losing investors' capital]*
http://afr.com/p/personal_finance/s..._frozen_fund_investors_3lKdZ6kbAIJfLyvAommpAJ

Just to keep investors' eyes on *exactly *when LM files the LMIF return with ASIC, here's a link:-

http://www.asic.gov.au/asic/asic.nsf/byheadline/Introduction+to+ASIC+Connect?openDocument
Select "Search ASIC Registers" (bottom RHS of page)
From the drop down menu select "Organisations and Business Names"
Then enter the entity you wish to search:-

LM First Mortgage Income Fund
Trilogy Pacific First Mortgage Fund
Trilogy Healthcare REIT
Trilogy Cape Parks Fund

Yes, some might consider Trilogy, but I won't:-
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


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## ASICK (27 September 2012)

Trilogy's lawsuit against (now, since they've discontinued against the director who died TWO years ago) four former directors of City Pacific Limited (under external administration) has just become more complex - the directors have cross-claimed.  Here's the latest order (27 September 2012) for those interested:
http://moneymagik.com/P_NSD604_2012_283083.pdf

Time had been extended until 28 September 2012 for Trilogy to file and serve evidence in support of its claims.  A further extension has been ordered until 4 October 2012.

This is going to the one action worth following:
Federal Court Link:
https://www.comcourts.gov.au/file/Federal/P/NSD604/2012/actions

Maurice Blackburn's link"
http://www.mauriceblackburnnsw.com....tions/current-class-actions/city-pacific.aspx

Balmain Trilogy's site:
http://www.balmaintrilogy.com.au/


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## ASICK (1 October 2012)

I just noticed this at ASIC listing for the LM First Mortgage Income Fund:-

Date: 16/05/2012 
Document Number: 027850151 
Document Type: Constitution For Managed Investment Scheme Modification Of Constitution (5101B) 
Pages: 21 

https://connectonline.asic.gov.au/R...t mortgage income fund&searchType=OrgAndBusNm

I wasn't aware of the amendments, but I guess investors in the fund were. By the way, LM still hasn't filed the fund's 2012 return - by my reckoning it's got until close of business tomorrow 2 October 2012 (since it was due on Sunday and Monday's a holiday in Queensland).

http://www.asic.gov.au/asic/asic.nsf/byheadline/Introduction+to+ASIC+Connect?openDocument
(use "Search ASIC Registers" - "Organizations & Business Names" - and enter "LM First Mortgage Income Fund"


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## Exadviser (1 October 2012)

I'm a little hesitant to write much here for personal reasons, but I have read all of the thread, and share people's anguish.

Whilst searching the web for more on this situation, I came across this article which I haven't seen posted here yet, and it may be of interest to the people viewing this thread.

http://www.afr.com/p/personal_finance/smart_money/managers_throw_lifeline_eb2zEymF9gN0fdvMp7o1JK

and this much older one where LM comment with their typical BS.

http://www.stuff.co.nz/sunday-star-times/business/3644718/Trying-wait-for-LM-investors

I'll be checking back here regularly and perhaps write more as, when and if confidence increases.


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## ASICK (4 October 2012)

*LM is late with the LMFMIF financials*

https://connectonline.asic.gov.au/R...t mortgage income fund&searchType=OrgAndBusNm

LM is late with the fund's return - bad news always travels slowly.  Keep an eye out as the days pass and see when they get a-round-tuit.

Note the prevous name for the fund: LM Mortgage Income Fund

I guess the addition of the word "First" must have given punters more comfort, but it seems the original name actually more properly describes the fund as it exists today.


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## ASICK (8 October 2012)

*Trilogy's Pacific First Mortgage Fund Crashes Year-on-Year!*

An investor in the PFMF reports being told by Balmain Trilogy  that the unit price in the fund is now $0.13 as at 30 June 2012.  That'd make a 56% loss of value since Trilogy took over (based on $0.48/unit as at 30 June 2009 -> $0.13/unit + $0.08/unit paid back): http://www.moneymagik.com/

That's a loss for the 2012 year of:
$273m (2011) - about $17.74m redemptions - about $115m (2012) 
= about  $140m (or 51%)

Remember, Wellington Capital's Premium Income Fund (PIF) lost about $90m from a $200m fund - that's about $45m per $100m of initial value - the PFMF lost about $45m per $100m.

I wonder if $45m per $100m of initial value will  be an accurate guide for the losses in the LMFMIF ?


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## Irishdan (8 October 2012)

Don't know whether everyone has seen this but the gall of Drake knows no bounds. This popped up in a gold coast "pay for space" magazine in August

http://www.goldcoastbusinessnews.com.au/article4845/IT IS TIME FOR OPTIMISM: DRAKE.html


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## ASICK (8 October 2012)

http://www.goldcoastbusinessnews.com.au/article4845/IT IS TIME FOR OPTIMISM: DRAKE.html

yep .. pay for space - a place to spruik !  I've noticed (as I'm sure others have) that LM's PR team is active.

but Drake's LMFMIF hasn't delivered up the fund's financial reports to ASIC yet:
https://connectonline.asic.gov.au/R... mortgage income trust&searchType=OrgAndBusNm

Neither has Trilogy's Pacific First Mortgage Fund:
https://connectonline.asic.gov.au/R...ic first mortgage fund&searchType=OrgAndBusNm

Neither has Trilogy's Cape Parks Fund:
https://connectonline.asic.gov.au/R...chText=cape parks fund&searchType=OrgAndBusNm

Neither has Trilogy's Healthcare REIT:
https://connectonline.asic.gov.au/R...rilogy healthcare reit&searchType=OrgAndBusNm

I'll bet they all carry very bad news - we already know that the PFMF lost 51% of its value over the past year and 56% overall since Trilogy took over fund in July 2009:
http://www.moneymagik.com

I'll be surprised if Trilogy's Healthcare REIT has any money left for investors with maybe the bank in a bit of trouble with the sad looking security asset described by the selling agent as "funky":
http://www.moneymagik.com/analysis_REIT.php

And the Cape Parks Fund? Heck, who knows - but I'll sure it'll be something to discuss at length:
http://www.moneymagik.com/cape_parks_fund.php


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## Irishdan (9 October 2012)

LM have released financials for 2 of the funds. The cash performance fund that does't have enough in it to buy a decent house and the Australian Income fund which has assets of just under 28m.
 Showed a small profit of 114k and delivered 4.5% roughly to unit holders after fees of 1.5% were deducted.

Basically these two funds are that insignificant however a statement made on page 3 of the directors report I think is significant regarding *likely developments and future results*

"_Further information on likely developments in the operation of the scheme and the expected results of those operations has not been included in this report because the repsonsible entity believes it would be likely to result in unreasonable prejudice to the scheme"_

FMIF and feeder funds can't be too far away can they?


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## ASICK (9 October 2012)

http://www.financialstandard.com.au/news/view/23168892

Trilogy make the run - meetings called.  

Geez, didn't Drake see this coming? If he doesn't pull LM's management fee down to 1.5%, stop LM's other fees, and undertake to wind up the fund ASAP, it'll be all over for LM.  Clearly Trilogy's record hasn't scared investors - my guess is that they're more scared of LM.

As I've said before, Citypac made a bad choice when it didn't reduce its fees and give undertakings to sort out investor concerns, LM will probably make the same mistake - and then LM investors will have a chance to see what we've experienced in the PFMF: http://www.moneymagik.com

From what I saw in the news article, the spiel is the same as for the PFMF - riding in on investor discontent, making all the promises, making the same crap promises about 'no fire sales' - ah phooey, the PFMF lost 51% last year alone with that mob - I think investors should get rid of LM if it doesn't change its ways, but taking on Trilogy ... yuk !   

Still, it's LM investors' money - they're entitled to make their own mistakes.


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## ASICK (10 October 2012)

*Trilogy Funds Management - an alternative RE?*

http://www.financialstandard.com.au/news/view/23168892
"Overseas Demand Replacement of LM as RE"

We should keep in mind that these articles about Trilogy are not from the ether - they're media releases.  When Trilogy ran for the PFMF they used Shed Media:
http://www.shedmedia.com.au/portfolio-item/trilogy-funds-management/

Both of LM and Trilogy will probably use media companies.

A couple of excerpts from the Financial Standard "article":

"... All these investors want LM out; they want openness, a simple, professional wind-down of the funds and return of their capital," said Bacon."

"The proposal to unitholders suggests an orderly wind-down (but no fire sale) of the Main Fund's assets and then capital distributions to investors in the Main Fund and through it to the two feeder funds - the Wholesale Fund and Currency Fund."

Of course, these are words investors love to hear: "orderly wind-down" - "no fire sale" - "capital distributions", but there is a stark reality, and that's the once dubbed "fire sale" from the growth days is the norm in the current market - there's no great competition for probably all of the assets in funds like the LMFMIF and PFMF  - just about every sale is a fire sale - to my mind, a simple fact of life - and it won't matter a hoot who's the manager - it'll depend solely on market demand, something that does not exit at this time.

Balmain Trilogy defined a fire sale so it's very easy to see if Trilogy made any fire sales (yes, they said no fire sales in the PFMF too!) - here's the definition: http://www.moneymagik.com/fire_sale_defined.mp3 

Here's an example of an offer and subsequent sale:
http://moneymagik.com/the_entrance_in_one_line.php
What do you think? Was that a fire sale? (as defined by Balmain Trilogy)

Here's an example of offering up the fund's most valuable asset:
http://moneymagik.com/martha_cove_ad.php
How about this one? Contemporaneously with the highlighting of the ad on www.moneymagik.com, the ad was withdrawn.

Fund value (including capital returns to investors) is a reflection of asset value and actual sale values.  The PFMF lost 51% in the 2012 financial year - overall since Trilogy took over the PFMF in July 2009, the fund has lost 56% of the value started with - City Pacific lost 52%.  As a % of starting value, Trilogy lost MORE than City Pacific (yes, I know the value lost under City was greater, but if the positions were reversed, it's my view that City Pacific would have still performed better).

Then there's the capital distributions - ah! the punters loves this - we heard all this crap from Trilogy when they run for the PFMF - while there's a number of media releases (which I'll find an post here in due course) spruiking hope, I've complied the following as a record of Trilogy spruiks while RE of the PFMF:
http://www.moneymagik.com/yardy_yardy_yah.php

The LMFMIF (like the PFMF) has debt - and when things go pear-shaped, debt has as least three nasty aspects to it: (1) the lender exerts control over the fund, (2) the lender stands first in line, and (3) the interest on debt is nearly always higher or much higher than one could earn with the same value of money.  

Punters want capital repayments, so will want to be paid out in preference to the debt, and sometimes the lender will permit this with quite strict conditions - if this happens, it's my view that the RE would be quite pleased - because if the debt is paid down first, punters will be screaming for the return of capital, that means a rapidly reducing fund value, the very value on which the RE's fees are calculated. 

On the other hand, if punters are paid out first (at the start), the RE isn't pressured by members to write down the debt, and there's a nice little fee earner in that that static value of facility debt.  Of course, I say "at the start" because sooner of later the lender will become increasingly concerned and exert its right to have more and more of monies derived from sales  directed to the repayment of  the facility (in preference to repayment to members) - I think there will always be such a time.  

Here's an exchange between an investor and Andrew Griffin at the Sydney Info session in November 2010 about repayment of the bank debt - listen to how Griffin justifies paying investors ahead of the bank:
http://www.moneymagik.com/show_of_hands.mp3

You'll hear investors clapping after Griffin's spiel - I couldn't imagine that any business-minded person in the current climate would clap to support maintenance of debt - but there you have it.

In over THREE YEARS as manager of the PFMF, Trilogy returned only $0.0875/unit and even at 1.62% fee (1.5% management fee + .12% fund expenses) racked up about $17m in fees (investors were repaid only $78m) - as a %,  the management fee represented 22% of the return to investors.

Trilogy represented $0.04/unit every April and October with additional payments in between:
http://www.moneymagik.com/re_cash_balance.mp3
(Andrew Griffin of BT at the Sydney Info Session in November 2010)

Trilogy is down to paying member $0.0075 every six months.  The payments are listed here:
http://www.moneymagik.com/yardy_yardy_yah.php

Then there was the representation about the 'targeted' $295m to be repaid by 31 October 2012:
http://www.moneymagik.com/295_million.mp3 
(Andrew Griffin of BT at the Sydney Info Session in November 2010)

The $295m did not include the majority of Martha Cove (valued at about $86m as at 29 February 2012):
http://www.moneymagik.com/disgorge.mp3
(Andrew Griffin of BT at the Martha Cove Info Session in April 2011)
Note the words, "get rid of", "disgorge".

However, just weeks away from the target date, Trilogy is $216.20m short of the $295 - and Martha Cove isn't included - However, the WHOLE fund is valued at about $108m now ($115m ($0.13/unit * 887m units) - $6.6m repayment to investors after 30 June 2012) - That's less than the $110m Griffin spoke to as being most (not all) of Martha Cove in April 2011 !

Trilogy hasn't spoken to the $295m in OVER ONE YEAR now - so much for openness.  I would think there's probably thousands of investors out there that still haven't clicked to the reality that they're not going to get the spruiked $295m by 31 October 2012 - still many who don't realise that, under Trilogy, the fund has lost 51% over the past year - and why? well, because they don't have the return yet - and as of yesterday, just like the LMFMIF, Trilogy hadn't filed the PFMF's 2012 return with ASIC.

As of April 2011 the future, according to Griffin, looked like this:
$295m repaid to investors by 31 October 2012 + $110m for Martha Cove
*Total $405m*

The real world seventeen months later:
as at 10 October 2012, a fund value of about $108m + about $77.6m repaid to investors
*Total $185.6 *

So, the "orderly wind-down", while sounding like some clinic, methodical, value-maximising process is a lot of crap - it's really "getting rid" or "disgorging" assets - and some of that might include sales "in one line" - and, if it's anything like our experience in the PFMF,  there'll be a lot of spruiks, and there'll be many, many disappointments.

Then may be the lure of "litigation" - http://www.moneymagik.com/litigation.php

In the case of the PFMF, at 1 September 2010 it was "more than $300, more than enough", in November 2010 reduced to "a hopeful $100m", on 7 December 2010, "could exceed $100m", "perhaps even more", by April 2011, "an utopian result of $100m", and by April 2012 an actual claim for $60m against five ex-directors of Citypac.

Since then, they seem to have discovered that one of the directors had died two years ago - he was discontinued against, but Trilogy wasn't "open" about that discontinuance.  Now we have Phil Sullivan alleging that there's no insurance because, among other things, Trilogy pay the premiums on run off policy. 

It's all on http://www.moneymagik.com - have a read.

Then there's Trilogy's Healthcare REIT - After spending nearly $500k of investors money,  Trilogy gladly accepted $3,555,000 from new investors for units at an issue price of $1.00 per unit (3,555,000 units) when those units had a current value of only $0.63 (2009).

Trilogy did better in 2010 when it receipted $129,600 for  unit with an issue price of $1.00 (129,600 units) when those units had a current value of only $0.60 - The massive and immediate loss of $1,315,350 suffered by the new investors in 2009 mitigated the loss for the fund in 2009 (hence only a $0.03 drop).
http://www.moneymagik.com/analysis_REIT.php

Then there's the Dee Why fiasco - have a read of all the facts on the Dee Why fund and the Heathcare REIT on:  http://www.moneymagik.com/

An investor in that fund sent us a heap of documents - I'm sure that members will find the published documents to be more than interesting - MDRN Investments Limited (now known as Trilogy Funds Management Limited) sure had some interesting associations back in ol' days - like Laton Capital and Laton Corporate Finance - have a read, I'm sure you'll be intrigued.

and Philip Ryan's breach of trust at:
http://www.moneymagik.com/trilogy1.php

The front page is quite long and the comment about the two funds, Philip Asley Ryan, the genesis of Trilogy, and how Trilogy became manager of the PFMF is further down the front page.

I fully realise that much of this is circular, but I think it's necessary to continually remind investors of these REs' pasts.  When these "raiders" (for want of a better word) come to the fund, they don't come with full disclosure, they come spruiking all the things investors want to hear, "no fire sales", "orderly wind-down", "return of capital" - but it's all about fees for them - it's business, plain and simple.

Be careful -  the spruik and reality may very far apart indeed.   I think if Trilogy is the option, then it's better to try to come to a deal with LM - let them get the fund out of the mess they've put it in - let LM give you want you want - and if they don't, get together and seek a court order to wind up the fund.

Sadly, if all the foregoing isn't enough,  there's  more to complain about Trilogy - sometimes I wonder how it's possible - but to date, every time I think I've reached all there is to write about, another issue of interest arises - such is life when one is minded to delve into Trilogy Funds Management Limited.


----------



## ASICK (10 October 2012)

In reference to my previous post:

"Since then, they seem to have discovered that one of the directors had died two years ago - he was discontinued against, but Trilogy wasn't "open" about that discontinuance. Now we have Phil Sullivan alleging that there's no insurance because, among other things, Trilogy pay the premiums on run off policy." 

sorry, that should have been "Trilogy *DIDN'T *pay the premiums on *THE *run off policy."

These are the only references I could find in relation to insurance and the ex-City Pacific directors:

From the 2009 Financial return, No Payment by Trilogy, "INDEMNIFICATIONS & INSURANCE OF DIRECTORS AND OFFICERS - FORMER RESPONSIBLE ENTITY - We understand the former responsible entity paid an insurance premium during the financial year in respect of a contract insuring each of the officers of the former Responsible Entity. The amount of the premium is, under the terms of insurance contracts, confidential. The liability insured includes costs and expenses that may be incurred in defending civil or criminal proceedings that may be bought against the officers in their capacity as officers of the former responsible entity or related body corporates." 
http://moneymagik.com/PFMF_return_jun_2009.pdf

From the 2010 Financial return, No Payment by Trilogy, "INDEMNIFICATIONS & INSURANCE OF DIRECTORS AND OFFICERS - FORMER RESPONSIBLE ENTITY - We understand the former responsible entity paid an insurance premium during the previous financial year in respect of a contract insuring each of the officers of the former Responsible Entity. The amount of the premium is, under the terms of insurance contracts, confidential. The liability insured includes costs and expenses that may be incurred in defending civil or criminal proceedings that may be bought against the officers in their capacity as officers of the former responsible entity or related body corporates."  
(note: the only difference in the text from 2009 to 2010 is the inclusion of the word "previous" immediately before "financial year in respect of a contract insuring each of the officers ...")
http://moneymagik.com/PFMF_return_jun_2010.pdf

From the 2011 Financial return, No Payment by Trilogy - Nothing mentioned.
http://moneymagik.com/PFMF_return_jun_2011.pdf

Since run off policies are required to be maintained and since non-maintenance results in the termination of the original indemnity policy, then,  in certain circumstances (say, as those in the PFMF as alleged by Phil Sullivan (ex-CEO Citypac)), investors will certainly lose out on a chance to recover losses.

Here's information on run off policies: http://abcpro.com.au/LinkClick.aspx?fileticket=si6MlKm_afI=&tabid=89

The information on run off policies might be an eye-opener for some.  After all, it could be the case that many investors have never heard of them.  There is no doubt that Trilogy should/ought have been aware that they possibility existed that a run off policy was required to be maintained to ensure the original directors' indemnity could be acted upon, but Trilogy didn't even allude to such run off cover in the excerpts from the PFMF's financial reports (disclosed above).


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## Irishdan (10 October 2012)

ASICK said:


> http://www.financialstandard.com.au/news/view/23168892
> 
> Trilogy make the run - meetings called.
> 
> ...




Sadly Asick, Drake would have seen it coming but his ego and the fact that the fees from this fund are what keep LM management going have clouded his judgement all along. The fund should have been liquidated by the "responsible" entity over 2 years ago when the default levels of borrowers skyrocketed. Instead they decided to amend constitution to allow for increased LVR's to accommodate capitalisation of interest on loans in default thus in turn preserving exorbident fee income. I don't think Trilogy are any better either... WIND IT UP


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## ASICK (10 October 2012)

http://www.financialstandard.com.au/news/view/23201552

and here we go ... it's on !

""Further, our management fees for the First Mortgage Income Fund have been historically low, averaging 1.41%. These assets need to be worked through, not simply sold down, and certainly not to be offset by a rapidly diminishing unit price as proven by previous Trilogy takeovers," said Drake.

*Far from offering any magic solution to investors in the funds, Drake compares the promises being made by Trilogy to those made to investors of City Pacific. The result of those promises saw the unit price slashed from 61 cents in December 2008 to 13 cents in June 2012*.

"*Investors in the LM funds would not want to see Trilogy achieve the same disastrous result for them", Drake concluded*."

LM has its problems, among other things, ITS FEES! but I'm sure readers will recognize my concerns in the last paragraph of the excerpt (highlighted in red).

The first thing Trilogy does is hide their funds' accounts from all except members of the funds (with the exception of the PFMF which is on Balmain Trilogy's site).   The funds raided from APGF are off the radar now, whereas with APGF, the funds financials were fully exposed to public glare on the website: not so with Trilogy or CYRE Trilogy.  Even the Trilogy Cape Parks Fund doesn't show its financials on its (Trilogy's) website - if it would have for 2011, in my view,  investors would have run away.

It's not that I just don't like them, I don't trust them.

PS.  I should add that it's a common ruse to spruik substantial support whether it's there or not - in many cases it might be no more than a  mirage - I wouldn't be surprised if many a battle had be won by the side prepared to delude the other into believing a much stronger force stands in oppostion.

I think Mr. Drake should really consider changing LM's fee structure (DOWN) and that he should cause LM to wind down the funds, otherwise he might be surpised that investors might oust LM and choose Trilogy, even with the "baggage" Trilogy brings to the fray - I think IrishDan makes good points.  Citypac read investor sentiment the wrong way, LM has a chance, but it might just follow along behind Citypac, and then LM investors may just follow along as we have in the PFMF.


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## Irishdan (10 October 2012)

ASICK said:


> http://www.financialstandard.com.au/news/view/23201552
> 
> and here we go ... it's on !
> 
> ...




You are right Asick, 

Pt 1. Investors and financial advisors have been telling LM for years that the fees were too high but it fell on deaf ears as the fund was frozen no one could do much. Now drastic action is resulting that will ultimately hurt investors and destroy LM

Pt2. Your point re spruiking onsiderable support can also be levelled at Drake. He has said on numerous occasions over the last 3 years that they have solid plans in place to get liquidity back into the fund and that there were financial advisers ready to direct large sums back into the fund

Pt3. *It's not that I just don't like them, I don't trust them*.. Drake included


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## ASICK (10 October 2012)

Irishdan said:


> ... Instead they decided to amend constitution to allow for increased LVR's to accommodate capitalisation of interest on loans in default thus in turn preserving exorbident fee income. I don't think Trilogy are any better either... WIND IT UP




IrishDan, you seem to have good resources - are you able to post a copy of the recent constitutional amendments made by the manager?  If what you say is correct, how could such amendments possibly be in investors' best interests? On the face of it, such amendments seem to be increasing risk rather than giving protection to what's left of investors' capital.  Of course accruals (interest receivables) can be nice little earners - all from the ether - I used to think that only the Reserve Bank could do that little trick.


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## Irishdan (11 October 2012)

Asick, the change I referred to occurred a couple of years ago when all the loans were around the 66% ceiling that was previously the max LVR. From memory at that stage around 70% of loans were technically in default at the 66% LVR level. It was around this time I started agitating to the THEN directors including Drake to sell up,Wind up but copped threats, silent treatment etc.

I think someone else has also referred to it earlier in this thread


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## ASICK (12 October 2012)

Thanks IrishDan.

Trilogy published the PFMF's 2012 return on its website.
http://www.balmaintrilogy.com.au/pdf/BTI 5125 PFMF Annual Report 2012_web.pdf

The highlights:

1. a loss in value of 51% for the year.
2. unit price down to $0.13
3. a loss of about 54% on an investment made in  "King Tide", Gold Coast. The unit has been sold but they didn't disclose the sale price. Conincidently, that's the same unit block which Trilogy (as fund RE) is suing a number of ex-directors of City Pacific over. http://www.moneymagik.com/
4. Trilogy's fee $3,306,259 - total $16,579,772 for the three years Trilogy managed the fund.
5. That the fund is paying for the legal action against the directors even though Trilogy said (in part, at the Sydney Info Sesssion) - http://www.moneymagik.com/litigation.mp3
6. The accompanying letter: http://www.balmaintrilogy.com.au/pdf/BTI 5125 Unitholder Letter.pdf
Not one word about the $295m 'target' spruiked from 1 September 2010 until August 2011 - since then, not a word.  Just another disappointment among many: http://www.moneymagik.com/yardy_yardy_yah.php
7.  No communications from BT's ICC (Investment committee comprising fund members selected by some accounting firm).
8.  The fund's assets at Martha Cove, Victoria dropped from $86m as at 29 February 2012 (fund rg 45) to about $39m as at 30 June 2012 - Trilogy says the drop is refective of the $ value  of expressions of interest received.

Since Trilogy took over the fund's management, the fund has lost 56% of its value - it's really a disaster.  I certainly wouldn't wish such an outcome to befall members of the LMFMIF - If LM comes in with such a loss, seek a liquidator to wind up the fund - it's the sensible way to see the end to these messes.


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## Irishdan (12 October 2012)

Still no sign of financials on website for FMIF or the feeder funds although the reports for the "petty cash" type funds were promptly put on there. 

MEMO to Peter Drake, we have a right to know how poorly you have managed our money,

No sign of BIS Schrapnel report either, might ring them and see if one has even been requested 

My bet is Auditor won't sign off on FMIF or feeder funds as being a viable going concern


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## ASICK (14 October 2012)

*"You're Just Too Good to be True, Can't Take My Eyes Off You"*

Having lost their latest raid on a APG fund, CYRE Trilogy have their eyes on LM:-

http://www.trilogyfunds.com.au/site...ency (NOM + EM)_INTERNAL PAGES_ WEB_FINAL.pdf

http://www.trilogyfunds.com.au/site...(NOM + EM)_INTERNAL PAGES_ 2 COLOUR_FINAL.pdf

http://www.colonialfirststate.com.au/prospects/LMI0007AU.pdf

some interesting reading - clearly there'll be heaps to comment on in the coming days.

http://www.youtube.com/watch?v=PzpWKAGvGdA


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## ASICK (14 October 2012)

*No Related Party Loans - But, Related Party Transactions are OKAY!*

To start the ball rolling -

Trilogy says on page 14 (in part), "No related party lending - Trilogy will not lend money from the FMIF or the Fund to any related entity of Trilogy or any of their associated companies, directors, management, friends or family members."

Of course, Trilogy is very careful with its language,"No related party lending" because if one notes (still on page 14), Trilogy goes on (in part), "Project Management - Where appropriate, CYRE Trilogy will engage project managers on behalf of the FMIF, including Knight Frank and *Avive Asset Management Pty Ltd (a related party of CYRE Trilogy) *..." 

Investors should never kid themselves, *so many of these managers want a bigger slice of the pie* - a buck here, a buck there ... jobs for the relatives ... all at investors' expense.  They criticise LM about its fees, and yet Trilogy is telling members that they'll make some extra money on the side, right from the get-go (Whatever makes a relative happy will make CYRE Trilogy happy, and whatever makes CYRE Trilogy happy will make Trilogy happy - get the picture?).

They wouldn't dare say "no related party transactions" because that'd limit the income stream they have their corporate "eyes" on - so, Trilogy says "no related party loans", but "related party transactions" are okay - sometimes is so very easy to make money out of disgruntled investors, so darn easy.

It's worth pointing out that Avive Asset Management Pty. Ltd. (ACN 157 910 828) was only registered on 20 April 2012 - geez, that's reminds me of a company called Property Solutions & Advisory ("PSA") which resides in Balmain Trilogy's offices (oh, and the offices of Balmain themselves).  Goodness sakes, another construct to make the bucks!  A Google search reveals NOTHING about this entity in the market place, not even a phone number. 

What's astounding is that Trilogy says its going to do wonderful things for FMIF investors, but opines, (on page 11), in part, that  " ... the FMIF’s heavy concentration of coastal (tourist-town) property development mortgage loans, coupled with high average LVRs, made the FMIF, and therefore the Fund, particularly vulnerable to the global financial crisis." - it's the market that the mob down at Trilogy are miserable at recovering asset value in - remember, under Trilogy, the PFMF lost 51% of its value in the past 12 months alone. 

Heck, they even lost around 50% of a unit Trilogy purchased (on behalf of the PFMF) while manager of the fund.  They sold the unit after 30 June 2012, but DID NOT DISCLOSE HOW MUCH THEY SOLD IT FOR !  Given they gloat when they can,  I assume the sale was a disaster.

If there's anything that Trilogy is, Trilogy is predictable - all the crap fed to members of the (then) CPFMF is much the same as fed to the FMIF feeder funds.

I've looked through the EM and it's got heaps to comment on - this'll do for a start.


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## ASICK (15 October 2012)

In its EM, Trilogy discloses (on page 12) a number of items which Members have a number of reasons to be dissatisfied with LM’s performance – I'll deal with a number of them one-by-one:

Trilogy says, (I'll call this Ground 1), “The decline in the net asset value per class of FMIF unit in which the Fund invests from $1.00 to $0.73” - Yes, that's a hit, 27% - but consider Trilogy has lost 56% of the value of the PFMF in roughly the same time frame – in any event Trilogy lost 51% of the fund's value in the past year. 

To put it in perspective, Trilogy expresses the loss thus, “As at 30 June 2012, the gross assets of the Fund were valued at $136.64 million (a decrease of $168.61 million from 30 June 2011)”
http://www.balmaintrilogy.com.au/pdf/BTI 5125 Unitholder Letter.pdf

See, only a year ago, the PFMF was valued over $300m, and now it's just a tad over $100m!  Yes, I know you're all terrified of LM, but consider under Trilogy's management the PFMF lost $168.61m in ONE YEAR! 

So, if you're all thinking that Trilogy is a great manager, then why the massive loss in the PFMF?  Okay, so you say, it can't be Trilogy, there's just too good, so it must be the market – huh?  So, the PFMF's losses under Trilogy are the market, then why isn't LM's losses?   Don't forget Trilogy's Healthcare REIT which also suffered massive losses over these past years:
http://www.moneymagik.com/analysis_REIT.php

Of course, as previously posted, Trilogy averred,  “In Trilogy’s opinion, the FMIF’s heavy concentration of coastal (tourist-town) property development mortgage loans, coupled with high average LVRs, made the FMIF, and therefore the Fund, particularly vulnerable to the global financial crisis.”

Trilogy has some experience with those 'coastal (tourist-town) property development mortgage loans' down at The Entrance in NSW – an asset was sold-off in one line.  A number of shops were 'gotten rid of' or 'disgorged' (as BT says here http://www.moneymagik.com/disgorge.mp3 ) Here's the advertisement:
http://moneymagik.com/the_entrance_in_one_line.php

Of course, Trilogy and BT each speak to no fire sales, but get real – the market price these days is a price we'd normally associate with fire sales, and the massive 56% losses suffered by the PFMF since Trilogy took over the fund in July 2009 is testament to that.

Trilogy says, (Ground 2), “The excessive level of fees being paid to the manager of the Fund and the FMIF equating to 4.93% of FUM in 2011 on a look through basis;” - dearly me, not the old 'look through basis' – that's a new term coming out of Trilogy, maybe they're trying to sound techo?   

Trilogy also says, “And in spite of all of this, LM still paid management fees at the rate of 2.50% p.a. of funds under management (FUM) of the FMIF and 2.43% p.a. Of the FUM of the Fund. This equates to a Fund management fee of 4.93% of funds under management in 2011 on a look through basis.” which is notated thus:

Footnote 10: LM’s Liquidity Strategy - LM First Mortgage Income Fund dated 22 June 2012. This is expressed to be calculated on funds under management which Trilogy has taken to be the net assets of each fund.”

Well, what can one say? I for one cannot see any connection between the issues raised in Ground 2 and Footnote 10 - Sounds like Trilogy stuffed up again and (nearly) doubled the fee – to my mind, it works for Trilogy, but it's dead wrong!  There's only one fee, and that fee is based on Funds Under Management (as in the PFMF which Trilogy knows all so well about how the fee is calculated – over $3.3m in fees for delivering a $168.61m LOSS!).  

I think it could be that Trilogy meant one of the values (perhaps the first, or maybe the second, who knows what's in their corporate "mind") should have been Net Assets and the other FUM - the inference being that there's a fee charged on FUM and another on Net Assets and they stuffed up the text: it doesn't matter if it was the case, it'd be nonsense anyway.

Since FUM is the same as Funds Under Management and since FUM included DEBT, FUM is NOT the same as Net Assets (which excluded DEBT) – actually, I would have thought Trilogy would have known that full well, but the folk at Trilogy are prone to make the odd mistake now and then – it's an oppps, but it suits Trilogy because it probably scares the pants off PFMF investors and makes Trilogy look like a good deal (which, in my view, they are most certainly not).

Trilogy says, (Ground 3), “The ongoing suspension of Fund distributions” - I know that investors want their income distributions – and my guess is that Trilogy knows that too – and the spruik about distributions was the same when Trilogy run for the PFMF, but the reality, just like in the PFMF, there is NEVER going to be further income distributions because of the massive losses suffered by the LMFMIF, and it DOES NOT MATTER WHICH MANAGER RUNS THE FUND – get real, distributions of income are NO MORE.

Trilogy has run the PFMF for over three years now and PFMF members have not received one cent in income distributions - but you guessed it - even with the massive losses suffered by the fund, many investors remained hopeful that they'd receive income distributions - unbelievable!

Trilogy says (Ground 4), “The ongoing failure to satisfy redemption requests from Members;” - ah, Trilogy has llots of experience on this point.  It was a gripe PFMF investors had too – after all, it's normal, everyone's peeved and they want back what's left of their respective investments.  But Trilogy only paid $0.04/unit only after FOURTEEN MONTHS of taking over the fund – and in OVER  THREE YEARS have only returned  $0.0875/unit! And the spruiks just kept on coming:-
Here's the list: http://www.moneymagik.com/yardy_yardy_yah.php

Sorry about the prolixity, but there's heaps to get through.  There's three more points which I'll deal with at another time.  I was expected some other postings from other members, but since they haven't come up, I decided to keep on keeping-on.

Happy reading.


----------



## ASICK (17 October 2012)

In its EM, Trilogy discloses (on page 12), in part, “The Deutsche Bank Loan facility had an outstanding balance of $53.8 million as at 31 December 2011 (although, based on recent correspondence from LM, this has been reduced to $33 million). The interest rate charged on this loan is at least 15% p.a. (there was provision to increase the interest rate to 18% p.a. if the loan was extended from 30 June 2012, however Trilogy has not been able to confirm whether the increase has occurred).”

Yes, the interest rate is high, but it'll probably have to be paid off before any distributions of capital will be able to be made.  The PFMF had a LVR of 10% on the CBA facility – but this didn't stop Trilogy paying out investors while maintaining debt.  Debt is great for managers grabbing a fee on FUM because FUM includes debt. 

An investor at the fund's Sydney meeting tried to argue that the debt should be paid off to reduce the costs for investors, but Andrew Griffin (of Balmain Trilogy) cited BT's (post facto) authority for making payments to investors ahead of the bank as a show of hands at that information session!
http://www.moneymagik.com/show_of_hands.mp3

In the end the LVR covenant kicked in and the payments to investors dried up and a nice fee was made by Trilogy ($3.3m in the past year alone – in consideration of Trilogy handing us of loss of over half the 2011 value of the PFMF).

Trilogy says on EM page 13 (in part), “Regular reporting - Trilogy will make information regarding the status and performance of the Fund and the FMIF which it receives in its capacity as a unitholder available to Members and will administer and manage the Fund on a fully transparent basis.”

I don't think anyone in the PFMF would say that Trilogy is a transparent manager – yes, it complies with its statutory obligations, but that's about where it ends.   Just as an example is the much touted $295m repayment of capital to investors of the PFMF – Trilogy spruiked the $295m until August 2011 and then fell silent.  The latest 2012 return and accompanying letter made no mention of the $295m.  

They used it and then discarded it: a desiccated carrot of no further use.  

Of course, Trilogy (if it becomes manager of one or both of the feeder funds) isn't going to receive any more information about the FMIF's state of affairs than any other unitholder in the FMIF – but it doesn't stop them spruiking anyway.

Trilogy says on page 13 (in part), “Independent and experienced responsible entity - Trilogy has significant expertise and experience in the funds management sector and will use its influence as a 23% unitholder in the FMIF to oversee the performance of LM as responsible entity of the FMIF. Initially, this will involve convening a meeting of members in the FMIF to replace LM with Trilogy as responsible entity of the FMIF.”

Trilogy's experience? - oh, they don't want to tell investors all about that experience - the list of loser funds grows:

1.  Trilogy's Principal Mortgage Mezzanine Mortgages Fund (link updated)
http://www.moneymagik.com/dee_why_new.php
2.  Trilogy's Healthcare REIT (link updated)
http://www.moneymagik.com/analysis_REIT.php
3.  Trilogy's Pacific First Mortgage Fund
http://www.moneymagik.com/ (link updated)

and of course, one must never forget the experience of the management team:
http://www.moneymagik.com/trilogy1.php

They might seem cheap, but, remember the old adage, “you get whatyou pay for”


----------



## ASICK (18 October 2012)

Here's an article published in New Zealand by Fairfax News.

http://www.stuff.co.nz/business/industries/7784330/Aussies-eye-frozen-mortgage-fund

Readers might not be fully aware of just how biased Fairfax media can be, but, believe me, they can be very biased.

Isn't it just wonderful how Fairfax is just so supportive of Trilogy Funds Management Limited?   Michael West certainly stuck the boot into Peter Drake down at LM, but Faixfax isn't playing the game fairly at all – it's starting to look to me that Fairfax has picked a side.

A number of members of the PFMF have sent information to Fairfax about Trilogy, information that Fairfax has chosen to sit on while allowing Trilogy to range free without negative information being reported by Fairfax.
For example, Fairfax is aware of Trilogy's activities in the following funds:-

1. Trilogy Healthcare REIT
http://www.moneymagik.com/analysis_REIT.php

2. Trilogy Pacific First Mortgage Fund
http://www.moneymagik.com/

3. Trilogy Principal Mortgages Mezzanine Mortgage Finance Fund
http://moneymagik.com/dee_why_new.php

Fairfax is aware of the massive (more than 50% loss) suffered by the fund in 2012, but says nothing.

Fairfax is aware of the losses suffered by the Trilogy PMMMF fund and the associations Trilogy had with various Laton entities, but says nothing.

Fairfax is aware of the losses suffered by the Trilogy Healthcare REIT and the fact that Trilogy receipted investments at $1.00 per unit when the current values were $0.63 (2009) and $0.60 (2010) respectively, says nothing.

But Fairfax says NOTHING and pretends to be an impartial news reporter, which is my view is far from the case – in fact, as far as I'm concerned, Fairfax is  pathetic.

Same goes for Trilogy's management of the PFMF – when Phil Sullivan (ex-CEO of Citypac) is able to be bashed, Fairfax is in there boots-and-all – even to the extent they can bash Sullivan as one would a pinata – but they got one hell of surprise when Sullivan sued – and for one, I hope Sullivan wins – good luck to him for suing Fairfax.
Here's part of the article, “The unit price has fallen from A$1 to A73c, and 89 per cent of loans are now in arrears or default.”

But good ol' Fairfax doesn't report Trilogy current woes in its Healthcare REIT and Pacific First Mortgage Funds, even though LM's losses are substantially losses than those suffered in Trilogy's own funds!  All this knowledge is within Fairfax but true to its reporting of matters related to the PFMF, Fairfax only has one entity with a “black hat”, and in this case, it's LM.

And, “In a pitch to investors, Trilogy said it would cast daylight on the inner workings of the fund by conducting an asset review, improving transparency and looking into potential legal action if any wrong-doing is uncovered.”

Yes, Trilogy said that to members of the PFMF too – and after three years, and after spruiks that IMF would fund litigation, Trilogy sued five ex-Citypac directors – had to discontinue against one after they found out he'd been dead for two years prior to the lodgement date of the claim!
http://www.moneymagik.com/litigation.php
http://www.moneymagik.com/

Now, if it's insurance they're after (after all, those guys wouldn't have $60m), then one director less would drop the claim to $48m, and if it's true that there's no insurance (as alleged by Phil Sullivan that there's no insurance because an essential policy element wasn't maintained by Trilogy), then there's nothing to pursue.

That's probably the reason IMF declined to support the fund in its claim as mounted by Trilogy – even though IMF expended $$$ in backing the public examinations of the ex-directors of Citypac, various CBA folk, and others!

And, "It will also reduce fees to 1.5 per cent for the main fund, and ultimately nil for the feeder funds.” - interesting, a drop to 1.5% but it won't run the feeder funds for nothing on the way to taking over the main fund – now, there's an impost for the feeder funds – nothing is free is Trilogy. If Trilogy wins the feeder funds but fails to win the LM FMIF, then investors in the feeders won't be happy little Vegemites at all, will they?

“Trilogy Group chairman Rodger Bacon said the proposal to finally return cash to unitholders was straightforward.  "What we suggest is an orderly wind-down, but no fire sale, of the main fund's assets, and then capital distributions to investors in the main fund and through it to the two feeder funds."”

Ah, just what they said to members of the PFMF:
http://www.moneymagik.com/yardy_yardy_yah.php

Even the old crap about no fire sales:
http://www.moneymagik.com/martha_cove_ad.php

and, “A similar move in 2009 saw Trilogy take over the City Pacific First Mortgage Fund, which ultimately led to it filing a class action claim for A$60 million of damages against City Pacific directors and officers.”

Now, if you've got your wits about you, what you'll note is that there's a number of items missing from this excerpt, and they are:-

1.  No mention that Trilogy said that IMF would back the litigation
http://www.moneymagik.com/litigation.mp3
2.  No mention that after funding the public examinations, IMF will NOT back the litigation
http://www.imf.com.au/cases.asp?ID=110 (note, no mention of the current litigation – plus, IMF has confirmed with a fund member that they are not backing the current litigation)
3.  No mention of suing the dead man and the subsequent discontinuance
https://www.comcourts.gov.au/file/Federal/P/NSD604/2012/actions
4.  No mention that the discontinuance might reduce the claim
5.  No mention that there might not be any insurance anyway (IMF will not support, and Sullivan's allegations) : http://www.moneymagik.com/
6.  No mention about the ex-Citypac directors cross claim alleging the fund is liable for their legal costs: https://www.comcourts.gov.au/file/Federal/P/NSD604/2012/actions
and here comes Fairfax at its best, “LM is an Australian multi-billion dollar fund management group owned and operated by mysterious Kiwi expat Peter Drake, who has been dubbed "The Scarlet Pimpernel" for his elusive behaviour.” - still, even at its worst, the comment relates to Mr. Drake personally, while Philip Ashley Ryan and Rodger Bacon escape without criticism.

Now a word about Ryan's breach of trust – such breach of trust of less importance to Fairfax than reporting about Drake's “elusive behaviour”!

“Structured credit expert David Jansen, who is acting as an independent consultant to Trilogy, said the takeover bid was an opportunity to scrutinise LM's transactions.” - as far as I'm concerned,  here's an expert that shouldn't be listened to – not a word about the Trilogy fund mentioned about, and not a word about Philip Ashley Ryan from Trilogy Funds Management. 

And, “”You do get to look up the skirt and see what's going on, and look at everything from an arms-length, commercial basis," he said. "That's particularly relevant if there's related party lending going on in the fund."” - what an inane statement, “look up the skirt” - and Fairfax thought the quote useful for fund members – in my opinion, a tad course.  

And what percentage of the total loans made by the fund are the related party loans? Not worth changing manager for – and I might be wrong, but the related party loans are not in default. (I'll stand corrected if I'm wrong on this). 

This is a statement I'm somewhat concerned about, “"They [large advisory networks] have taken a close look at it, and had some concerns with LM's performance," said Jansen. "It's fair to say we've been working with them as well, constructively."” - I'm concerned that the “[large advisory networks]” haven't seem to have taken a good look at Trilogy and its performance in the abovementioned funds! 

“Smaller advisers have received information about the proposal overnight, which Jansen expected to follow up with discussions soon.” - let's hope the discussions are criical in nature, but I suspect they won't be. 

Finally, “  © Fairfax NZ News” - yep, good ol' one-eyed and biased Fairfax media.


----------



## ASICK (18 October 2012)

Fix-up - "But good ol' Fairfax doesn't report Trilogy current woes in its Healthcare REIT and Pacific First Mortgage Funds, even though LM's losses are substantially losses than those suffered in Trilogy's own funds! All this knowledge is within Fairfax but true to its reporting of matters related to the PFMF, Fairfax only has one entity with a “black hat”, and in this case, it's LM."

the text "even though LM's losses are substantially losses than those suffered in Trilogy's own funds!"

should read "even though LM'S losses are substantially *less *than those suffered in a number of Trilogy's own funds"

Here's another NZ article:
http://www.decisionmakers.co.nz/kiwi-investors-140m-revolt-against-aussie-fund-manager-nbr/

Philip Ashley Ryan plays a big part in this attack on LM:

in part, "Trilogy’s Brisbane-based managing director Philip Ryan told NBR ONLINE LM’s investors want out and they do not want to see their money “effectively evaporate” because of LM’s fees."

You'll all remember Mr. Ryan, he's the one who (with others) was found to have breached a client's trust by the Supreme Court in Queensland (affirmed by the Appeal Court)  - but, he didn't lay out his breach when he opined about LM - mum's the word on that one!
http://www.moneymagik.com/trilogy1.php

Of course, Mr. Ryan knows a lot about "effectively evaporating" investors money - that'd be in Trilogy's PMMMF fund, the Trilogy Healthcare REIT, and the Trilogy PFMF  - all suffered big losses as investor's money was effectively evaporated away. 

I was thinking, "Could it be possible that Trilogy's Mr. Ryan have been thinking that he'd have a spruik in NZ because no one knew he from a bar of soap" - surely he wouldn't have been known in NZ as the Man From Trilogy who (with others) breached a client's trust?

Ryan  continued his spiel, "The only reason we’re involved is that investors in the major feeder funds have come to us and said we’re tired of the fees." - and that might very well be true - but surely they wouldn't have been attracted to Trilogy on the basis of Trilogy's performance as manager of the aforementioned funds!

Ryan continued along, (as if on a roll), "The final accounts for this year haven’t come out or haven’t been released yet and everyone, of course, is scared that there’s going to be further impairments.” - and this is from a man (in this article of 9 October 2012) who co-signed the PFMF's accounts on the 4 October 2012 with full knowledge that Trilogy's PFMF lost 50% of its value (over $168m):
http://www.balmaintrilogy.com.au/pdf/BTI 5125 PFMF Annual Report 2012_web.pdf

A letter dated 11 October 2012 which accompanied  the financials said in part, "As at 30 June 2012, the gross assets of the Fund were valued at $136.64 million (a decrease of $168.61 million from 30 June 2011) and the net assets attributable to the Unitholders of the Fund were valued at $116.74 million (a decrease of $156.47 million from 30 June 2011). The net asset value attributable to each unit for the year ended 30 June 2012 was $0.13 (a decrease of $0.18 from 30 June 2011)."

The letter went on to say, "The $0.18 decrease in unit value is attributed to:
• the $0.03 per unit ($26.43 million) return of capital payment made to Unitholders in three separate instalments during the reporting period;
• $0.08 is directly related to the further impairment recognised in respect of the Martha Cove securities and is reflective of expressions of interest received following the close of the marketing campaign in October 2011; and
• $0.07 per unit resulting from the continuing decline in the value of the Fund’s underlying property mortgage assets (including costs of operations) particularly those situated in South East Queensland regions (primarily the Gold Coast and Gold Coast hinterland)."

I don't think there's anyone out there who wouldn't think that the LM fund is going to sink badly in 2012 - after all, Wellington Capital's PIF went down by about 50% ($90m) - so did the PFMF - and I guess it's going to be the same for LM's FMIF - however, I think it's over-the-top for Trilogy to suggest that the loss is due to management, when they say the PFMF's massive losses were due to market forces.

The article closed with, "In 2009, Trilogy took over management of failed Brisbane property investor City Pacific’s first mortgage fund." and went on, to 30 June 2012, to lose 51% of the fund's value.

and, "Earlier this year, Trilogy took a lawsuit against City Pacific directors for alleged “unreasonable” loans to developers. A hearing date is yet to be set."

What a disaster - even IMF wouldn't touch it. 
http://www.moneymagik.com/
http://www.moneymagik.com/litigation.php
http://www.imf.com.au/cases.asp?ID=110 (notice no information is filled out - that's because there's no information to fill in the gaps - crikey, they've even got Balmain Trilogy down as RE (which is not the case))


----------



## Irishdan (23 October 2012)

Just found the following on LM's website

Interesting when Drake's income is threatened he suddenly agrees to reduce fees to the same level as Trilogy are proposing

Also states here that there is NO intention to reopen the funds and that an orderly sale of assets as quickly as possible. Complete 360 from the spin we have been putting up with for the last few years. Too Little Too late Mr Drake. 

I am no fan of Trilogy either, Bring in the liquidators




*Welcome to the LM Mortgage Funds
VOTE “AGAINST” BOTH EXTRAORDINARY RESOLUTIONS FOR LM CURRENCY PROTECTED AUSTRALIAN INCOME FUND & LM WHOLESALE FIRST MORTGAGE INCOME FUND
Documentation dated 28 September 2012 has been sent by Trilogy Funds Management Limited (“Trilogy”) seeking to remove LM Investment Management Limited (“LM”) as responsible entity/manager (RE) of the LM Currency Protected Australian Income Fund and the LM Wholesale First Mortgage Income Fund, feeder funds of the LM First Mortgage Income Fund (“LM First”). If removed, Trilogy proposes to issue a Notice of Meeting to replace LM as responsible entity/manager of LM First Mortgage Income Fund.

LM is dealing with this matter to protect the feeder fund investors. Trilogy as replacement responsible entity raises a number of issues mentioned in our prior communications.

The Directors of LM unanimously recommend that investors reject any Trilogy proposal by voting "AGAINST" both resolutions. Please consider the following update:

Changing managers will delay the return and reduce the quantum of your ultimate cash return
LM has no intention of re-opening the Funds. LM’s only strategy is to return investor capital through an orderly sale of assets as quickly as possible.

To replace LM will simply delay the entire process, cause confusion which can be exploited by counter parties (including importantly borrowers) and leave many borrowers with a belief that they can renegotiate on more favourable terms particularly as they know much more about their loans and security properties than Trilogy.

Changing managers will not reduce the costs of the LM Currency Protected Australian Income Fund, LM Wholesale First Mortgage Income Fund or LM First
From 1 November 2012, LM will introduce the same RE fee structures for LM Currency Protected Australian Income Fund, LM Wholesale First Mortgage Income Fund and LM First as have been proposed by Trilogy. Thus changing REs will not change fees. This will be achieved by amending the constitutions, as required, as these changes will not require investor consents as they are to the benefit of investors.

Trilogy will put your bank facility and your investment at risk
Removing LM as manager will put the current bank facility in default and risk receivers being appointed. LM is currently negotiating to either refinance Deutsche Bank or significantly improve the terms. LM has successfully reduced the Deutsche Bank facility from $90 million to $33 million. LM is committed to having all bank debt repaid as soon as possible. This will allow repayments to investors to recommence.

Directors of Trilogy have previously had failed investments
Trilogy has changed its name from MDRN Investments Limited. A previous related entity of Trilogy, as well as the current director, Philip Ryan, were associated with failed investments and have been found to have made negligent misstatements, had damages awarded against them and were forced to wind up a past scheme after ASIC mounted a successful class action (refer ASIC Media Release 06-172).

Trilogy broken promises at City Pacific and failed to perform
Trilogy has been responsible entity of the City Pacific First Mortgage Fund since 2009 when it was voted in by investors based on various promises. It has failed to deliver on these promises. Since becoming responsible entity of City Pacific First Mortgage Fund more than three years ago, the unit price has plunged by 73% to $0.13 with investors receiving a minimal return of capital.

Related party transactions
There are no loans from LM First to any director or associated entity of a director and nor will there ever be.

There are only two Corporations Act defined related party transactions totalling less than $10 million. LM First holds the senior debt positions on both, with another LM First having a subordinated interest.

June 2012 financial accounts and updated RG45 report
LM expects to provide updated financial reports and RG45 Reports for all of its Funds within the coming weeks. The most recent financial reports for all Funds (to 31 December 2011) can be found on the LM website at http://www.lmaustralia.com/Document-Library/Financial-Reports.aspx.

Voting Process
To ensure LM remains as your manager please download, complete + return your funds proxy form as soon as possible but no later than 9.30am (Sydney time) on 30 October 2012.

Download LM Currency Protected Australian Income Fund proxy form
Download LM Wholesale First Mortgage Income Fund proxy form
For your vote to count at the meeting, return the proxy form to the share registry no later than 11.30am (Sydney time EDT)for the LM Currency Protected Australian Income Fund; and 9.30am (Sydney time EDT) for LM Wholesale First Mortgage Income Fund on Tuesday 30 October. Given how slow the postal service can be we encourage you to lodge your proxy by one of the following means:

Fax
 + 61 3 9473 2145 or

Email
votingservices@computershare.com.au


(please note the fax number was incorrect in some of the previous proxies circulated).

Postal votes can be made by mailing to:
Computershare
GPO Box 2062
Melbourne VICTORIA 8060

(please allow time for postage)

If you would like to discuss your investment please contact your financial intermediary or the LM client relations team on +61 7 5584 4500 or by email at mail@LMaustralia.com.*


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## Irishdan (23 October 2012)

and this pearler yesterday as well in Money Management

*Australian fund manager LM Investment Management is conducting due diligence with two offshore real estate private equity funds in a deal worth $1 billion.

Both of the offshore funds - which LM declined to name due to the "confidential nature of the due diligence process" - have expressed an interest in funding property assets within the Managed Performance Fund and the First Mortgage Income Fund.

LM founder and chief executive Peter Drake said big fund houses in the US, Europe and Asia are looking upon Australia as an attractive investment destination.

LM chief financial officer Grant Fischer said the company had been in talks with the offshore funds for "several weeks".

"We have now moved to a lock-down for the complete asset due diligence and fund allocation. Particular interest is being shown toward the signature assets within the Managed Performance Fund and the First Mortgage Income Fund," he said.

LM currently holds Australian assets with a gross realisation value of $3 billion. The company operates nine offices worldwide and receives investment inflows from over 70 countries, according to an LM statement.*


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## ASICK (23 October 2012)

As I understand it, LM has now agreed to match the fee offered by Trilogy as well as undertaken to wind up the funds ASAP.  If it is the case, LM has a chance to help those who it lured into its funds in the best possible way.  Now is the time for managers to take the welfare of their investors into account.

If it is the case, it'll be good for LM investors that LM has at last WOKEN UP (thanks of course to pressure from the mob at Trilogy)!

I've just received copies of the financial returns for two of Trilogy's funds, the Trilogy Cape Parks Fund, and the Trilogy Healthcare REIT - and they're both disasters.

On first read, the Cape Parks Fund has 1000 units on issue at $1.00/unit.  It seems arms length investment has been repaid (as I recall, only about $30,000) and the fund has been pumped (to cover expenses) by related entities for the time being.  See more info about the fund here:
http://www.moneymagik.com/cape_parks_fund.php

When one looks at Trilogy's Cape Parks Fund on its website, one would think it's a real goer:
http://capefunds.com/

There was a notice about the 2011 return and the fact that the 8.5% paid in 2011 was the result of a payment from a related entity:
http://capefunds.com/assets/files/NOTICE_Income support to Cape Parks Fund.pdf

Even so, the 8.5% (propped up) return was  promoted by Newcastlewealth.com as "an important investment opportunity":
http://newcastlewealth.com.au/2011/...on-parks-an-important-investment-opportunity/

And Trilogy's Heathcare REIT has traveled into NEGATIVE EQUITY - nearly $300k of NEGATIVE EQUITY gee.. that must be a hoot - the fund is worth LESS than the amount invested! -- opppss .. not a good look for the bank:-
http://www.moneymagik.com/analysis_REIT.php  (see "Funky" - and of course, the "Funky" asset)

And believe it or not, the bank, yes that dear ANZ bank which aided Trilogy to lure punters into the fund, that dear ANZ bank  is prepared to provide the scheme with further time in which to secure a sale in order to repay the facility, even though the facility has expired and currently in default! Gee.. isn't the ANZ just a kind-hearted lender?

Mind you, the building's been up for sale for well over six months and Trilogy is on its second agent - the first one didn't seem to do too well - heck, for a while there the car parks for offered for rent at $50/week/car park!  Oh well, i guess those are the sorts of things one has to do when one makes decisions that sees a well-paying tenant move elsewhere.

Actually, anyone who thinks Trilogy is smart ought to do a good readup on the Healthcare REIT and see just how all the money was lost - it's an interesting case study of .. well, many things .. have a read - see what you think - see what conclusions you come to - I'd be surprised if you think too much of Trilogy after you've seen what they did!


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## ASICK (23 October 2012)

Duh ANZ bank isn't being as obliging as I first thought:
http://www.moneymagik.com/healthcare_reit_note_19_2012.jpg
Dittims ...


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## ASICK (24 October 2012)

Here's two more releases from LM:-

http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

http://www.lmaustralia.com/Download...ogy-management-pacific-first-update-19-10.pdf

An excerpt, "*The LM First will not be reopening.*

● The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund.

● LM is well progressed with the orderly sale of assets.

● Based upon expected cash realisations over the coming months, progressive repayments to the Deutsche Bank facility will continue which will see it fully repaid by February 2013. Thereafter, capital distributions will commence to investors.

● As extensive work has now been completed we are happy to bring forward the review of our fee to our pre GFC fee average levels. This results in our fees being either at or below the Trilogy proposed fee levels.

● LM’s approach is one of value add, not sell at any cost, and this has not changed. It has always been LM’s intention to return all monies to all investors as soon as possible, whilst maximising the value of the assets. LM is continuing with its orderly sell down of assets with capital returns to investors due to commence in February 2013 and received progressively on a pro rata basis across 1 to 3 years."

In my view, this is the best outcome for investors - it avoids costs and gives investors what they want: a low fee, getting the "monkey" of the bank facility off the fund's "back", and the eventual recovery of whatever is left of their respective investments.  

I'm not convinced that it was those meetings which changed LM's corporate "mind", I think it's because LM finally realized that members of LM's funds  wanted something very different to what LM wanted - and that the pressure of Trilogy coming on the scene gave LM only one simple choice, to meet investor demands or risk losing the funds.

I think it's best if a liquidator is appointed, but in the absence of that choice, it's best LM acts to wind up the fund in investors' best interests.

Trilogy (and Balmain Trilogy) made many representations about what they would do for the PFMF.  The touted return of $295m began prior to a meeting of members on 1 September 2010 and continued up until August 2011 - since that date, neither Trilogy nor Balmain Trilogy have even mentioned the $295m! 
http://www.moneymagik.com/yardy_yardy_yah.php

It was spruiked to be $0.04 every April and October, with additional payments in between - the reality? 1 x $0.04/unit payment, 4 x $0.01/unit payment, and 1 x $0.0075/unit payment - a total of $0.0875/unit in OVER three years!

Trilogy caused the fund the expense of what they termed an "asset review" - the asset values disclosed as a result of that costly exercise failed to hold year-on-year - impairment followed impairment - the $0.48/unit as assessed by the review would fall by 51% over the following three years (accounting for redemptions).  My view of the review? A waste of money!

Trilogy spoke about litigation - and there was a legal review.  I think Trilogy paid for this one.  It took nearly three years before litigation was commenced against directors, litigation, which to my mind, is a waste of fund money.  First Trilogy / Balmain Trilogy spruiked that IMF would fund the litigation and thereby ease the financial burden of any legal claims - it was big spruik: http://www.moneymagik.com/litigation.mp3

After funding the public examinations, IMF didn't fund litigation against the directors - contrary to all the benefits (including risk aversion) offered by IMF funding litigation as spruiked by Trilogy (BT), the fund is now funding the litigation, litigation which IMF seems to see no value in since it isn't funding the fray. http://www.moneymagik.com/litigation.php

The PFMF has suffered enormous loss under Trilogy's management - litigation to recover losses (other than recovery against lenders and/or guarantors) has brought no money into the fund to date, and if the litigation is to settle only on the one existing Federal Court claim, then I suspect the result from the litigation will be $0.

Investors should be patient with LM and allow them to pay off the debt - this will take some time since there's no easy way out of this, but I think it's right to get rid of debt first - after all, no one will be able to EARN the interest at the rate the fund is PAYING, so it simply does not make any sense to make payments to investors while the bank debt remains.  Here's an exchange between a PFMF member and Andrew Griffin of Balmain Trilogy (November 2010) - the member is concerned about the costs of debt to the fund: http://www.moneymagik.com/bank.mp3

As an example (other than the returns in the PFMF), LM investors should take a look at Equititrust's IF's receiver's latest report to investors:
http://www.equititrust.com.au/Pdfs/...orts - 20121004 - 8th Report to Investors.pdf

An estimated return of $0.16 to $0.23 for EIF members, and even though the receiver's been at it for nearly a year, he doesn't see any potential for repayments to investors until next year - clearly, money isn't going to flow like a river of honey.


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## ASICK (25 October 2012)

I've been told by an acquaintance who is a member of the PFMF that he's provided LM a letter relating to his investment in the PFMF and Trilogy's management of same. As he understands it, LM intends to make the letter available to certain LM fund members/entities.  At this time I haven't been able to obtain a copy of the letter.

I've also received an email from one of the biggest investors in the PFMF, a member whose been very much pro-Trilogy/BT over these past three years.  The email indicates concern about Trilogy's management and a desire to see alternative management.  I'm not sure of the motivation for the email at this time, but nevertheless, it might very well be that the "wheels" are coming off  Trilogy's "cart" (management of the PFMF).

Another rumour has began swirling about an ardent long-term Trilogy supporter on BT's ICC giving up his ICC membership.   What a waste of space BT's ICC has been - what a waste of bloody space.

I'll post any updates as they become available.


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## ASICK (25 October 2012)

*How Could Anyone Believe Trilogy's Valuations?*

If investors in LM's funds think that Trilogy coming in and doing an "asset review" will be of any benefit to them, then they should jolly-well do some research.

Here's an example of but one asset from the PFMF, Martha Cove: 

*First, the period-on-period values as provided by Trilogy / Balmain Trilogy:*

30 June 2009 $156m [revalued as a result of the expensive so-called "asset review"]
30 June 2010 $141m [drop of $15m (- 10%) in 1 year]
30 June 2011 $118m [drop of $23m (- 16%) in 1 year]
RG 45 29 February 2012 $86m [drop of $32m (- 27%) in 8 months]
30 June 2012 $47.3m [drop of $38.7m (45%) in FOUR MONTHS!]
[not mentioned in the financial report - update was part of an accompanying letter]
RG 45 30 September 2012 $43m [drop of $4.3m (- 9%) in THREE MONTHS, and that's after a 45% drop in PREVIOUS FOUR MONTHS!]

*Second, the fee base:*

fee = 1.62% comprising 1.5% management fee + 0.12% fund expenses
*
Third, an estimated fee based on the average value between the start and end of each period:*

2009 - 2010 average value $148.5m, fee = $2.057m (1 year)
2010 - 2011 average value $129.5m, fee = $2.097m (1 year)
2011 - 2012 average value $82.65m, fee = $1.338m (1 year)
2012 - present average value $45.15m, fee = $0.244m (4 months)
*
Fourth, estimated fee and unit holder value:*

Estimated fee total = $5.736m
Estimated value as at 31 October 2012 = $43m
Estimated fee / value = 13%

*Question:*

Is there anyone out there who feels they'd have confidence in any value Trilogy gives about any fund asset?

If you feel you would, then you must  have rocks in your head.


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## ASICK (26 October 2012)

If you're interesting in checking any information provided at www.moneymagik.com, documents relating to the PFMF are available here:
http://www.moneymagik.com/general_information.php
[some tables yet to be updated with the latest 2012 information (return + RG45)]
Please contact the site if you think any information is incorrect - while all effort is made to ensure correctness, that in itself cannot be an assurance of actual correctness.  Please check all facts for yourself.

Also, Banksia has crashed:
http://www.news.com.au/business/com...-financial-group/story-fnda1bsz-1226503478426
I wonder if Trilogy'll be chasing after Banksia next?

The beat goes on - thanks in no small part to the Australian Federal Government & its Corporate Regulator, ASIC.


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## ASICK (27 October 2012)

The latest from Michael West at SMH:

http://www.smh.com.au/business/a-ma...-cant-help-but-be-elusive-20121026-28b4k.html

No matter what the SMH does, it continues to provide biased one-sided reports - always giving Trilogy a free ride.

For the SMH, there's always only one black hat wearer in every show, and necessarily, all the others wear white hats.


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## ASICK (27 October 2012)

ASICK said:


> The latest from Michael West at SMH:
> 
> http://www.smh.com.au/business/a-ma...-cant-help-but-be-elusive-20121026-28b4k.html
> 
> ...




I don't know the rights and the wrongs of Michael West's article, an article that seems to me not to bode well for LM, but what I do know is that Michael West is WELL AWARE of Trilogy taking investors' money at $1.00 for units with a current value of $0.63/unit - Michael West is WELL AWARE of Trilogy's failings in the Trilogy PMMMF, Trilogy Healthcare REIT, and Trilogy Pacific First Mortgage Fund - Michael West is WELL AWARE of Philip Ashley Ryan of Trilogy Funds Management Limited' breach of a client's trust, yet, in the face of that knowledge he gives Trilogy and Mr. Ryan  a free pass.

Michael West is WELL AWARE of the 56% loss of PFMF value since Trilogy took over the fund in July 2009 - and he should be particularly WELL AWARE of the massive loss suffered by the fund in its Martha Cove assets. Yet, NOTHING said by Mr. West.  The fund impairments/loss suffered at Martha Cove is no less catastrophic than the worse one could anticipate (without knowledge of the facts) from the land in the SMH article, but for the PFMF, the impairment/loss is a REALITY - it's a reality under Trilogy's management - it's not a mere spruik from Michael West.

Fairfax media choose to mock Peter Drake as it mocked Phil Sullivan - but Rodger Bacon escapes with a "no mock card" from Fairfax.

I would have thought that fair and balanced reporting is an essential plank of media responsibility - I would have thought that reporting a lop-sided, biased, one-eyed view of an issue would be avoided like the plaque by Fairfax, but sadly, it is not the case with Mr. West's article and others.

I don't know if SMH's "CBD" is still being carried by Fairfax, but one thing for sure is, the ONE-EYED REPORTER ICON seems to me to be more apt for Mr. West's column, than Mr. West's facade:
http://www.smh.com.au/business/telstra-player-not-so-clued-up-on-optus-20091013-gvp8.html

Investors in a number of LM funds are off to a meeting next week, and the media has the potential to influence the vote - to my mind, that influence carries with it a responsibility to report in a fair and balanced way, not to take a lop-sided one-eyed view of the issues members of the fund will be presented with.

To my mind, in the circumstances, Michael West should have disclosed Trilogy's past to investors and called for a wind up of the LM funds by a liquidator - he didn't - and for that, he's shown his bias, and given us a tiny glimpse into why we are becoming increasingly skeptical of the media.

We came across another article in relation to a PFMF asset last night.  The fund had an asset at The Entrance, NSW.

The Fund's asset at The Entrance sold for only $1.2m:
http://www.foxwood.com.au/ourSuccess002CoastRetail.html

11 shops at just over $100k each ... "all in one line"

At Martha Cove, in April 2011, Andrew Griffin defined a fire sale thus:
http://www.moneymagik.com/fire_sale_defined.mp3

See Annexure A - Table B in the following Fund RG 45s:

NSW - $4,582,739 (Fund RG 45 - 29 February 2012)
http://moneymagik.com/PFMF_RG45_29_February_2012.pdf

NSW - $0m (Fund RG 45 - 30 September 2012)
http://www.moneymagik.com/PFMF_RG45_30_September_2012.pdf

LOSS from 29 February 2012 = ($4,582,739 - $1,200,000) PLUS management fees, agent's commission and other costs, receiver & managers fees and charges, and all other expenses.

That's a $3,382,739 LOSS from an asset valued by Trilogy at $4,582,739 (plus agent's fees and charges, management fees, receiver and manager fees, and all other fees and charges)!  Take a look at my previous posting about Martha Cove, the write down is ENORMOUS.  Under Trilogy, the LOSS at The Entrance was about SEVENTY-FOUR PERCENT - and, as I understand it, the sale was in APRIL, less than TWO MONTHS from the most recent valuation as at 29 February 2012!

Would we have known about this loss if it wasn't for the agent's spruik? No, we would NOT have.

and there's more about yet another asset Trilogy is managing, but I'll leave it for later - hopefully others will opine as to the issue of media bias and the factual issues on which LM fund members should decide the outcome of the upcoming fund meetings (which as I understand it, and contrary to Michael West, do not relate LM's "flagship" fund).


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## ASICK (27 October 2012)

If all of the foregoing isn't a shock to you, then try this one:

The fund has a major asset in "Woodgrove" at Wakerley, Manly, just south of Brisbane.
http://www.woodgrovewakerleymanly.com.au/contact-us/

Trilogy's been manager of the PFMF for OVER three years.

Try the contact  number 07 3890 7545: seems the phone's  been disconnected!

And, extraordinarily, as disclosed on the website, they've only sold ONE house:
http://www.woodgrovewakerleymanly.com.au/masterplan/

Could this be yet another reason why I think Trilogy hasn't got a clue?

and that isn't all - Southern Cross Constructions (NSW) Pty. Ltd. has collapsed which may affect Southern Cross Constructions (SE Qld) Pty. Ltd., a company which has done (or is doing) construction work at "Woodgrove" - Each of the two companies appear to be associated:
http://www.beanmedia.com.au/profiles/Lindsay Bennelong.pdf (see bottom of page 4)

More information on http://www.moneymagik.com/


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## ASICK (29 October 2012)

*TRILOGY - THE "CADBURY" OF THE MIF BUSINESS*

Ok, it's not a "glass and a half", but it IS a "Month and a half" - Here's an up-to-date report on the  sale of the 11 shops at The Entrance (PFMF assets)

1. The value as at 29 February 2012 (the only NSW fund asset - Annexure A - Table "B")
$4,582,738
http://moneymagik.com/PFMF_RG45_29_February_2012.pdf

2. A receiver/manager had been appointed - separate costs not disclosed.
http://www.balmaintrilogy.com.au/pdf/BTI 4834 Asset Review Letter.pdf
(see asset 16, page 8)

3. The shops were sold "in one line" on 12 April 2012
http://www.moneymagik.com/the_entrance_in_one_line.php

4. At Martha Cove in April 2011, Balmain Trilogy had defined a fire sale as:
http://www.moneymagik.com/fire_sale_defined.mp3

5. The selling agent disclosed on its website that the assets were sold in one line for $1.2m
http://www.foxwood.com.au/ourSuccess002CoastRetail.html

*6. LOSS = more than 74%, or $3,382,739 + management fees, agent's commission and other costs, and other expenses in a MONTH & A HALF!!!*

I wonder how many funds out there have lost OVER 74% of value on the sale of an asset  in a MONTH & A HALF?

Now, who was the winner? Of course it was Trilogy (and Balmain Trilogy) - because management fees are calculated on gross asset values (of course the value disclosed in the RG45 is only the net asset value (with estimated disposed costs and perhaps other things already subtracted)).

I'm sure the Receivers made a pretty penny - (PKF? - who, by the way, who was commissioned by Trilogy to write the so-called "Expert Report" for the meeting of members of the PFMF dated 1 September 2010) -as did Foxwood, who have been commissioned by Trilogy sell assets all over the place without having a physical presence in all those places - Martha Cove (Vic), The Entrance (NSW), Wakerley (Qld) .. and more? see my previous posting)


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## Irishdan (29 October 2012)

I agree Asick the reporting is onesided. That said however, the lack of commentary by the Gold Coast Bulletin of any of the issues or indeed any of the Newslimited press is equally astounding, given Qld is the epicentre of these disasters (LM and Trilogy)
I wonder about how much of the writedown in values in the Trilogy funds can be attributed to an overstatement of the value by the previous management and how much is attributable to further market downturn in the ensuing period.

Also whilst I agree re the apparent bias in the Fairfax reporting, the facts are that Drake has not delivered on any of the recent statements made by Lm re their funds and disclosure

1. 2012 Financials - Still not publshed

2. BIS Shrapnel asset review - Still not to hand

I note that a property they recently sought expressions of interest on reached around 35-40% of the value of funds lent by LM against the property. This would be in line with the losses racked up in the first pacific fund. I wonder what the property would have realised 2years ago if Drake had taken his medicine then rather than continue to try and save his primary income stream.

On the topic of the Farifax article, the interrelated lending exposed, if true is an absolute disgrace given the continued bleatings by LM that their was minimal related party lending in their portfolio


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## ASICK (29 October 2012)

Great to see you back IrishDan.

I'll respond to your comment one part at a time since there's a number of issues at play.

"I agree Asick the reporting is onesided. That said however, the lack of commentary by the Gold Coast Bulletin of any of the issues or indeed any of the Newslimited press is equally astounding, given Qld is the epicentre of these disasters (LM and Trilogy)"

I guess you meant "(LM and CITY PACIFIC)" since they are and were the original funds.  I've never thought too much of Nick Nichols and the Gold Coast Bulletin, so in agreeing with you, I merely restate my skepticism of media in general, and Fairfax in particular.

"I wonder about how much of the writedown in values in the Trilogy funds can be attributed to an overstatement of the value by the previous management and how much is attributable to further market downturn in the ensuing period."

It's important to restate the fact that, at great expense to the fund, Trilogy carried out a so-called "asset review" - some time in November 2009, a new value was attributed to the PFMF - $0.48, down from City Pacific's last assessment of $0.63.  

Interestingly, Phil Sullivan pointed out that the value attributed to the PFMF as at 1 July 2009 was actually a value assessed at a time after Trilogy had managed the fund for about five months - so, in fact, it's fair to say that City Pacific's loss could have been only $0.37 (the last value assessed by City Pacific as at 30 June 2009), and not the value $0.52 (as assessed by Trilogy as at some time in November 2009).

So, how much can the value of write down be attributed to City Pacific over valuing since 1 July 2009?  The answer is a simple NONE. 

The next point you raise is how much could be attributed to the market?  How would anyone know? But if one was to attribute the whole of the loss to the market, then one would have to likewise put LM within the same protection of market losses - after all, it would be quite hypocritical to shelter Trilogy within market losses, yet blame LM.

Trilogy's value of the PFMF has been progressively wrong for every single year - and the losses within the PFMF in the last two years have been extraordinarily high.  Take a look at the retail shops at The Entrance - over 74% loss in less than two months - would you attribute that to the market?

How about Martha Cove? the valuations for that assets seem so remote from the market that they may as well have been made by a monkey tossing picking balls out of a lotto number deciding machine.

How about using a real estate agent without local representation?  How about an advertised phone number which doesn't answer? How about promoting the sale of only one house in large estate?  How about a house sitting down at Martha Cove for months on end, a house which is clearly overvalued to the local market?

And there's yet another which I'll post about later - a total of $32m lost.  I'd be pleased if you'd respond with your view about who is responsible for how much of each part of the loss.

The simple reality is that All values of individual assets have been re-assessed by Trilogy NOT by City Pacific.  Remember,  Trilogy have been managers of the fund for over three years and they re-assessed the value as at 1 July 2009, over THREE years ago!

"Also whilst I agree re the apparent bias in the Fairfax reporting, the facts are that Drake has not delivered on any of the recent statements made by Lm re their funds and disclosure

1. 2012 Financials - Still not publshed

2. BIS Shrapnel asset review - Still not to hand"

I agree with you here too - however, the BIS Shrapnel asset review is now passe (as I understand it), because there's no split in asset (sell/hold).  It's a great concern that the 2012 financials aren't published, but we're all aware that the losses are going to be significant - LM has foreshadowed losses - we know they're coming.

Whether intended or not, the failure to provide up-to-date figures will protect LM against any backlash from any woeful outcome for the fund in 2012.

"I note that a property they recently sought expressions of interest on reached around 35-40% of the value of funds lent by LM against the property. This would be in line with the losses racked up in the first pacific fund. I wonder what the property would have realised 2years ago if Drake had taken his medicine then rather than continue to try and save his primary income stream."

Well, actually, that might have in line with City Pacific, but that was OVER THREE YEARS AGO!  Trilogy lost a further 56% of what remained after City Pacific (if we say that City Lost 52%).   

If LM assets dropped to $0.50/unit, they'd be about twice as well off they PFMF members are under both City Pacific and Trilogy - and if we look at the PFMF outcome for its major asset at Martha Cove and the sale of the retail shops at The Entrance, LM investors are streets ahead (if there's a pun in there somewhere, none was intended).

"On the topic of the Farifax article, the interrelated lending exposed, if true is an absolute disgrace given the continued bleatings by LM that their was minimal related party lending in their portfolio"

I'd like to see LM's response to this one - I've lost trust in Michael West.   

I'm not an apologist for LM, I'm more interested in seeing investors gain what Alex Jones (of www.infowars.com) would say would be "full spectrum" information (not exactly said, but the idea's there anyway).

I can clearly see that LM has a lot of problems, and I'm sure that investors haven't seen all - I agree 100% with you that LM should be replaced - but NOT with Trilogy.  To my thinking, replacing LM with Trilogy is the worse thing that could happen. 

I have no doubt that the fund should be wound up by a receiver, but in the absence of litigation (in the form of a application before a court), that simply can't take place.  The laws relating to windup are so woefully insufficient.

One thing is for sure, if investors oust LM, they won't oust Trilogy at some later time  - investors will be sapped, and regardless of how the fund might travel with Trilogy, they will be stuck with them - that, in a nutshell, is the problem.  Investors would be much better off to stick with LM and put more and more pressure on LM for a better outcome (it that's at all possible).


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## ASICK (29 October 2012)

*FEEDER FUNDS: SEE THROUGH VOTING*

http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-trilogy-see-through-voting-26-10-12.pdf

Well it seems that LM is thinking.  Amending the funds' constitution to allow see-through voting in the LMFMIF is a smart thing to do, because in one hit, LM has taken away Trilogy's power to vote in the LMFMIF - now individual units will vote - so even if Trilogy wins the feeder funds, it will NOT gain the power to vote in the LMFMIF.

I have to confess, I admire LM's tenacity, a tenacity which has served to hamper Trilogy's greedy grab.


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## ASICK (29 October 2012)

*Trilogy at PFMF Asset 32 "Mariners Cove"*

Two for you IrishDan.  The following excerpt relates to a marina on Broadwater (Gold Coast).  The facts are as Trilogy as outlined in the following excepts - well, some of the fact anyway:

http://www.balmaintrilogy.com.au/pdf/BTI 4964 UnitholderUpdate.pdf

Trilogy explains that the total impairment to the PFMF was $32m in the following excerpt:

"Asset 32 (Mariner’s Cove)
As detailed in the July 2011 Asset Review update, the Fund as second ranking mortgagee continued to be influenced by the desires of the first ranking mortgagee to realise the asset (the Property) in its current state. As such, following a demand by the first mortgagee, an Expression of Interest campaign was conducted.
Based on the results of that campaign, the first mortgagee required a sale to occur and a contract was exchanged for $13 million in October 2011. The Fund in its subordinated second ranking position had no other choice but to follow the direction of the first ranking mortgagee. With the Fund unable to control the situation, a further impairment of $14.4 million will be incurred resulting in a total loss on that asset of $32 million."

Yes, how true - second mortgage holders have no other choice but to follow the direction of the first ranking mortgagee - and true, on the face of it,  the fund was unable to control the situation - Even Mr. Bean would see that in many cases second mortgages can be like oral contracts, they're not worth the paper they're written on.

However, please pay particular attention to the excerpt's last sentence (which I've underlined).

Then comes the reasoning:

"Why was the Fund placed in such a limiting position?
• In April 2008, City Pacific Limited (City Pacific) granted a $12 million loan facility to a company called SP Marina Pty Limited (SP Marina) to assist with the purchase of Mariner’s Cove;
• SP Marina was 50% owned by City Pacific;
• The Fund did not have first ranking security. First ranking security was to the benefit of an unrelated lender who advanced $20 million;
• City Pacific was apparently of the opinion that it was in the best interests of Unitholders to make the advance to a related party (settling on 4 April 2008) notwithstanding that:
a. only days earlier in March 2008 City Pacific had frozen redemption payments to Unitholders; and
b. the Fund had an outstanding debt owing to the CBA of over $217 million.
• In mid-2008 City Pacific ceased paying distributions but still managed to find another $4.9 million to advance to SP Marina in December 2008;
• As part of arranging this loan from itself (as responsible entity) to itself (as a 50% owner of SP Marina) City Pacific charged a fee of $1 million; and
• The eventual sale of Mariner’s Cove was at the discretion of the first ranking mortgagee. Neither Balmain Trilogy nor Trilogy had any capacity to influence the outcome."

Now, please pay particular note to the excerpt's last sentence (which I've underlined).

Both the (highlighted) last sentences speak to the same issue, that neither Trilogy (nor Balmain Trilogy) could not influence the outcome - that is, neither of them could influence the PFMF's loss of $32m in relation to asset 32 (ironic isn't it? asset 32, $32m  -  a nice memory aid).

Okay, what Trilogy (and it's part-construct Balmain Trilogy) doesn't tell readers is that the loan was only $17m as at 1 July 2009.   Now, that's important - because right at this moment, Trilogy (and it's part-construct) had all the capacity in the world to influence the outcome, because if they thought the loan was worth "Jack-squat" then the loan could have been written off there and then - but Trilogy (and its part-construct) didn't do that - they kept it alive.  

So, if Trilogy kept it alive, and kept the value (or substantive part of the value) as part of the PFMF's assets after the expensive so-called "asset review", then how is it possible to say that City Pacific is responsible for that part of the loan not written off by Trilogy?

But look at what Trilogy says, "a further $14.4m impairment will be incurred" - and there was nothing they could do about it - do you believe that IrishDan?

If the loan was deemed to a dead loss by the asset review, then the $17.6m ($32m - $14.4m) original loan would have reduced the PFMF's value way back there as at 30 June 2009, and of course, Trilogy's fees would have been reduced. Fund unit price would have been reduced.

Trilogy managed to plug another $14.4m into the loan AFTER taking over as manager and then, when the whole thing could  no longer be sustained (because the first mortgagee has knocked off the asset), the original loan and all else was lumbered onto  City Pacific's corporate "shoulders" in what I see as a gigantic buck-passing exercise.  As a consequence, unit price was bumped as were Trilogy's fees - of course, only Trilogy won in the end, because investors lost a total of $32m.

Nice work if you can get it, right?

For the most part, take over a loan, pump it up with accruals, make fees, and then when it all falls apart, blame City Pacific.

Now, my first question to you IrishDan, who would you blame the losses on?

To my mind, if, as a consequence of the asset review, the loan was deemed to be bad, it should have been fully impaired as at 30 June 2009 - in which case City Pacific was responsible for the loss. 

However, If the loan was deemed as mostly/partly good and accruals were posted to the loan, then that is an altogether situation for which City Pacific would not seem to have much responsibility for the loss.

IrishDan, secondly, do you think that Trilogy (and its part-construct) had the  capacity to influence the outcome in relation to PFMF asset 32 at Mariners Cove?


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## Irishdan (29 October 2012)

Hi Asick,

I wasn't trying to defend Trilogy at the expense of City or indeed LM. My Point is that they are all sharks. There is no way that any investor is going to get anything out of this regardless of whether Trilogy or LM win the right to conduct the next round of incompetence


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## ASICK (29 October 2012)

*Trilogy & its RG 45 for the PFMF*

http://www.balmaintrilogy.com.au/pdf/BTI5130_PFMFRG45_OCT12.pdf

I don't know if readers know too much about the RG45 disclosures? RG45 is a mandatory disclosure (which LM hasn't given members in the LMFMIF but to my mind should have done so a long time ago).

RG45 disclosures can be very interesting, especially Annexure 1 Table "H".

Loans are slotted into LVR ranges - the lower the LVR, the lower the risk - and visa versa.

Since the value of PFMF loan security assets are well below the value of the original loans, both LVRs and loan values are calculated with respect to loan security asset values.  The value of each loan is therefore arbitrary.

LVR = (Loan Value / Value of security) * 100% 

Let's say we have a security asset valued at $10m, what sort of loan could we assess that is likely to be recovered? Say we choose $9m.  Then the LVR = ($9m / $10m)% = 90%.  Would that be high risk or low risk? I'd say in today's market, that'd be high risk and recovery in full is very much unlikely.

Say we choose $8m.  That's an LVR of 80% and risk lowers, but it's still high.  Full recovery of the loan is probably not likely.

Say we choose $7m.  That's an LVR of 70% and risk moves to a place where the loan is more likely to be recovered in full.  It's not guaranteed, but it's more likely.

So, working backwards from a security asset value, the value of a loan is arbitrary - a high (more crowd pleasing) value is attained by using higher and riskier  LVRs.  A lower (more crowd depressing) value is attained by using lower and less riskier LVRs.

Where is the real value? Who knows? but the reality is that recovery of the full amount is more likely with lower LVRs, but it seems Trilogy likes to take the optimistic (crowd pleasing) path to high LVRs.

Right now the PFMF's value is $0.1225/unit, but I would add with 80% of the fund unlikely to recover full loan value (see Table "H" where over $90m of the fund's loans may fall between 90% - 100% LVR)

If Trilogy was to move the loans from the 81% - 100% ranges to the 61% - 70% range, the unit price would drop considerably, but the chances of actually recovering that amount would be more likely.

I'm not suggesting Trilogy has done anything wrong in the way it presents the accounts - I'm simply stating the unit price must be read in conjunction with the risk disclosed in LVR Table "H".   This is why I say that the unit price in a badly damaged fund  is not an indicator of anything tangible - it's a useless measure unless someone is actually willing to pay you that price - if they're not, it's worth nothing.

Trilogy has always taken an optimistic view of the fund when compiling LVR tables - this mechanism has allowed higher unit prices to be disclosed because so much of the loans fall into the higher LVR ranges (as disclosed in the fund various RG45s), but because of the increased risk (higher LVR), the loan values eventually are impaired as value dissipates out of the fund - the downward pressure in security asset values force LVRs upwards with value necessarily having to be expelled from the fund.

It might be that PFMF loans may have to be graded to the 51% - 60% range for complete recovery - that would mean a massive impairment in the PFMF - but while I can see the loss coming, I can't see Trilogy bringing the loans down into those LVR bands to show, what I regard  is a more realistic value of the PFMF.

My view? Always read unit price in conjunction with RG45 Table "H" - the PFMF is severely overvalued at $0.1225.


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## ASICK (29 October 2012)

Irishdan said:


> Hi Asick,
> 
> I wasn't trying to defend Trilogy at the expense of City or indeed LM. My Point is that they are all sharks. There is no way that any investor is going to get anything out of this regardless of whether Trilogy or LM win the right to conduct the next round of incompetence




Hi IrishDan, 

I'm sorry that my post gave that impression  - it wasn't intended that way but I can see that it might. I've always seen you as impartial and was truly interested in your opinion.


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## ASICK (30 October 2012)

*Trilogy's Latest*

Here's the latest from Trilogy:-

http://www.trilogyfunds.com.au/site...EB Up-Date  to LM Investors  Advisers _2_.pdf

Some comment:-

“the asset review” - to my mind, a waste of money.  Want proof? The fact that the PFMF lost 56% of its value since the “asset review” is, to my mind, proof enough.  If any entity was given an advantage, it was the manager – a bag full of fees for the manager with year-on-year losses for investors.  

“legal review of the current RE's actions” (see below).

“transparency and regular communication of real information to investors” - here's an example of what Trilogy has to offer – spruiks and disappointments:
http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/litigation.php

“selling up the assets – no fire sales”
again – Trilogy defined what a fire sale was (Martha Cove, April 20110
See:
http://www.moneymagik.com/fire_sale_defined.mp3
http://www.moneymagik.com/ [in relation to the fund's asset at The Entrance]
http://www.moneymagik.com/martha_cove_ad.php
http://www.moneymagik.com/the_entrance_in_one_line.php

“date for accounts” - How about the PFMF in 2010? – 1/11/10 – a month late – oppps .. see .. it does happen from time to time. 
https://connectonline.asic.gov.au/R...ic first mortgage fund&searchType=OrgAndBusNm

“based on reports, Trilogy thinks the unit price is about $0.60” - if it's $0.60, then subject to the RG45 disclosing no large amount of $$$ in the high LVR ranges, $0.60/unit is a good outcome in the circumstances – a far better outcome than has been achieved by Trilogy in the PFMF.

“licence” - Trilogy is confidence but applies to ASIC just in case, but says it has some good arguments in any event. Now, that's confidence!

“Pacific Fund” performance - interestingly, Trilogy doesn't use the full name of the fund. It might be more difficult for LM fund members to do a google search for the “Pacific Fund” and come up with the Trilogy Pacific First Mortgage Fund.  

Trilogy says, “The loss suffered by investors is as a result of the poor loans made by City Pacific which are now subject to legal action being undertaken against the previous RE board and credit committee” - really? Most of the losses suffered in the claim  were included in the initial reassessment of the fund's value (asset report) and formed part of the initial write-down to the new value of $0.48 (from $0.63) as at 30 June 2009 – those are the bulk, if not all of the losses spoken to in the claim, NOT the ongoing losses in the PFMF under Trilogy's management (loss of 56% in fund value).

As to value, here's  Balmain Trilogy's Andrew Griffin at the investor information session at Sydney in November 2010:
http://www.moneymagik.com/the_hopeful_recovery.mp3
and down at Martha Cove in April 2011:
http://www.moneymagik.com/keep_on_turning_in.mp3

Trilogy spruiked a $295m return to investors by October 2012:
http://www.moneymagik.com/295_mil.mp3
(note: the $295m was not intended to include the bulk of the fund's assets at Martha Cove)
http://www.moneymagik.com/re_cash_balance.mp3

The last time Trilogy spoke to the $295m was in August 2011 – they haven't mentioned it since.

What has Trilogy delivered to date? $0.875 * about 887m units = about $77.6m with a fund value of about $109m gives a  total value = $186.6m.  

The spruik was $295m + about $88m = about $383m, the reality $186m (and the game's not over yet!).
http://www.moneymagik.com/yardy_yardy_yah.php

As previously posted, Trilogy had (just as its proposing for the LMFMIF) as the fund's expense, carried out an “asset review” and had revalued all of the fund's assets – this asset review also effectively (for the most part) limited the loss in the fund caused by City Pacific to the loss as determined by the new assessment of the value of the assets.

The losses (calculated as at some time in November 2009) were applied as at 30 June 2009, and that being the case, set City Pacific's part of the loss for the fund at $0.52/unit (there were about 887m units in the fund at that time) – so the loss (Citypac as manager) equates to about $461m.

As previously posted, Trilogy started off by suing five directors, then found that one of them had died and had to discontinue against the dead man.
http://www.moneymagik.com/trathen_the_disappearing_man.php

Clearly the suit was directed towards insurance since it's quite unlikely that the ex-directors would have a lazy $60m laying around.  Now that the suit is against four, that's make the claim about $48m – but there's a problem – Ex Citypac CEO (and one of the respondents in the Federal Court) Phil Sullivan alleges  there's no insurance because of Trilogy's failure to fulfill an essential clause of the indemnity insurance – oppps!

Don't forget that Trilogy said that there were claims for “more than $300m, more than enough” (or words to that effect), but that petered away to a “hopeful $100m”:
http://www.moneymagik.com/twas_300.mp3”

Litigation funder IMF funded the public examination of the ex-Citypac directors and others but wasn't interested in funding the litigation against the directors – now, why could that be? To my mind, only because there's no money in it. After all, if there were $$$$ to pursue, IMF would be in there “boots and all” because that's what they do: they don't waste shareholders money on a folly.

Trilogy hasn't mentioned any of these things. Trilogy hasn't mentioned that there's a cross-claim by the respondents claiming that the fund is liable for the respondents costs. .. oppps again.
https://www.comcourts.gov.au/file/Federal/P/NSD604/2012/actions

Trilogy hasn't told members of the PFMF that the PFMF is paying for the litigation – readers might recall that Trilogy told members of the fund that IMF would fund the litigation and the benefits to the fund of potentially giving up 26% of the take:
http://www.moneymagik.com/litigation.mp3

Trilogy also told members that  IMF would fund any litigation Trilogy wanted them to – which now seems a fanciful proposition:
http://www.moneymagik.com/balmain_in_charge.mp3

After all the spruiks, IMF is NOT funding the litigation – the fund is.  There now only four, not five respondents – there's a possibility of  no insurance – and there's a cross claim for indemnity for legal costs by the respondents.  

Now, what else didn't Trilogy speak to?

The majority of PFMF losses while Trilogy managed the PFMF and
The failure to return the targeted $295m:
http://www.moneymagik.com/yardy_yardy_yah.php
The Trilogy Healthcare REIT:
http://www.moneymagik.com/analysis_REIT.php
The Trilogy MMMF:  
http://www.moneymagik.com/more_on_Trilogy_PMMMF.php
Philip Ashley Ryan of Trilogy Funds Managements:
http://www.moneymagik.com/trilogy_more_on_ryan.php


----------



## Irishdan (30 October 2012)

ASICK said:


> Hi IrishDan,
> 
> I'm sorry that my post gave that impression  - it wasn't intended that way but I can see that it might. I've always seen you as impartial and was truly interested in your opinion.




Thats Fine Asick, No harm done.

I am impartial in these matters and on the issues you raise regarding Citi Pacific and subsequently Trilogy/Balmain Trilogy I must admit I did not follow it as closely as I have LM because I did not have anyone seek my advice who have or rather had exposure to these funds. Suffice to say I have looked at all of the information you have provided and it would appear that they are no better at delivering on their grand statements than indeed the Management of LM have been, or for that matter equititrust, banksia, Macarthur Cook, MFS,ACR any number of "mortgage funds" or "income funds" the majority of which were Gold Coast based.
My issue is with this whole sector and the level of disclosure about risk. All of these type of investments were promoted as "safe" or alternatives to Term Deposits. With Lm I have had continued dialogue since 2009 and have said for three years that it would indeed get to this point and that it should have been liquidated back then. 

LM is just the one in my sights at the moment but they are no better or worse than any of the others listed,in fact they all have the same stench about them 

Keep up the good fight my learned friend...


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## ASICK (30 October 2012)

Irishdan said:


> Thats Fine Asick, No harm done.
> 
> I am impartial in these matters and on the issues you raise regarding Citi Pacific and subsequently Trilogy/Balmain Trilogy I must admit I did not follow it as closely as I have LM because I did not have anyone seek my advice who have or rather had exposure to these funds. Suffice to say I have looked at all of the information you have provided and it would appear that they are no better at delivering on their grand statements than indeed the Management of LM have been, or for that matter equititrust, banksia, Macarthur Cook, MFS,ACR any number of "mortgage funds" or "income funds" the majority of which were Gold Coast based.
> My issue is with this whole sector and the level of disclosure about risk. All of these type of investments were promoted as "safe" or alternatives to Term Deposits. With Lm I have had continued dialogue since 2009 and have said for three years that it would indeed get to this point and that it should have been liquidated back then.
> ...




I well understand your feelings, in fact I empathize with you.  I know well of Trilogy's m.o.   I was thinking about what I would say as to why members shouldn't support Trilogy and stay with LM when LM is far from a star performer.   

Having given it some thought, I would say that at least with LM, members can blame LM and LM can blame none other than the market ... however, with Trilogy, Trilogy can blame LM, it can build a straw man out of Peter Drake .. promise litigation .. promise asset reviews .. years will go by ... and if things go pear-shaped, then they'll bring out Drake (aka the LM pinata, or strawman) or LM or the market, but nothing will be Trilogy's fault.

Members will tire and have no interest in replacing Trilogy even if things get so bad they couldn't get worse.  I understand how the members of the LM funds feel, but to think that Trilogy will perform better than LM is, in my opinion, no more than a dream.

We thought that getting away from City Pacific was so important that we could overlook Ryan's breach of trust, but if we'd had out time over again, and if Citypac had "capitulated" (as Trilogy says of LM), then I'm sure many of us would have stayed with City Pacific. 

Trilogy mocks LM's meeting members' demands, but for my part, I think it was wise of LM, and it's a very good reason why members should see that LM has the good sense to meet members' demands in such a stressful environment  (albeit with pressure from a predator).

I recently posted that even one of Trilogy's most ardent supporters is no looking to see a change in management - it took three years, but after the battering the fund has taken under Trilogy's management, he wants a change.  Given that he was one of the small number of members who brought Trilogy into the fund, that's quite a change.

I also understand that what is posted here is unlikely to influence the outcome of the vote which, for the most post, is probably complete, but it's important for members to know about Trilogy - know not just what Trilogy wants to tell members, but what Trilogy hasn't told members.

I will oppose Trilogy everywhere I'm able to - I understand that by opposing Trilogy that I obviously assist LM, but when I take everything into consideration, I think that is the right thing to do. 

If I've two targets, I'll look to "shoot' the one I fear the most - and for me, that's Trilogy.

As to keeping up the good fight, that I will, my learned friend, because if we ignore the mistakes of the past, we are bound to repeat them.


----------



## Irishdan (30 October 2012)

a note just received from an adviser following a phone hookup with Peter Drake

_Recently we have seen an unusually high level of correspondence from LM Investments regarding their closed mortgage funds, this has been in response to an approach by Trilogy Funds Management to take over as Responsible Entity (manager) from LM for the LM Currency Protected Australian Income Fund and the LM Wholesale First Mortgage Income Fund, two feeder funds of the LM First Mortgage Income Fund.

You may have already received paperwork from Trilogy asking you to vote yes to such a change. At this point we  yet to make a decision on which way it will recommend that clients vote.    Please note that if you are invested in LM within a BT Wrap portfolio, BT Wrap will be making a decision on behalf of investors, of which you will be notified. I spoke to BT Wrap yesterday and they have yet to make a decision on whether to vote or abstain. 
I attended a conference call on Tuesday held by LM around “LM’s strategy for the closed mortgage funds versus Trilogy” At this call Peter Drake, LM’s CEO relayed the following information.
•         LM will start paying distributions that are owed to investors in November 2012 but they could not give an indication as to what amount or how consistent this distribution would be. 
•         They would expect that in 12 – 18months investors will get back 50% of their capital based on the unit price at the time, not the original $1 per unit. 
•         The remaining 50% of capital to be returned to investors within 3 – 4 years based on the unit price value at that time. 
•         They have reduced the management fees in the fund down to 1.5% per annum in order to match the fees announced by Trilogy Funds Management. 
•         They are awaiting a BIS Shrapnel report on the underlying investments in the fund which should be out in ‘the next few weeks’. They believe that this will price the units in the fund at approximately $0.60/unit, which is a drop from the current value of $0.73/unit. 
•         The loan owed to Deutsche Bank which is currently at $33 million will be repaid by March 2013. 
At this teleconference it was also confirmed  by LM that they will no longer be moving forward with splitting the fund into two parts. This was originally announced by email on October the 22nd.  LM’s reasoning for this decision is as follows: “This decision was made following our last rounds of meetings with advisors and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the fund.  This does not change our general value add strategy and asset sell down approach.” This means that as they sell assets in the fund the capital will be returned to investors as per the timeframes detailed above. 
As more information arises we will keep you informed. If you have any additional questions on this matter please contact your adviser.
Kind regards_

It is another attempt to buy time by Drake. I am willing to bet that 
1)the distributions in November are insignificant if they materlialse at all
2)BIS Schrapnel asset review report and financials will not be available prior to the vote
3) unit price is below 60c (my bet is around 50 at best)


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## ASICK (30 October 2012)

Irishdan said:


> ... “This decision was made following our last rounds of meetings with advisors and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the fund.  This does not change our general value add strategy and asset sell down approach.” ...
> 
> It is another attempt to buy time by Drake. I am willing to bet that
> 1)the distributions in November are insignificant if they materlialse at all
> ...




Actually, I'm quite surprised that there's any talk at all about an income distribution - I would have thought the only talk would have been about capital redemptions !

Even $0.50/unit is fairly good if that's the case - mind you, I've learnt that the value doesn't matter - it's only what comes back that matters.

I'm pleased to see that the strong preference NOT to see the assets split.  Managers in such damaged funds attempt to split investors by one mechanism or another in order to keep the income stream from the fund going for as long as possible.

Darn, that's another subject I hadn't turned my mind to - Trilogy's meeting of members of the PFMF of 1 September 2010.   Really, when it comes to Trilogy, sometimes I think it's an neverending story.

Here's an appetizer (starting at "Victims of the sorry City Pacific saga ... "):

http://www.smh.com.au/business/bonus-racket-twice-paid-for-a-single-job-20100830-1431p.html

So much more to discuss about Trilogy (and Balmain Trilogy) now ... the meeting was such a blast.

Full of hopes & full of dreams .. 

http://www.youtube.com/watch?v=ZHS73xXV-nw&feature=related


For my learned friend:
http://www.youtube.com/watch?v=7FiOmiiX48I


----------



## ASICK (30 October 2012)

*WOW!*

http://www.lmaustralia.com/Downloads/Unitholder-letter/adv-trilogy-key-points-29-10-12.pdf


----------



## ASICK (31 October 2012)

It's always nice to be back in Australia. Mind you, it's been nice in Thailand these last couple of weeks, but unanticipated car troubles in Chiang Mai slowed me down a bit.

Back to Australia, and back to LM and Trilogy with one day out from the meeting.

Here's the latest news:
http://www.moneymanagement.com.au/n...gy-claim-insto-support-in-bid-for-lm-feeder-f

Putting the spruiks aside, I believe this excerpt:
"Trilogy said it had received early support for the takeover bid. It said despite the low response rate of less than 20 per cent, which was due to mail delays particularly from New Zealand, the votes received reflected an 85 per cent approval rate for the Trilogy takeover."

I'd reckon that would be the case - after all, that'd be driven by investor discontent with LM - but once investors get a decent sniff of the real Trilogy  then I'd say once investors factor in Trilogy's failures, Trilogy "dream run" will grind to a halt (at least I hope it does).

For my part, I can see the problems with LM, but I can worse with Trilogy - this isn't a choice between the best, it's a choice between two, one (Trilogy) in my assessment, much much worse than the other.

I'd hate to say "I told you so" - but, by golly I will if Trilogy takes over the funds and they crash as did the PFMF.  There is no way I'd want other members of any other fund/s to feel so badly about a manager as I do about Trilogy.  No investor needs to feel he/she is in a hopeless situation - but that's how I feel about my investment in the PFMF with Trilogy as manager.

LM is not the best manager, but it's the best on offer on 1 November 2012.

It seems institutional investors will sway the vote to Trilogy in the wholesale fund.


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## ASICK (31 October 2012)

*Trilogy at Wakerley - PFMF Asset 18*

Recent photos from Wakerley

(after 3 and a half years of Trilogy as manager)
Photos taken sometime last week

Photo 1 - http://www.moneymagik.com/wakerley_1.jpg
Photo 2 - http://www.moneymagik.com/wakerley_2.jpg 
(as I understand it, the only advertising on the estate)
Note the advertising - the phone number has been disconnected! 

More on Wakerley ---> Wakerley (asset 18) http://www.woodgrovewakerleymanly.com.au/contact-us/
Supposedly, only one property sold: http://www.woodgrovewakerleymanly.com.au/masterplan/

Try ringing the number on the Foxwood plan of the Wakerly project (DISPLAY HOME OPEN SAT TO WED 12pm to 4pm PHONE: 07 3890 7545)  Anybody home? I called - it's been disconnected - did you call?

Don't believe the photos? Go and have a look for yourself!

www.moneymagik.com will be updated with more pictures taken last week  (hopefully this evening)

Good luck for those in any LM who want Trilogy as a manager ...


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## ASICK (1 November 2012)

*Trilogy at the PFMF's asset at Wakerley*

I should point out that all construction shown was carried out BEFORE Trilogy took over the fund.  No work has been carried out on the assets (as shown) under Trilogy's management of the PFMF.  The construction work has been left to the elements.  The ripped sarking, weather timbers, and unkept landscape lay bare as a testament to Trilogy's management of the asset.

www.moneymagik.com has been updated to 9 photos (taken last week by a member of the fund).


----------



## ASICK (1 November 2012)

*Trilogy at the PFMF's asset at Wakerley*

I took a drive down to PFMF asset 18 at Wakerley this morning.  I found that all completed houses/duplexs have been sold.  I spoke to a group of three owners and not one of them was happy. They all complained about deflects with their homes which were not resolved.  They also complained about the mess of the fenced area which looked like a war zone, was unkept, and contained partly-constructed houses which were severely weather-beaten.

Here's the map as I see it:
http://www.moneymagik.com/map_asset_18.jpg

Quite a number of the duplexes seem to be rented.

It's quite a mess down there.

Any updates will be posted on www.moneymagik.com

(keep in mind that it's now three and a half years since Trilogy took over the PFMF)


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## ASICK (1 November 2012)

*Did You Ever See Such A Thing In Your Life?*

http://www.youtube.com/watch?v=MfaChKSV8kg&feature=fvwrel


http://www.lmaustralia.com/Download...ult-and-business-as-usual-for-LM-01-11-12.pdf


Did you ever see such a thing in your life?

Institutions voted to impose a .5% fee on investors, a fee that investors would otherwise NOT have paid under LM! 

I guess it's not going to affect the institutions, but it will affect the investors.

Only 5 out of 237 investors supported Trilogy - The first BIG question of the day, "why so many?" - maybe the 5 were uninformed.

Now, there's stupid, and there's STUPID - the second BIG queston of the day, "is it possible to be dumber than STUPID?" - It seems that it is.

Wouldn't it make more sense to wait for a meeting of the main fund? After all, the only difference now is that Trilogy gets an income of about $350k (according to LM) it wouldn't otherwise have received, and investors will be paying that $350k, an amount they otherwise would not have paid - and the outcome for the main fund will be EXACTLY THE SAME as if the vote NEVER happened.

I hope they'll forgive me for saying it, but I think it was quite a dumb move.


----------



## ASICK (1 November 2012)

*ASIC is NOT a Prudential Regulator!*

Geez, I wish others would post.

"“Trilogy does not control any assets as it is a feeder fund of the LM First Mortgage Income Fund. And for this, they are charging investors fees equating to $350,000 for managing nothing, and for land locking investors”, says Drake."

There is no rule that says investors have to vote smart.  In fact, ASIC has warned investors that its not a prudential regulator.  ASIC will not concern itself if investors want to vote for something that causes them to lose, be it losing .5% FUM or losing all of their respective investments.

"An attending investor was dumbfounded as to how his trustee could vote on behalf of himself for a fund manager who has no control over the assets. This was compounded by the fact that if he were to stay at LM, there were no fees to be paid as a feeder fund. At the meeting, Trilogy confirmed they would now charge him 0.5%. The investor said “but wasn’t this about saying you could do it for less fees than LM?”
Trilogy did not respond."

Don't forget .. you're dealing  with Trilogy - Philip Asley Ryan is a director or Trilogy:
http://moneymagik.com/trilogy_more_on_ryan.php

Trilogy lost investors money in its Trilogy PMMMF:
http://moneymagik.com/more_on_Trilogy_PMMMF.php

Trilogy lost investors money in its Trilogy Healthcare REIT:
http://moneymagik.com/analysis_REIT.php
(also Trilogy took in $3,555,000 at $1.00 per unit when the current value of each unit was only $0.63/unit - now, that should  be ringing alarm bells, right? Remember ASIC doesn't care if investors want to give money away - ASIC is NOT a prudential regulator - let the buyer beware, right?)
(Trilogy also made sure it got Rojacan's money out by spending near $500k of investors money in order to lure other investors into the fund - Rojacan is a company associated with Rodger Bacon of Trilogy)

Did anyone really expect Trilogy to answer when confronted with the proposition that the vote was supported to afford investors a lower value of fee than with LM?  Really, did anyone?   It's business, and investors made a choice - Trilogy gets an income stream - investors pay more - simple really, isn't it?

And then there's all the losses investors in the Trilogy PFMF have lost:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

LM warned investors that they'd pay more in fees if Trilogy won - it's not as if the result come from the ether.

Now Trilogy stands to make that $350k for managing nothing except the single investment in the LMFMIF.

This'll go down as one of  the dumbest moves in MIF history - and Trilogy'll be laughing all the way to the bank.

Would I be surprised if the guys and gals down at Trilogy will be celebrating tonight ? No, of course I wouldn't - if I was them, I'd be laughing my head off.


----------



## ASICK (1 November 2012)

*PREDICTION*

My prediction is that Trilogy will come under a lot of pressure to run the fund for no more than the outgoings. In other words, Trilogy will run the fund for 0% management fees.   In my view, if there's disquiet in the feeder fund they control, it'll probably sink Trilogy's chances of having a shot at the main fund.

However, having said that, if Trilogy feels it's got no chance at the main fund, it'll probably be more inclined to continue with the application of the .5% fee.

Anyone else got a prediction?

As a note, if members called another meeting for next month and voted LM in, even the cost of a $50k meeting would save the feeder fund $300k in the first year alone  if LM is brought back as RE.


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## Mysteryman (2 November 2012)

*Re: PREDICTION*



ASICK said:


> My prediction is that Trilogy will come under a lot of pressure to run the fund for no more than the outgoings. In other words, Trilogy will run the fund for 0% management fees.   In my view, if there's disquiet in the feeder fund they control, it'll probably sink Trilogy's chances of having a shot at the main fund.
> 
> However, having said that, if Trilogy feels it's got no chance at the main fund, it'll probably be more inclined to continue with the application of the .5% fee.
> 
> ...




Thanks Asick for all your information. I may have kept quite but have been following all 174 entries.  Being an investor in the LM Wholesale First Mortgage fund through one of the platforms I am absolutely dismayed (understatement) by what has been going on with this fund over the last four years. 

The change of RE to Trilogy is the last straw especially now we will be paying 0.5% for nothing. As you say, Trilogy must be laughing. But what could we have done when we have no voting rights whatsoever. All voting rights are in the hands of our platform and I am sure they voted for Trilogy. The big question is, why would they vote for a Company with such a bad track record? There has to be something in it for them!

Calling for a meeting to switch back to LM (lesser of two .....) is not such a bad idea but how to get backing of the platforms, who after all are meant to have the interests of investors at heart.


----------



## ASICK (2 November 2012)

*Re: PREDICTION*



Mysteryman said:


> Thanks Asick for all your information. I may have kept quite but have been following all 174 entries.  Being an investor in the LM Wholesale First Mortgage fund through one of the platforms I am absolutely dismayed (understatement) by what has been going on with this fund over the last four years.
> 
> The change of RE to Trilogy is the last straw especially now we will be paying 0.5% for nothing. As you say, Trilogy must be laughing. But what could we have done when we have no voting rights whatsoever. All voting rights are in the hands of our platform and I am sure they voted for Trilogy. The big question is, why would they vote for a Company with such a bad track record? There has to be something in it for them!
> 
> Calling for a meeting to switch back to LM (lesser of two .....) is not such a bad idea but how to get backing of the platforms, who after all are meant to have the interests of investors at heart.




Thanks for posting Mysteryman - if only more members would express their views. I'm not an investor in any LM fund - I'm merely a concerned investor from another fund who's "been there, done that" (so to say).  While I'm able to post with prolixity, my money is not at risk in your fund.

I think LM has learned a valuable lesson that City Pacific wasn't willing to learn, and the lesson is that LM's management of the fund is vulnerable to a raider (such as Trilogy) because the manager has not met the concerns of investors.    Trilogy called it "capitulation", but I call it "common sense survival" - the move from the ego-driven (I think  IrisihDan raised this point, and I agree) manager-centric management of the fund to a more investor-centric mangement is one that I think investors should appreciate (with no better alternative in the mix).

Further, blame is able to be sheeted home to LM at every stage, with Trilogy, in my view, that simply would not change (blame would be still sheeted home to LM) - such an outcome is not good.

I, and other members of the PFMF, received letters from ASIC pointing out that ASIC is NOT a prudential regulator - ASIC really doesn't care about substance (outcome), it cares about form. Note the case ASIC mounted against the CBA (and settled) - the matter was about form, about ASIC's allegations that CBA engaged in an unregistered managed fund which allegedly caused consequential loss to investors.  Form is important to ASIC, substance is not.

So, I wouldn't be thinking that ASIC is going to come riding to rescue any time soon.

The better outcome would be that Trilogy runs for the LMFMIF as soon as possible so the matter is able to be resolved - say, a meeting is called within the next week or so - if not, if I was an investor in the feeder fund, I'd be looking to get rid of Trilogy.

In the PFMF, it took Trilogy nearly three years to bring suit against the ex-directors of City Pacific, a law suit which in my opinion is a real crock and a waste of the fund's money.  Even IMF wouldn't touch it, and that's after paying for the public examination of the ex-Citypac directors and others (including CBA folk).

Days turn to weeks, and weeks to months - even if Trilogy does nothing, it'll be raking in about $7k/week for SFA so there's no reason to rush into anything - however, I think that's not the case for investors themselves - time is of the essence and the matter should be resolved.

I think the platforms (as they seem to be called) must see the good sense in getting rid of Trilogy if Trilogy is unable to oust LM from the main fund - and of course, if Trilogy is able to oust LM, then the matter is moot.  The game was always about taking over the main fund - I'm surprised the platforms couldn't put just a couple of "neural connexions" together to note that there was no benefit to taking over either of the feeder funds, there was only benefit from taking over the main fund - in fact, it was plainly pointed out by LM that a Trilogy takeover of a feeder fund would result in a .5% FUM fee payable to Trilogy for that fund - do the platforms reside in a mental vacuum?

I learnt a long time ago that residing on the upper floors doesn't necessarily make companies "smart" - sometimes hypoxia strikes in such rare-air enviorments - decision making becomes fuzzy and disoriention follows - pilots have known to fly upside-down into moutains - platforms have been known to vote for Trilogy.  How much do the platforms know about Trilogy? I don't know, but they should have made it their duty to find out - Did they do that? I suspect they didn't.

I still think that Trilogy will be "forced" to manage the fund at cost - otherwise, the discontent amongst ordinary investors in the platforms will take its toll.  I'm sure even the platforms don't need the angst and will pass on the pressure to Trilogy - remember, if the platforms aren't pleased, then the end could be nigh for Trilogy, before the whole show even gets off the ground.

The next week or so could be very interesting - I think LM is quite bemused by the whole outcome, and with good reason.  As LM says, "For LM, it's business as usual" (or words to that effect - a phrase that I seem to recall).


----------



## RODENT69 (2 November 2012)

Dear all

Please be patient re this  -its my first posting, please excuse any errors I may make re spelling 

Like other Investors in the LMWSFMIF  I had so far chosen not to post here, up until now. My background with the investment is  very similar to Mysteryman- I am on the Asgard Platform, and yes they did vote to support Trilogy, although they will not confirm it in writing to me - yet!!

For us so called Platform/Master Trust investors, I was not communicated with in advance of the Asgard decision, although FM from LM had indicated they already had. They will say the PDS says they didnt have to. I am currently writing to the Trustee in Asgard Capital Management to express my concern about their decision to support Trilogy

For the information of other forum members, I am known to Dinga, we have communicated by Email often. Since applying for a closure of my Asgard account and redemption in LM on 30 July 2008, I have been in constant communication with Francene Mulder of LM and the so called "Scarlet Pimpernel" Mr Peter Drake

I am especially not pleased with the latest LM  Press Relaese -  "Good Result and Business as Usual"  I have wrtten to Drake and Mulder this morning about that  communication which is unhelpful to investors in the WSFMIF as it reads like we are cut adrift, and they were only really concerned about the CPAIF

Drake has already replied  this morning and mentioned their poor communication, which he acknowledges has been an LM weakness. Drake said to me Trilogy will never get at the Funds assets, we will see.

I must say I have enjoyed reading these Forum postings, and like Mysterman I have read them all, including all the enlightening postings by ASICK who I know is not an LM investor. ASICK your contributions have proven very valuable, even when you have banged on endlessly re Trilogy.  I think your views about what should happen are also correct.

I dont propose to write down my 4 year plus history of communications with LM or Asgard because most of what I may say has been said before, HOWEVER I strongly doubt if any of these people could ever be trusted.

I post here this extract From Asgard to Advisors re the WSFMIF   dated 2 Nov 

"We understand that Trilogy will shortly convene a meeting of members in the LM First Mortgage Income Fund (FMIF), of which the Fund is a feeder fund, to vote on resolutions to replace LM with Trilogy as RE of the FMIF. Prior to this, it will also call a meeting of members in another feeder fund to the FMIF to consider similar resolutions to replace LM with Trilogy as RE.
If Trilogy is appointed RE of FMIF, then Trilogy will commence the orderly realisation of FMIF’s assets and return capital to investors.
We will keep you informed of any progress made by Trilogy to replace LM as RE of the other feeder fund and FMIF".

I will keep reading with interest this Forum and will add to it when appropriate


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## ASICK (2 November 2012)

Hi Rodent69, great to see you post.  While there's much to discuss as a result of your posting, I'll take a break from my endless banging-on re:Trilogy in the hope that more LM investors will participate in the discussion. Good onya for taking the leap and making a great posting.


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## ASICK (2 November 2012)

http://www.moneymanagement.com.au/n...rilogy-successful-in-stage-one-stoush-with-lm

Funny, the only happiness seems to be over at Trilogy .... 

To those who support Trilogy, I'll reiterate my concern, "Be careful, you might get what you wish for".


----------



## Dudd (2 November 2012)

ASICK said:


> http://www.moneymanagement.com.au/n...rilogy-successful-in-stage-one-stoush-with-lm
> 
> Funny, the only happiness seems to be over at Trilogy ....
> 
> To those who support Trilogy, I'll reiterate my concern, "Be careful, you might get what you wish for".




ASICK, I'm an investor in the FMIF and haven't posted for a long time, but I always keep up with and appreciate your's and other's views.

We seem (not surprisingly) to have different views from LM and Trilogy on what will happen next: LM say that trilogy won't have a hope in hell of taking over the main LMFMIF,I think becaause there are too many individual investors who wouldn't trust Trilogy to look after their money, or perhaps because they've read your posts!  On the other hand, Trilogy seem to think it will be a piece of cake and the funds will all fall over like dominos into their hands.  

I would be interested to know your expert view on this, i.e. how difficult is it really going to be for Trilogy to get enough votes to gain control of the main fund?


----------



## ASICK (2 November 2012)

Dudd said:


> ASICK, I'm an investor in the FMIF and haven't posted for a long time, but I always keep up with and appreciate your's and other's views.
> 
> We seem (not surprisingly) to have different views from LM and Trilogy on what will happen next: LM say that trilogy won't have a hope in hell of taking over the main LMFMIF,I think becaause there are too many individual investors who wouldn't trust Trilogy to look after their money, or perhaps because they've read your posts!  On the other hand, Trilogy seem to think it will be a piece of cake and the funds will all fall over like dominos into their hands.
> 
> I would be interested to know your expert view on this, i.e. how difficult is it really going to be for Trilogy to get enough votes to gain control of the main fund?




hahaha - I just love to opine, it's my nature .. but expert? .. hell no .. I've just watched what's left of my investment  in the PFMF dwindle away under Trilogy's management - I've had the experience and I'm trying to impart that experience to members of the LMFMIF.   Three and a half years - it's a long time - and $0.0875/unit repaid.

I continually put on these links because they're factual:
http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/litigation.php

I think members should read all the documents and listen to all the sound clips from the meeting - members should try to understand what was said to us and see the outcome.  Really, it was a lot of representations, followed by a lot of disappointments.  Now I've received an email from a substantial investor wanted to see the end of Trilogy -and this guy was one of the members who brought Balmain into our fund !   I guess there's only so much one can take, right?  The investor's interests control a unitholder which is one of two of the largest in the fund.

From my life experiences, I'd say that corporations don't go into the pits to fight - and I'd guess they regard forums such as this as the pits.  I can understand that corporations might see the world differently, but seeing it differently doesn't make them see it right.

I think that if LM runs a campaign on Trilogy's performance in a single, precise, correct document, then I think it will deprive Trilogy of a takeover of the fund - in saying that, it really depends on the depth of feeling against LM.  So, LM has to get its act together and show investors that it's sincere - that might be a big ask - but, to my mind, it's something they have to do.  I think they've taken some steps towards that end - investors might think otherwise because discontent seems to go back a number of years.

Trilogy will grow its support off investor discontent - LM has to minimize that discontent in order to sap Trilogy's support within the fund - as I see it, this is the "battleground" - it's a battle for investors' "hearts and minds".

Then there is the risks - if Trilogy runs for the other feeder fund, I would see that as a grab for dough.  It's clear (as least to me) that Trilogy run for the wholesale fund was for the $$$$ since it doesn't give them any special benefit in any future LMFMIF meeting - As LM knew, so would have Trilogy known (or ought to have known) that there'd be a $350k/annum fee in the offering if it took the wholesale fund, and it would have known (or ought to have known) that members in the fund would be disadvantaged without any advantage towards a future LMFMIF meeting.  Trilogy used sentiment to gain fees when there was no other advantage.  I think investors see that quite plainly now.  That should disclose a side of Trilogy that's not too pleasing.

I wish I did have an expert opinion, because I'd love to tell, but I can't.   In short, I would say that if investor sentiment against LM is so bad that they disregard all of Trilogy's shortcomings, LM doesn't stand a chance.  However, if LM is able to placate long-time discontented investors by proving to them (in short order) that it will do the right thing, then Trilogy will fail.

So, who'll win? I haven't got a clue.

An article that might be of interest:

http://www.businessday.com.au/business/beware-an-angry-debt-collector-20110804-1idjt.html

"Stephen Ecob from Collection Corporation of Australia in Hobart has had little success getting the responsible entity of the fund, Trilogy Funds Management, to cough up $4.8 million in unpaid owners' corporation (aka strata) fees linked to the $650 million Martha Cove marina project.

''They wouldn't even come to the front counter,'' Ecob said about his recent visit to the reception of the Trilogy office.

The First Mortgage Fund took possession of several large lots in the marina development on Port Phillip Bay that were seized from its now bankrupt former manager and debtor, City Pacific. City Pacific borrowed more than $200 million from the fund (containing more than $900 million of deposits) to develop the project.

''They are just milking the joint for fees and haven't even paid the rates,'' Ecob told CBD, clearly frustrated at the lack of response he was getting from the fund's new managers.

The debt collector's complaints about Trilogy and its co-manager Balmain might also raise tempers among First Mortgage investors, who have so far only received a capital return of 5 ¢ for each of their units that were originally worth $1.

Despite having a debt collector on its case over unpaid strata fees, the managers Balmain Trilogy have still been able to pay themselves fees from the fund once worth $1 billion. The fund paid out $2.9 million in management fees in the last six months of last year.

The Trilogy Funds chairman, Rodger Bacon, was unable to provide a clear position on whether he thought the fund was liable for the strata fees.

''_The various interested parties and companies that are involved and the receivers that are involved, I wouldn't even attempt to give you any clarification of that_,'' Bacon said. He suggested CBD put a call through to his co-manager, the loan manager Balmain. Balmain's chief executive, Andrew Griffin, failed to return CBD's phone call."

(emphasis added)


----------



## ASICK (4 November 2012)

*SUNDAY AFTERNOON MATINEE*

"HOW TO MAKE HAY WHILE THE SUN SHINES" 

Expressions of Interest re: Martha Cove closed October 2011:
http://www.moneymagik.com/PFMF_letter_11_October_2012.pdf
"... following the close of the marketing campaign in October 2011;"  
(emphasis added)

Trilogy valued the Martha Cove assets at $84.75m as at 31 December 2011: 
(and ignored the expressions of interest which closed in October 2011, TWO MONTHS PREVIOUSLY - more fees ! good one Trilogy !)
http://moneymagik.com/PFMF Half Year 2011 V4 FINAL.pdf

Then valued the Martha Cove assets at $86.3m as at 29 February 2012: 
http://moneymagik.com/PFMF_RG45_29_February_2012.pdf
(and ignored the expressions of interest which closed in October 2011, FOUR MONTHS PREVIOUSLY - more fees ! good one Trilogy !) 

In  a letter dated 11 October 2011 (a year from the closing date of the expressions of interest), Trilogy says (in part), "$0.08 is directly related to the further impairment recognised in respect of the Martha Cove securities and is reflective of expressions of interest received following the close of the marketing campaign in October 2011;" 
http://www.moneymagik.com/PFMF_letter_11_October_2012.pdf

(then, all of a sudden, the expressions of interest which closed EIGHT months prior to 30 June 2012, suddenly impact the value of the Martha Cove assets and the unit price drops by EIGHT CENTS !) 

UNBELIEVEABLE - and the information about the EOI impact on unit price came in a letter, NOT in the financial reports !   http://moneymagik.com/PFMF_return_30_June_2012.pdf


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## ASICK (6 November 2012)

*Major PFMF Unitholder Pleads a Case to Oust Trilogy*

http://www.moneymagik.com/

One of the largest unitholders in the PFMF pleads a case to oust Trilogy from the PFMF.

(and he's one of the cohort that brought BT into the PFMF)


----------



## ASICK (7 November 2012)

*Trilogy - PFMF Asset 18*

On PFMF Asset 18:

As a member of the PFMF, I would invite any Brisbane/near Brisbane reader to take a trip to "Woodgrove" at Wakerley in order to have a look at the state Trilogy has left the fund's asset after nearly THREE AND A HALF YEARS as fund manager.    It's a mess and we've lost heaps of money on it.     

Last time I phoned, the phone number was disconnected, but thankfully, when I looked, the development was still there: http://www.woodgrovewakerleymanly.com.au/contact-us/

Go and have a look if you're able - some pics at the top of this page: http://www.moneymagik.com/

Believe me, it's shocking.

On the $60m litigation:

A unit holder asked Rodger Bacon (of Trilogy) a question today, "So, the $60m return to the fund is not looking too flash then?" - Bacon answered, "No, that's right"  - am I confident the PFMF will gain anything from the litigation? No, I am not.


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## Irishdan (8 November 2012)

For all of those poor investors in LM funds unfortunately I agree with ASICK. ( I think he has provided enough evidence to prove his case)

There is no benefit in changing RE to Trilogy. There is certainly good reason to remove LM but trilogy is not the answer. For what its worth I think investors in LM First Mortgage fund and the feeder funds have done their money.

Here's why

1. Assets have recently been sold at below 60% of what LM have them on the books at. Actual unit value will be revealed as around 50% of what LM value the units at

2. Financials for 2012 still not released. I would love to be proved wrong but i suspect that the auditor won't sign off on them as being a going concern ( at worst could be trading insolvent but lets hope not)

3. LM told an adviser teleconference that they were still getting the BIS Schrapnel asset evaluation done which will reveal the true value of the assets.

4. Spruik on LM website about $1bn funding deal will be revealed in time as a deal done with LM interest in Maddison estate and not with investors in FMIF or feeder funds. If I am right this will allow "Maddison" which Drake is sole owner of, to be refinanced out of the funds and protected from the liquidation of the assets of the FMIF. Yes Liquidation, Drake has stated the funds won't be reopened, they will be subject to "an orderly selldown". ie liquidated. The only thing is, he is controlling the liquidation process not an independent party as it really should be!!


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## ASICK (8 November 2012)

Irishdan said:


> For all of those poor investors in LM funds unfortunately I agree with ASICK. ( I think he has provided enough evidence to prove his case)
> 
> There is no benefit in changing RE to Trilogy. There is certainly good reason to remove LM but trilogy is not the answer. For what its worth I think investors in LM First Mortgage fund and the feeder funds have done their money.
> 
> ...




IrishDan, I agree & don't agree - true, the fund needs a new manager, actually it needs a receiver - but given ASIC's stand-off and "watch it fail" stance, that's just what's going to happen: the appointment of a receiver is unlikely, but it's something that members shouldn't stop wishing for (sometimes, dreams do come true).  True, Trilogy should be avoided like the plague - and yes, there's heaps of evidence why Trilogy should be avoided like the plague.

On point 1 - I tend to think that the LMFMIF is worth less than $0.50 - I'll be quite surprised if it is - and I'll be wanting to see RG45 Annexure A Table H in order to get a feel for the risk at whatever unit price is disclosed.  I'll also want to see how much accrued interest "received" is disclosed.  

Readers may be interested in my spruik on www.moneymagik.com "LVRs IN THE PFMF: AS I SEE IT" - when members of the LMFMIF read the LVR ranges in Table H, it'll probably be the case that, since security asset values have dropped below the original loan values, those original loan values  have been discarded and replaced by new loan values calculated by reference to the new securty values and SELECTED LVR values.

On point 2 - It's common in screwed up funds for the auditor to raise doubt about this 'going concern' nonsense - the simple reality is that whatever is left of investor funds will cover the costs of running the fund - it'll always run while there's anything left of investors' money.  While investors think it's all over, it's not for those who're able to sap some coin from it.

On point 3 - another opinion, paid for by the manager.  I remain of the view that a manager isn't going to pay for a report that slams it - just a personal point of view.

On point 4 - If LM has madated a wind up of the fund, then as I see it, LM ought to make its position clear in relation to the Pimpana property:
http://www.goldcoast.com.au/article/2012/08/05/436121_gold-coast-business.html

If LM isn't prepared to say that it'll knock off the property and return money to investors, then I'm sure Trilogy will point that out and spruik that they'll knock it off, and believe me, Trilogy can do just that - on one asset, a more than 74% LOSS in only six weeks (PFMF asset at The Entrance NSW) - and AGAIN, in my view, appointing Trilogy is not what investors deserve.   A timely disclosure  by LM about the Pimpara property will doubtlessly be in both LM's and investors' best interests.

I'm sure Rodger Bacon of Trilogy will be watching with great interest.


----------



## RODENT69 (8 November 2012)

I am sure that as many are aware the LM CEO Peter Drake has just posted on the LM web site and sent same info to many investors a doc titled a "Personal Apology from Peter Drake"

Quite frankly it may be too little too late, in fact I would not accept it as any form of apology at all !!  Much of what Drake says and has said often does not ring true.  Example LM *did say *they were going to Reopen the Fund and had Financial investors with clients ready to invest. Now they say NO.

They also created the Sell and Hold Option, remember the 16 May meeting- and now say they decided to not proceed, HOWEVER before Trilogy came to the and rattled them  LM DID NOT SAY THEY HAD CHANGED THEIR MIND ABOUT PROCEEDING WITH IT.

Re the $20 Mil Drake says will be settled prior to Dec 2012, that will all go to DB  - nothing will go to investors.
Perhaps Mr Drake needs to also be reminded that LM promised to catch up on the Pathetic Distributions still not paid- I am owed 6 months at ??

Like others we await the Audited Financials for 2012, and what really happens to our Unit Price  near to 0.50c??

For the information of others, Trilogy said in a letter to Unit Holders on 25 Oct 2012 that they had Two research reports  that supported their position to replace LM as the RE. On 5 Nov I wrote to Bacon, Barry, and White(shed Media) and asked for copies of these reports, so far nothing has appeared, I reminded them again today!!

I have also written to the Trustee of my MasterTrust/Platform Manager(Asgard) and asked in very strong terms that they justify their decision to support Trilogy on behalf of the 213 Asgard Investors in the LMWSFMIF

I know for a fact Asgard certainly had no love for LM.

I suggest if others are in my situation and feel the same, perhaps you should write to their Trustee also. I know that Asgard and BT supported Triligy, and maybe CFS also?

I find it less than amusing that we all invested in a Managed Investment where LM and now Trilogy are really only Property managers not actual Investment/Fund Managers


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## ASICK (8 November 2012)

Hi Rodent, are you able to post a copy of the letter of apology that you speak to? 

UPDATE - I found it: http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-PD-trilogy-apology-08-11-12.pdf
(sometimes I find the LM site somewhat difficult to navigate)

One of the reports was said by LM to be put together by Atchinson - Balmain Trilogy appointed Atchinson head of BT's Investor Consultancy Committee (ICC). Atchinson also put together reports for a number of Trilogy funds, including the Cape Parks Fund (a fund which has 1000 * $1.00 units on issue as at 30 June 2012).

I wonder how they're able to put together these reports without knowledge of the assets?

Would you be kind enough to post the reports if you get hold of them?

It's a mess - no doubt about it.


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## ASICK (8 November 2012)

*PFMF Asset 18 - "Grande Pacific" at the Broadwater*

Phil Sullivan (ex-CEO of City Pacific) has made an extraordinary allegation in relation to another one of the PFMF's prime assets - "Grande Pacific" - a vertical retirement community on the Broadwater (Gold Coast):-

http://finance.groups.yahoo.com/group/PFMF_last_chance_forum/

Hot on the heels of disclosure about Trilogy's neglect of the PFMF's Asset 18 at Wakerley - "Woodgrove".

Unbelieveable.


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## No Trust (9 November 2012)

*Late Financials*

When Drake mentions late financials, it brings back memories of Equititrust before their collapse...

They also assure all was well and then went belly up...

How many beachfront properties does Drake have??? All these guys have a penchant for luxury whilst investors lose...







ASICK said:


> Hi Rodent, are you able to post a copy of the letter of apology that you speak to?
> 
> UPDATE - I found it: http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-PD-trilogy-apology-08-11-12.pdf
> (sometimes I find the LM site somewhat difficult to navigate)
> ...


----------



## No Trust (9 November 2012)

Lets hope the industry is cleared of mortgage funds once and for all.


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## ASICK (10 November 2012)

*The Beat Goes On!*



No Trust said:


> Lets hope the industry is cleared of mortgage funds once and for all.




Hope, against hope .. right? Ah.. you know that's not possible!

No Trust's recent postings on the Equititrust thread here on ASF reveals this link:

http://www.miguardianfiduciary.com/Home.aspx

Does the link look good?

If you think it does, then you should read No Trust's last couple of postings on the Equititrust thread.

https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=142&p=736784#post736784

The beat goes on ...


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## ASICK (10 November 2012)

*Re: Late Financials*



No Trust said:


> When Drake mentions late financials, it brings back memories of Equititrust before their collapse...
> 
> They also assure all was well and then went belly up...
> 
> How many beachfront properties does Drake have??? All these guys have a penchant for luxury whilst investors lose...




Yes, time enough has passed - I think a receiver should be appointed, just like in the Equititrust EIF.   

Remember, read the unit price in conjuction with RG45 Annexure A, Table H.   The declared unit price is arbitrary, subject to the LVR the manager wishes to disclose - remember, the loan values are calculated by reference to the security asset values since those security asset values have slipped way below the original loan values.

Note that LM should disclose that Table H is not calculated by reference to the original loans, as Trilogy disclosed on the PFMFs most recent RG45, "H) LVR FOR LOANS IN PERCENTAGE RANGES. (PLEASE NOTE THE LVR TABLE IS BASED ON THE IMPAIRED BOOK VALUES)":
http://moneymagik.com/PFMF_RG45_30_September_2012.pdf


----------



## Edgen (11 November 2012)

Have just come across this forum while searching on the internet. We are Overseas Mum and Dad investers locked up in the LM Closed Fund, we have most of our savings in it and where mis sold by a FA ( i still have e mails stating that we did not want anything risky at all and we where not prepared to loose our money) funnily enough he quit his job just after the fund was closed .
Is there nothing we can do but watch our  savings disappear before our eyes , can we not go to the finacial Ombudsman regarding this or does it take the maority of investers to join together to do something ? any advice much apreciated .


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## No Trust (11 November 2012)

*Re: Late Financials*

Equititrust is a copy book example of late financials and attempt to save the founders ass at all costs... look what happened there... It went belly up... I agree with ASICK, a receiver should be appointed here as well by the court.

I might be noted that ASIC's hand were forced to appoint in the Equititrust case, when an application was put forward to put the company into receivership by a third party. 

This may be the answer here... Its time to put the company out of its misery, stop the fighting over who will manage the carcas and acknowledge its time to bring in the undertakers...





ASICK said:


> Yes, time enough has passed - I think a receiver should be appointed, just like in the Equititrust EIF.
> 
> Remember, read the unit price in conjuction with RG45 Annexure A, Table H.   The declared unit price is arbitrary, subject to the LVR the manager wishes to disclose - remember, the loan values are calculated by reference to the security asset values since those security asset values have slipped way below the original loan values.
> 
> ...


----------



## RODENT69 (11 November 2012)

*Re: Late Financials*



No Trust said:


> When Drake mentions late financials, it brings back memories of Equititrust before their collapse...
> 
> They also assure all was well and then went belly up...
> 
> How many beachfront properties does Drake have??? All these guys have a penchant for luxury whilst investors lose...




ASICK     If you can tell me how to post the Doc I have which is the report from Atchison Consulting, I have it as an Adobe Doc 13 pages, can it be attached here so how as a Doc?


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## ASICK (12 November 2012)

*Upload File*



RODENT69 said:


> ASICK     If you can tell me how to post the Doc I have which is the report from Atchison Consulting, I have it as an Adobe Doc 13 pages, can it be attached here so how as a Doc?




 I'll check - I've never used the feature.

Ok -

First, open a new reply dialogue box, then select the *PAPERCLIP *option in the first row of the toolbar in the next dialogue box -

Then, either:

1. Drag the .pdf in the "*Attachments*" area at the bottom of the dialogue box - select "*DONE*" (bottom RHS)

or

2. select "*Add Files*" (top RHS) - a new dialogue box opens - select "*Select Files*" (bottom of new dialogue box) - navigate to the .pdf file - select the .pdf file  - I assume,  select "*DONE*" (bottom RHS)


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## RODENT69 (12 November 2012)

ASICK

I hope I have done this adding attachment OK - happy reading - its repetitive in parts


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## ASICK (12 November 2012)

*Atchinson Consulting - Good Ol' Ken*

For the sixty-ninth in a line of doublessly magnificant rodents, you did a great job.

First impressions - BIASED and loaded with failures to make a full disclosure.

Atchison disclosed, "Disclosure:  Ken Atchison is the independent chairman of the Pacific First Mortgage Fund investor committee. Atchison Consultants has received a fixed fee, established prior to commencement of work from Trilogy Funds Management for the preparation of this report. *Atchison Consultants applies a strict and rigorous process for the production of research reports*."

I've emphasised a single paragraph - why? because the process itself is not disclosed, and so, the reader has no idea if the process actually should include anything negative about Trilogy.  Also, I think it's worth noting that Atchison HAS NOT disclosed that the report has not disclosed any negative about Trilogy, or alternatively, Atchison has HAS NOT disclosed that the report is SKEWED in favour of Trilogy, or alternatively that the report is a  PROMO for Trilogy which purposefully fails to disclose negative aspects of Trilogy and Trilogy's management team.

Yes, Ken Atchison is the so-called chairman of BT's so-called investor committee (ICC) and what isn't disclosed is that Atchinson gets more work than that from Trilogy.

Here's the Cape Parks Fund (1000 * $1.00 units invested as at 30 June 2012):
http://www.capefunds.com.au/assets/files/Cape Parks Fund Independent Expert Report.pdf

Another "2008" report by Atchison note in Trilogy's "Communique" but I can't find that report anywhere:
http://www.trilogyfunds.com.au/site/assets/files/Communique Newsletter.pdf

I suspect it relates to Trilogy's failed Trilogy Healthcare REIT: http://www.moneymagik.com/analysis_REIT.php

I refer to page 8 of the report and comments relating to Trilogy's management of the PFMF. Geez I though he would have mentioned the $295m that Trilogy/Balmain Trilogy held out to investors from prior to 1 September 2010 until August 2011, but he didn't - by the way, Trilogy hasn't mentioned anything about that since August 2011 either. (the spruik was that members of the PFMF would receive about $0.33/unit ($295m) by October 2012 and that $295m would not include the $0.10/unit value of Martha Cove)

There's probably a good reason - and that good reason would be that members have only received $0.0875/unit since July 2009 with the fund's value down to $0.12275/unit (which includes Martha Cove worth about $0.06/unit).  Quite the disaster, right?  Good Ol' Ken makes no mention - hush ! "mum"'s the word!

And the PFMF has lost 56% of its value since Trilogy took over - (redemptions are excluded - that's the real loss, and that's only up to 30 June 2012) - Good Ol' Ken makes no mention of that either.
http://moneymagik.com/performance_PFMF_Trilogy_big.jpg

How about that disaster at Wakerley? No mention there either !
http://www.moneymagik.com/ (look up Wakerley on the menu)

How about the reduction in value of Matha Cove - Nope, nothing.
http://moneymagik.com/PFMF_letter_11_October_2012.pdf

How about offers in one line by Trilogy / Balmain Trilogy ? Nope !
http://moneymagik.com/martha_cove_ad.php

How about the 75% loss down on the fund's commercial asset at The Entrance? Nope !
http://moneymagik.com/the_entrance_in_one_line.php

How about the Trilogy Healthcare REIT ? Nope - silent !
http://www.moneymagik.com/analysis_REIT.php

How about the Trilogy PMMMF at Dee Why ? Nope - dead silence !
http://moneymagik.com/more_on_Trilogy_PMMMF.php

How about Trilogy's Philip Asley Ryan's breach of trust  ? Nope - nope - nope !
http://moneymagik.com/trilogy_more_on_ryan.php

I suppose I shouldn't forget Trilogy's greedy grab for part of the (then assessed) $300m in potential legal proceeds: http://www.smh.com.au/business/bonus-racket-twice-paid-for-a-single-job-20100830-1431p.html

Atchison says (on page 8, and in part),  "*Trilogy has first-hand experience in the replacement of an incumbent Responsible Entity for a frozen mortgage fund*. In June 2009, in joint venture with Balmain Corporation Ltd, the unitholders of City Pacific First Mortgage Fund voted at an extraordinary meeting to appoint Trilogy Funds Management Limited as the new Responsible Entity of the Fund." (emphasis mine)

Yes, Atchison is right, Trilogy does have "first hand experience in the replacement of an incumbent responsible entity" but that's where the disclosure of facts came to an end.

Atchison makes reference to a document cited as the "Trilogy Achievement Document' - However, I couldn't find the document.  Is it possible that such a document exists? If it does, it surely must be silent as to Trilogy's failures (as the title purposefully discloses).

Atchinson went deep into LM and the LMFMIF, but failed to examine Trilogy to the same extent -  I guess otherwise, it did, Trilogy wouldn't have paid for the report, or if it did, Trilogy wouldn't release it.

LM responded thus:

http://www.lmaustralia.com/Downloads/Unitholder-letter/adv-atchison-report-rebuttal-18-10-12.pdf

I really think the LM FMIF has crashed badly - the RG45 was due 29 February 2012 - that's a long way overdue.

I really do get a bad feeling about this fund. I'll be surprised if the unit price is above $0.50, but whether it is or not, I'll be looking straight to RG45 Annexure A Table H to see whether the unit price is sustainable.

Sadly, in my view, Trilogy is NOT the answer - the Atchison report is a load of crap - ASIC should apply to the court to have a receiver appointed.  However, in saying that, investors in LM are entitled to make their own mistakes - and if Trilogy is appointed, I'm sure this forum will become a groaning place for many more discontented LM investors.

http://moneymagik.com/wakerley_pictures_01_11_12.php

Thanks again Rodent.


----------



## ASICK (12 November 2012)

*Good Ol' Ken*

The one issue that Atchison really omitted was Trilogy's inability to project the future, or even to fairly disclose the present (particularly for the Trilogy Pacific First Mortgage Fund).  It surprises me that he doesn't - after all, he's been there on BT's ICC since the outset.

Now, he might say, well, I can't disclose information I'm privy to on BT's (selected) ICC - okay, then such a position would make Good Ol' Ken conflicted because he'd know what the report has missed, and, if that was the case, then I'd say that the report should never have been published in the first place.

On the other hand, to my mind he ought to know that there's adequate information in the public arena to speak to Trilogy's performance in the PFMF, at Dee Why, and at Crows Nest - there's adequate information in the public arena about Ryan's reach of trust,  so one has to wonder why the report is silent to those issues (issues I raised in some detail in my last post).

Good Ol' Ken is surely aware that Trilogy's Andrew Griffin spoke to "more than $300m, more than enough" in legal claims at the fund meeting of 1 September 2010, and that that "more than $300m" had dwindled aware to a "hopeful $100m" by November 2010, and to a "utopian $100m" by April 2011, and a claim against five directors for $61m by April 2012 which had dropped to a "hopeful/utopian" $48m the moment the claim was filed because one of the directors had died two years before the claim was lodged.  To my recollection, Atchison attended the 1 September 2010 meeting.

Then comes the respondent ex-City Directors of Citypac's cross claim seeking indemnity for their legal costs, and there's that allegation by Sullivan that there's no insurance because Trilogy didn't keep up the necessary payment on a policy essential for the maintenance of the directors' indemnity insurance.
http://moneymagik.com/litigation.php
( in particular, https://www.comcourts.gov.au/file/Federal/P/NSD604/2012/actions )

At the meeting held on 1 September 2010, Trilogy spoke to a unit price of $0.48/unit (30 June 2009), and in answer to a persistent Terry H., disclosed the unit price about $0.43 - in the later disclosed 2010 financials, the unit price was disclosed as $0.43.

Trilogy spoke to $0.04 "every April and every October" with additional payments in between - but there was only ONE $0.04/unit  payment, FOUR $0.01/unit payments, and ONE $0.0075/unit payment.

Readers will note BT's ICC reports are listed (among other things) at this link :
http://www.moneymagik.com/general_information.php 

Again, the representations, and the disappointments:
http://www.moneymagik.com/yardy_yardy_yah.php

Just imagine if there was no information source to disclose:

1. Philip Ashley Ryan's breach of trust.
2. Trilogy's failure at Crows Nest
3. Trilogy's failure at Dee Why
4. The woeful outcome for the Trilogy Pacific First Mortgage Fund
5. The representations put to PFMF members, and the subsequent disappointments.

Just imagine - now, that's make Good Ol' Ken's spiel look a whole lot better, wouldn't it?

So, if you want to close your mind to items 1. - 5. above, then you'll get what we got, and really, I woudn't wish it on anyone (except my worst enemy).


----------



## RODENT69 (12 November 2012)

ASICK

Not sure what went wrong with my last post, it didn't post, so here I go again
The so called Report is very one sided, and certainly could not in any way be called Balanced. Given that Trilogy requested it and paid for it, its content is hardly surprising .

Much of what it says about LM is factual and freely available from their Website. Yes it can and has been used to paint a picture that LM is at FAULT - which of course it is.

The report has just selectively taken this information and presented it in a different way (and repeated the Bias against LM) over multiple pages. 

Trilogy saw an opportunity, promoted by several investors and Master Trust Platforms to hone in on the weakness in the LM position over its Sell/Hold Option  passed at the meeting on 16 May 2012.

I say weakness because LM and especially Drake NEVER understood that Investors really only wanted their money back, and the Sell/Hold option was not a way of delivering this when it could not be EASILY understood by Investors, and by its content explanation had too many down sides.

Drake only now, when his Funds are threatened, recognises that LM and himself did a very poor job of communicating with his investors, he has done TOO LITTLE TOO LATE!!

With Trilogy as our RE I cant see how investors in the WFMIF are going to receive any Money in the immediate future. Of course we are all STILL waiting for the Audited Financials for 2012 and other relevant info, updated 
RG 45 etc, and all that, after we have digested it could start another round of Trilogy challanges, I'll bet that's the only thing holding them back at the moment.

QUESTION    now that the WFMIF has Trilogy as RE who do I chase for my missing 6 X Monthly Distributions, small and all as it is-- do I chase LM or Trilogy?


----------



## ASICK (12 November 2012)

You chase Trilogy - make Trilogy earn just a small part of  its $350k/annum managerment fee.  LM is no longer the RE for the fund.  Trilogy is RE and is now responsible for the investment into the LM FMIF.  LM is no longer liable to any unit holder in the fund.

Good luck - no doubt about it, the blame will go to LM.  Trilogy will (rightfully) say, there's nothing we can do about it.



UPDATE: Re: RG45 and accounts - my guess is that it's the only thing holding BOTH of them back.

What a dream income stream for Trilogy - only a single investment and only the least amount of administration. I'm sure they're more than pleased with you guys and gals - to be sure, to be sure.

I wonder if BDO will become the auditors? And will there be a change in custodian?  Remember, Trilogy's fee and other expenses will be deducted from any returns to the fund BEFORE any $$$$ are returned to investors.  If there's a slow feed of returns, the expenses and fees could take a big slice out of those returns.



FINAL UPDATE - there's been an update in the PFMF:
This link is being updated over time:
http://moneymagik.com/update_12_11_12.php


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## ASICK (13 November 2012)

*Trilogy's Management of the PFMF: Good News*

And the good news keeps on coming in for PFMF investors:-

http://www.moneymagik.com/


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## ASICK (13 November 2012)

*Trilogy's PFMF asset - "Grande Pacific" and More !*

"Grande Pacific" is a vertical retirement "village" on the broadwater at the Gold Coast. I've just had confirmation that NOT ONE UNIT has been sold in the three and one half years Trilogy has managed the PFMF.  Extraordinary stuff - not one unit sold !!!  Millions tied up - receivers, management, on-going costs - and heaps of management fees to Trilogy.

It's bad enough to see "Woodgrove" at Wakerley in such a mess.

Then there's the more than 74% suffered on the fund's assets at The Entrance in JUST SIX WEEKS !

and the  extra $14.4m suffered on a SECOND MORTGAGE LOAN.

and the  massive write-downs on Martha Cove assets.

It's a mess.


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## Mysteryman (13 November 2012)

RODENT69 said:


> ASICK
> 
> 
> With Trilogy as our RE I cant see how investors in the WFMIF are going to receive any Money in the immediate future. Of course we are all STILL waiting for the Audited Financials for 2012 and other relevant info, updated
> ...




Have just come back from holiday - greatly needed as a result of stress caused by LM and Trilogy. Unfortunately holidays don't make such problems go away!

The Atchison report makes interesting reading (thanks Rodent69) in that you are right Asick, it makes no mention of Trilogy's failures for PFMF. It makes Trilogy look like a knight in shining white armour, about to come to our rescue. Not surprising as report was paid for by Trilogy. Having money invested in the WFMIF now amounts to a stalemate at our expense. What really hurts is the disenpowerment of having no voting rights whatsoever as the money is invested through the BT platform, which voted, on our unsolicited behalf for Trilogy. Not surprising that Ken Atchison wrote a glowing report for Trilogy since he is chairman of BT's investor committee. BT is obviously disenchanted with LM. But what does BT get out of it by going with Trilogy? Do they really believe Trilogy will do a good job? No, there has to be some gain for them.

How is the present situation now meant to work. LM has the money invested and we have to try to deal through Trilogy. But I can't see much co-operation between the two of them. It would be better if total control of all funds were under LM or Trilogy, although hard to place any confidence in either.  

Interesting that Rodent69 is owed 6 distributions through Asgard. I am owed 8 through BT, the last month I received was April 2010. Seems pretty discriminatory that although, as I believe, we are in the same fund, some have received more than others.

The big question is, Asick. Where do we go from here? How does the investor get any say or control? We can write to LM, Trilogy, BT, Asgard or even ASIC but the response is often evasive, misleading or unhelpful and so on an individual basis we are going nowhere. Unfortunately, I gather a lot of investors are very old or the investment forms part of a deceased estate or the investment is too small to waste a lot of effort in retrieval. But for the rest, who's investment is significant, there has to be a way we can unite to achieve some meaningful input and hence results.


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## ASICK (13 November 2012)

Mysteryman, I should point out that it seems to me that BT (Balmain Trilogy) is not your BT.  You might resolve this issue.   Perhaps I should use Balmain Trilogy (and not BT) in order to distinguish from your BT.  When I used "BT" it was used to mean "Balmain Trilogy" (a construct of Balmain and Trilogy).  Nevertheless, Atchison is the paid chairman of Balmain TRILOGY's selected ICC.


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## Mysteryman (13 November 2012)

ASICK said:


> Mysteryman, I should point out that it seems to me that BT (Balmain Trilogy) is not your BT.  You might resolve this issue.   Perhaps I should use Balmain Trilogy (and not BT) in order to distinguish from your BT.  When I used "BT" it was used to mean "Balmain Trilogy" (a construct of Balmain and Trilogy).  Nevertheless, Atchison is the paid chairman of Balmain TRILOGY's selected ICC.




OK, I stand corrected. Thanks for clearing that up.


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## ASICK (13 November 2012)

*Trilogy v. LM (mostly)*



Mysteryman said:


> ... How is the present situation now meant to work. LM has the money invested and we have to try to deal through Trilogy. But I can't see much co-operation between the two of them. It would be better if total control of all funds were under LM or Trilogy, although hard to place any confidence in either.
> 
> Interesting that Rodent69 is owed 6 distributions through Asgard. I am owed 8 through BT, the last month I received was April 2010. Seems pretty discriminatory that although, as I believe, we are in the same fund, some have received more than others.
> 
> The big question is, Asick. Where do we go from here? How does the investor get any say or control? We can write to LM, Trilogy, BT, Asgard or even ASIC but the response is often evasive, misleading or unhelpful and so on an individual basis we are going nowhere. Unfortunately, I gather a lot of investors are very old or the investment forms part of a deceased estate or the investment is too small to waste a lot of effort in retrieval. But for the rest, who's investment is significant, there has to be a way we can unite to achieve some meaningful input and hence results.




Anything I say, that is, my opinion, is based purely on my exprience as an investor in a frozen managed fund.  Before any member changes an existing investment or makes a new investment, advice should be sought from a suitably qualified accountant, lawyer, or financial advisor (subject to the type of advice sought) [disclaimer].

*Trilogy or LM?*

In relation to the Trilogy / LM relationship - you're right, there'll be no love lost between the two of them.  Since I have absolutely NO confidence in Trilogy, I'd say a receiver, or if not, then LM. I'm quite confident I've made my bias quite obvious - I'm sure there's no surprises.

I think LM is under a lot of pressure to wind the show up - but I also think LM has some very BIG losses to disclose - and that's going to be a shock for investors, who then might think Trilogy is better, well, they're entitled to think like that - I recall being in a similar position, and many of us thought like that.

The real difference between LM and Citypac (the previous manager of the PFMF) is that LM has "met the market" (that is, many investor demands), that's something Citypc didn't do - I think that decision was fatal for Citypac.  Full, honest, warts and all disclosure is important, even when it's shocking.  I don't have any doubt you're all going to lose heaps, so it's probably best if you accept what's going to happen, and that it's most likely Trilogy is unlikely to be able to give any better an outcome - do not think things couldn't be worse, because they can be.

*Different Outcomes in the Same Fund*

I formed the opinion that different funds seem to be treated differently, but I really haven't had the time to look closely at that matter - although, that was within the LM FMIF, not a feeder fund.

I don't know how your fund is structured - if you'd post more information about the fund perhaps someone might be able to help you.

*What to do?*

Your RE is now Triogy - it's earning .5% FUM (of about $350k according to LM).   You, as unitholders, have invested in a fund.  The fund has invested in LM's FMIF.  Trilogy is your RE.  Trilogy is responsible to you - but unfortunately, Trilogy has no more power with LM than you have with Trilogy.

So, if you feel helpless with Trilogy, so goes Trilogy with LM.

I think Trilogy won't make a move until the financials and RG45 are released - bad news will rile investors further, which in turn will give rise to disgruntled investors (ah! disgruntled investors), and disgruntled investors are more likely to seek a change in manager: heck, they might see Trilogy as a "white knight".

LM knows that - when LM finally discloses what I believe will be terrible news, Trilogy will make its move.

If Trilogy doesn't then I think it would make good economic sense to get rid of Trilogy - but good luck getting investors to get together - good luck indeed.  I've often mused that an investor might demand a cashier at Woolies fix up $0.05 in change,  yet disregard massive losses on a $100k investment - not much different to gamblers.

I think that if Trilogy doesn't make a run for the LM FMIF and if it doesn't hand over management of your fund to LM, then Trilogy will make hay while the sun shines (the .5% FUM management fee) doing very little indeed - and you'll never get rid of them - after all, it's not often anyone wants to admit to a mistake.


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## ASICK (13 November 2012)

Mysteryman said:


> OK, I stand corrected. Thanks for clearing that up.




I think it was my error in the circumstances and was just correcting it. No fault on your part.


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## RODENT69 (13 November 2012)

ASICK said:


> I think it was my error in the circumstances and was just correcting it. No fault on your part.




For Info of all-   just had a call from Trilogy man- they will not give me the other Report that was written in support of them. It did however go to all the Main Finincial Planners groups, so if any body has a planner that has it then maybe it could be published here?

The reason Trilogy wont give it to me is that it was commisioned out of NZ and was for Financial planners only, and quote "The reason we cannot provided it to you directly is that ASIC may view it as advisory in nature and the author of the document is not licensed to provide financial advice" unquote , what a lot of BS.

Also for info my letter to Asgard CEO was received and is being studied at length, and I have learned that Asgard ONLY voted for Trilogy on behalf of their Super Members, AND they commissioned their own report, which of course I am unlikely to ever see.


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## ASICK (13 November 2012)

*Trilogy - the Impossible !*

I really couldn't imagine it possible to write a well-researched report in support of Trilogy as a fund/s manager.   

I wouldn't imagine they'd be pleased to see the other report ripped to pieces on this thread !

There's a lot of reasons Trilogy doesn't disclose much on its website - a whole lot of bad reasons why they don't.


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## ASICK (14 November 2012)

*Ya Gotta Wonder*



RODENT69 said:


> ... Also for info my letter to Asgard CEO was received and is being studied at length, and I have learned that Asgard ONLY voted for Trilogy on behalf of their Super Members, AND they commissioned their own report, which of course I am unlikely to ever see.




I think Asgard has a duty to disclose the report to investors - after all, that report was the basis on which Asgard gave Trilogy a leg-up into you fund.  Asgard should also explain the reasoning why Asgard supported the appointment of  Trilogy and the payment of a .5% mangement fee (according to LM, $350k/pa) in circumstances whereby the appointment of Trilogy had no affect on your fund's members' ability to gain control over the fund's investment in the LM FMIF, and if Trilogy was not appointed, the fund would save the $350k (money out of YOUR pockets).

Asgard should also explain to its (affected) members whether it knew of Trilogy previous failures, Philip Asley Ryans's breach of trust, and the massive losses in the Trilogy PFMF.

http://moneymagik.com/trilogy_more_on_ryan.php
http://moneymagik.com/analysis_REIT.php
http://moneymagik.com/more_on_Trilogy_PMMMF.php
http://moneymagik.com/performance_PFMF_Trilogy_big.jpg
http://www.moneymagik.com/

It seems to me that Agard has a lot to explain (and disclose). Maybe Asgard might pick up Trilogy's tab? I think they should.

Ya gotta wonder at the workings of mice, and the minds of men (and women).

The lesson to be learnt is that every proposal has to carefully considered - always look to the beneficiaries - in Trilogy's proposal to your fund, there was only one beneficiary, Trilogy: a $350/pa fee for doing SFA.  

Ya gotta wonder.

Asgard most certainly has a lot to explain (and disclose).


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## ASICK (14 November 2012)

*The Internet*

There was a time when mobs like Trilogy could decimate investors' lives and then move along to decimate other investors' lives with impunity.   After all, who would know? ASIC didn't require managers to disclose failure.  Heck, they didn't even require disclosure of prior bankruptcies and breaches of trust.

Mobs like Trilogy were free to hold themselves out as wonderful managers in colorful PDSs which lure yet more into highly disclaimed investments where risk falls squarely on the "shoulders" of the investors themselves.

It was last year when www.moneymagik.com pointed to Trilogy's Healtcare REIT and for investors to watch out for the 2011 return which was going to be a "doozy" -at that time, Trilogy disclosed the documents for that fund on its website.  After less than a week, Trilogy pulled virtually all of the information in relation to that fund from its website.  Here's the latest on that fund:
http://www.moneymagik.com/analysis_REIT.php

Go to CYRE Trilogy's website and you won't find anything there except self place.  They took a number of funds off APG (a company which disclosed ALL information) and now those fund as "buried" for only investors to see.  Seems there's no appetite down at CYRE Trilogy for disclosure to the general public either: http://www.cyretrilogy.com.au/

Trilogy's Cape Parks Fund is the same.  It promotes payment of 8.5% (in 2011) with ONLY $30,000 of arms-length investment.  (ditto for 2012, with only 1,000 * $1.00 on issue as at 30 June 2012), yet its accounts are not  free for all to see (and have a chuckle) on Trilogy's website:
http://www.moneymagik.com/cape_parks_fund.php

Of course, there's nothing on Trilogy's website about the loss down at Dee Why:
http:http://moneymagik.com/more_on_Trilogy_PMMMF.php

There's no disclosure about a previous association with Laton Corporate Finance:
http:http://moneymagik.com/more_on_Trilogy_PMMMF.php
http://www.asic.gov.au/asic/asic.ns...+involved+in+Henry+Kaye+seminars?openDocument

And no disclosure about a previous association with Laton Capital Group:
http:http://moneymagik.com/more_on_Trilogy_PMMMF.php
http://www.jenman.com.au/news_item.php?id=328

Even, the failures in the Trilogy Pacific First Mortgage Fund are shuffled off to Balmain Trilogy's website, where on has to shift along in time to find information:
http://www.balmaintrilogy.com.au/
unlike here:
http://www.moneymagik.com/general_information.php

But all the things they don't disclose for free are being disclosed for free - and those things will be continued to be disclosed, for as long as the interent persists - thru generation to generation.  They cannot avoid the past - and all new investors have to do is conduct a Google search, and a more complete picture will emerge of a manager's performance - a picture which will provide the basis on which investors will make more informed decisions.

I'm sure Trilogy and Balmain Trilogy feel the "heat" of the interent.  I'm sure LM does too. I understand LM management was upset about this thread even with only 20 look-ins a day!

And Equititrust too - just look at the Equititrust thread on ASF to see No Trust's magnificant efforts about McIvor's new adventure:
https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=142

Do I care whether No Trust is really an investor in Equititrust? No, I do not - what I look to is his words and his words are those of support for investors and for the disclosure of truth.  

And then comes Asgard - now that name will appear on Google searches, and they'll have to consider whether they do the right thing, or "Asgard" will appear yet again and again - is that what they really want?

Ok, I'm sure everyone who looks-in today knows the power of the internet - what the shame is, that perhaps hundreds of thousands of members in decimated MIFs/MISs haven't received the message yet.

Still, the internet IS powerful - even a lowly investor (PFMF) such as myself is able to publish today - there's no skill required - no printing press - no degree in journalism - no delivery service: WE have come of age - WE  have the internet.


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## ASICK (15 November 2012)

*The so-called "Jansen Report"*

http://www.decisionmakers.co.nz/kiwi-investors-140m-revolt-against-aussie-fund-manager-nbr/
"David Jansen, a New Zealand-based financial consultant for Trilogy, says the New Zealand feeder fund, known as the LM Currency Protected Australian Income Fund, is now thought to be worth about $90 million."

http://nz.linkedin.com/pub/david-jansen/43/6b8/bab
"David Jansen's Overview 
Current Consultant & Service Provider at Trilogy Funds Management Ltd (Self-employed)"

Wow - he ranges wide and free - but, at least to me, he seems pegged to Trilogy

now, where is the so-called "Jansen Report"?

http://www.decisionmakers.co.nz/kiwi-investors-140m-revolt-against-aussie-fund-manager-nbr/
Investment eroded by fees

"Trilogy’s Brisbane-based managing director Philip Ryan told NBR ONLINE LM’s investors want out and they do not want to see their money “effectively evaporate” because of LM’s fees.

“*The only reason we’re involved is that investors in the major feeder funds have come to us and said we’re tired of the fees.*

“When you aggregate the fees for the main fund and the fees for each feeder fund it comes close to 5%, which is well above the industry average, and that’s on an asset base that is actually declining,” Mr Ryan alleges.

“The final accounts for this year haven’t come out or haven’t been released yet and everyone, of course, is scared that there’s going to be further impairments.”

If successful, Trilogy stands to make millions of dollars from its 1.5% fee on the main fund, though Mr Ryan says it will be on a declining pot, as the intention is for an “orderly” wind-down.

Two Australian institutions – which Mr Ryan would not name – are leading the revolt in the wholesale fund, while a group of Kiwi investors in the currency fund are calling for LM’s replacement."

And, as a result of investors going to Trilogy because they're "tired of fees", they copped an extra .5% FUM ($350k p/a) from Trilogy - Good one Philip Asley Ryan: http://moneymagik.com/trilogy_more_on_ryan.php

Wonderful spruik from Trilogy's Philip Asley Ryan - darn, he forgot a few items of interest:

The Dee Why failure - http://moneymagik.com/more_on_Trilogy_PMMMF.php
The Crows Nest failure - http://moneymagik.com/analysis_REIT.php
The Trilogy Pacific First Mortgage Fund (PFMF) failure - http://moneymagik.com/performance_PFMF_Trilogy_big.jpg
The litigation fiasco (more than $300m --> hopeful $100m --> absolute utopian $100m --> $61 claim --> $20m - 50m --> $0m ? : http://www.moneymagik.com/litigation.php
(of course, let's not forget that they didn't even check to see if one respondent was even alive - in fact Mr. Trathen died TWO years BEFORE Trilogy lodged the claim - and who's in charge of the litigation? http://www.moneymagik.com/balmain_in_charge.mp3 (November 2011) - but  IMF is NOT funding the current Federal Court Proceedings)
And last, but certainly not least, the latest PFMF update : http://moneymagik.com/update_12_11_12.php


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## RODENT69 (15 November 2012)

Mysteryman said:


> Have just come back from holiday - greatly needed as a result of stress caused by LM and Trilogy. Unfortunately holidays don't make such problems go away!
> 
> The Atchison report makes interesting reading (thanks Rodent69) in that you are right Asick, it makes no mention of Trilogy's failures for PFMF. It makes Trilogy look like a knight in shining white armour, about to come to our rescue. Not surprising as report was paid for by Trilogy. Having money invested in the WFMIF now amounts to a stalemate at our expense. What really hurts is the disenpowerment of having no voting rights whatsoever as the money is invested through the BT platform, which voted, on our unsolicited behalf for Trilogy. Not surprising that Ken Atchison wrote a glowing report for Trilogy since he is chairman of BT's investor committee. BT is obviously disenchanted with LM. But what does BT get out of it by going with Trilogy? Do they really believe Trilogy will do a good job? No, there has to be some gain for them.
> 
> ...




Mysteryman

Just need to correct my earlier post after reading your comments
I was wrong, I have checked my records, it seems  we are both owed 8 Distributions for the Months May 2010 throught to Dec 2010. I was paid the last three, and only catchup distributions, ho ho - for Feb, March, April 2010  in Sept 2011 (all in that month of Sept 2011) from Asgard. As you would be aware LM froze distributions from Jan 2011.
Given that LM told us all this was money they had accounted for and would be paid, I wonder If we will ever see it, from either LM or Trilogy-  I really doubt it


----------



## ASICK (15 November 2012)

*Trilogy Uses Registry to Spruik its Fund - Your turn now?*

I received a gratuitous letter from Trilogy - I wasn't impressed.

Here's an amended copy of the letter - enjoy:

http://moneymagik.com/trilogy__funds_management_spruik_2012.jpg


----------



## ASICK (15 November 2012)

*Re: Trilogy Uses Registry to Spruik its Fund - Your turn now?*



ASICK said:


> I received a gratuitous letter from Trilogy - I wasn't impressed.
> 
> Here's an amended copy of the letter - enjoy:
> 
> http://moneymagik.com/trilogy__funds_management_spruik_2012.jpg




Now Trilogy has control of your fund, what's the chances you guy'll get a promo letter to invest with Trilogy? 

Maybe things aren't going to well down at Trilogy? could using the names from the registry be an act of desperation?  There wasn't one single dollar of new investment in Trilogy's Cape Parks Fund in 2012 - in fact, 30,000 unit were redeemed: http://www.moneymagik.com/cape_parks_fund.php - just 1000 * $1.00 units issued as at 30 June 2012, and that's after THREE YEARS OF OPERATION!!!!

Could it be  that while you guys ran towards Trilogy, that others were running away?

Last time I looked at the Corporations Act, I came to the conclusion that one couldn't use the names from the registry for that sort of business - heck, that's only my opinion - but I know that I'll get a definitive (and learned) opinion in the near future and I'll be sure to post it here if I find out such use of the registry is permitted - and if it is, then watch out for the potential of self-praising ads from Trilogy.

Nothing amazes me with Trilogy - just when I think I've seen it all, there's more.


----------



## ASICK (15 November 2012)

*Wait ! There's more !*

Ok, Trathen is the disappeared man from Balmain Trilogy's site in relation to the litigation. BT haven't actually told investors that they'd sued a dead man - Andrew Griffin (and his experience team) in charge of the litigation? ho hum. 
http://www.moneymagik.com/balmain_in_charge.mp3
http://www.moneymagik.com/litigation.php
(and of course, IMF didn't hang around to fund the touted "$60m" litigation - seems IMF didn't see any $$$$s in it)

Well, there's another disappearing act - The Great Disappeared Pollution (yes, pollution) :

Down at Martha Cove in April 2011, Griffin said that Lake View Industrial Estate, "as it turns out, is fairly heavily polluted":

http://www.moneymagik.com/fairly_heavily_polluted.mp3

and then on 12 November 2012 in the latest update, BT says: http://tinyurl.com/bjucrcu (Asset 20, on page 9)

"Environmental studies have revealed that the site is not adversely affected by contamination"

Now, how does a site go from "fairly heavily polluted" to "not adversely affected by contamination".

The local council knew nothing about it - a fund member phoned some time ago and again just recently and the council knew nothing about it.

and then, as if blessed by a miracle, and after years of little to no activity at the site, BT says, "which will enable the orderly realisation of the five unimproved lots in the coming months."

Great for fees for Trilogy - and so was "Woodgrove" at Wakerley and so was "Grande Pacific" at Broadbeach .. large value assets returning NOTHING to investors while the manager took a fee - while receiver's took fees - while the general crowd of beneficiaries fed off the assets, we got NOTHING (except for less than half of "Woodgrove" but I wonder whether investors made any headway even on that).
http://moneymagik.com/update_12_11_12.php

Ah .. good luck with Trilogy - you're going to need it.


----------



## ASICK (15 November 2012)

*Re: The so-called "Jansen Report"*



ASICK said:


> http://www.decisionmakers.co.nz/kiwi-investors-140m-revolt-against-aussie-fund-manager-nbr/
> "David Jansen, a New Zealand-based financial consultant for Trilogy, says the New Zealand feeder fund, known as the LM Currency Protected Australian Income Fund, is now thought to be worth about $90 million."
> 
> http://nz.linkedin.com/pub/david-jansen/43/6b8/bab
> ...




I'm a little perplexed about this Jansen guy.  He's disclosed as a "financial consultant for Trilogy"

http://www.nbr.co.nz/article/kiwi-investors-140m-revolt-against-aussie-fund-manager-dw-13040
"David Jansen, a New Zealand-based financial consultant for Trilogy, says the New Zealand feeder fund, known as the LM Currency Protected Australian Income Fund, is now thought to be worth about $90 million."

http://nz.linkedin.com/pub/david-jansen/43/6b8/bab
"David Jansen's Overview  - Current Consultant & Service Provider at Trilogy Funds Management Ltd (Self-employed)"

IMO, "financial consultant for Trilogy" and "consultant and service provider at Trilogy" are NOT the same thing (not, just the words, but what one might understand from the words).

For example,  this fellow discloses in his Linkedin profile, among other things, that he's a "self-employed consultant  at Trilogy".  

He doesn't disclose being a mere  "self-employed financial consultant" - to my mind, there is quite a difference between the words "at Trilogy" and "for Trilogy"  - words which to my mind,  very much limit the extent to which one might conclude Jansen ranges free of Trilogy.

I think the newspaper publications (and there are quite a few) seem to be quite misleading because readers might be led to believe that Jansen is not "at" Trilogy but rather speaks as a consultant "for" Trilogy.

Further, the news articles do not disclose that Jansen is a "service provider at Trilogy".

These are the words used, "David Jansen, a New Zealand-based financial consultant for Trilogy, says  the New Zealand feeder fund, known as the LM Currency Protected Australian Income Fund, is now thought to be worth about $90 million." - to me, indicates comment from an arms-length consultant.

Had the news release used these words, ""David Jansen, a New Zealand-based financial consultant and service provider at Trilogy, says the New Zealand feeder fund, known as the LM Currency Protected Australian Income Fund, is now thought to be worth about $90 million." - to me, indicates comment for and on behalf of Trilogy.


----------



## RODENT69 (15 November 2012)

I post this as information for others to form their own views. 

Its an Email that I sent to LM and their reply today.
Note my references to dates, and the avoidance of a direct answer by LM. 

My conclusion is that LM NEVER intended to abandon the Sell/Hold option, despite the words in the reply, UNTIL forced to by the Trilogy challenge effectively mounted on 28 Sept  ONLY eight days after LM was  saying to investors they were still proceeding with Sell/Hold option


 Question to FM of LM-   --  In the LM update  dated 20 Sept 2012 it clearly indicates that LM was still proceeding with the Sell/Hold option, nothing later was sent to investors contradicting this UNTIL  in the doc  dated 19 Oct  in response to Trilogy challenge LM said this

"The LM First will not be reopening.
• The assets of the Fund will not be split. This decision was made following our last rounds
of meetings with advisers and investors, wherein the strong feedback was a preference
not to see assets split, rather have all investors continue to benefit from the whole pool of
assets in the Fund".

The Atchison report for Trilogy is dated 5 October  so when did LM actually make the decision to abandon the Sell / Hold was it before or after the date of the Atchison Report?

Second Point

I refer to the communication from LM dated 22 Oct – Re Super and Non Super Platform -----

That communication has a Proforma Doc?-  prepared by LM and signed by multiple Asgard investors, which appears to indicate that it was sent to Asgard. 

Is that true was it sent to Asgard?. And are you aware of any replies or acknowledgements by Asgard - reason Asgard has initially told me I am the ONLY person who has lodged a formal complaint of any type re Trustee decision to support Trilogy.  

.....................................................................................................................................................
Reply by FM of LM 

Following our May meeting, we continued meeting with advisors and investors and on the back of the strong theme for most investors to see a return of capital sooner rather than later, we came to the conclusion that the preference was for an orderly sale of remaining assets with all investors receiving capital distributions pro-rata.

We were tidying up the strategy ready to announce when Trilogy launched their attack.

Asgard did receive the correspondence you refer to.  Perhaps from a legal and technical viewpoint it is not seen as a formal complaint.


----------



## ASICK (15 November 2012)

*What's an FM?*



RODENT69 said:


> ... The Atchison report for Trilogy is dated 5 October  so when did LM actually make the decision to abandon the Sell / Hold was it before or after the date of the Atchison Report? ...




Hi Rodent, what's an "FM"?

I'm curious why you asked the quoted question? Is it because LM disclosed that the assets would not be split on the day after the Atchison report? 

18 October 2012 : http://www.lmaustralia.com/Downloads/Unitholder-letter/adv-atchison-report-rebuttal-18-10-12.pdf

19 : http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

"The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund."


----------



## RODENT69 (16 November 2012)

*Re: What's an FM?*



ASICK said:


> Hi Rodent, what's an "FM"?
> 
> I'm curious why you asked the quoted question? Is it because LM disclosed that the assets would not be split on the day after the Atchison report?
> 
> ...




ASICK  my learned friend      FM   are the initials of a Director in LM that I have had extensive communication with over the last 52 Months!!!

My Email was all about timings of *what* and *when* things happened, and  was an attempt to get LM to say exactly at what point they decided to drop the Sell/Hold option.  As you can read they DID NOT ACTUALLY SPECIFY WHEN.  The date of the Atchison report was 5th Oct and at that point they knew LM was still intending to proceed with Sell/Hold  because they were able to offer up their alternative position, - "Orderly realisation of all Unit Holder assets and return of capital to unitholders"

I fully realise its all too late, but just as in the past with questions to LM I was just trying to get an honest reply - but never did
My view is that this point of difference was a significant factor in the decision making process to support Trilogy.
Hopefully when I get my formal reply from Asgard, it may say why they decided to support Trilogy


----------



## ASICK (16 November 2012)

*Does it really matter?*

# 69, Does it really matter?

Asgard - an experienced company:
http://www.asgard.com.au/

28 September 2012  - Notice of Meeting & Explanatory Memorandum:
http://www.trilogyfunds.com.au/site...ency (NOM + EM)_INTERNAL PAGES_ WEB_FINAL.pdf

"Step 3: Vote on the Resolutions either by attending the Meeting or by completing and returning the
enclosed Proxy Form prior to *5.00pm AEDT on 29 October 2012* by any of:
Online: www.linkmarketservices.com.au
See the Proxy Form for further details
Mail: Link Market Services Limited, Locked Bag A14, Sydney South, NSW, 1235
Fax: +61 2 9287 0309
Email: vote@linkmarketservices.com.au
See the Proxy Form for further details
By hand: Link Market Services Limited, 1A Homebush Bay Drive, Rhodes, NSW, 2138"

18 October 2012 : http://www.lmaustralia.com/Downloads...l-18-10-12.pdf

19 October 2012 : 
http://www.lmaustralia.com/Downloads...y-19-10-12.pdf

"The assets of the Fund will not be split. This decision was made following our last rounds of meetings with advisers and investors, wherein the strong feedback was a preference not to see assets split, rather have all investors continue to benefit from the whole pool of assets in the Fund." 

The meeting - 1 November 2012:
http://www.lmaustralia.com/Download...ult-and-business-as-usual-for-LM-01-11-12.pdf

As I understand it, you say that Asgard had an independent report which you suspect you'll never be privy to. I'd guess that if the board of Asgard commissioned the report, the report would doubtlessly influence the board (at least to some extent).

In any event, If LM's statement of 19 October 2012 (excerpted above) had any influence on the board of Asgard, the board had from 19 October 2012 (or thereabouts)  until 5 pm 29 October 2012 to make any change to its voting position.


----------



## ASICK (16 November 2012)

*They Didn't Want YOU to Know Who They Were!*

I didn't notice this before, but it's an interesting signature block on the notice of meeting:
http://tinyurl.com/cfj8xpu

http://www.moneymagik.com/convening_members_agent.jpg

Of course the signature is obviously that of Mr. Rodger Bacon of Trilogy Funds Management Limited:
http://www.moneymagik.com/signatures.jpg

The notice was signed on 28 September 2012, just four days after the company, "Convening Members' Agent Pty. Ltd." was registered (24 September 2012):
http://tinyurl.com/canrfbb

Now, that's embedding the convening members (those who hold at least 5% of the units on issue).

The company, Convening Members' Agent Pty. Ltd. (registered on 24 September 2012) was the convening member & Bacon acted as agent for that company when he signed the NOM (Notice of Meeting) on 28 September 2012.

Clearly the convening members were shy about disclosing who they were, and Bacon acted to aid that non-disclosure.

It's important to understand the distinction between calling the meeting and paying for the meeting.  While we might say that "Trilogy called the meeting", the fact is that the convening member called the meeting - in this case, it was a newly registered company obviously a construct of the member or members who was/were at that time, an actual investor or investors, or representative/s of an investor or investors in the fund, or agent/s of an investor or investors in the fund.

It seems to me that Bacon signed because none of the directors of Convening Members' Agent Pty. Ltd. would put their signature to the document - They didn't want you to know who they were. A lot of effort has gone into this little arrangement.


----------



## ASICK (16 November 2012)

*Ways and Means*

Now, please don't be thinking that I'm suggesting that there's anything illegal about Bacon signing for the actual convening members' construct - there isn't.   And there's nothing wrong with Bacon  not disclosing his name under his signature.

As disclosed, there is two steps of isolation - one using the construct, and the second using Bacon as agent for the construct. These steps would not prevent disclosure to other platforms, and certainly not to the media, after all, those entity have the means and ways not readily available to ordinary investors.

Any ordinary investor out of the loop (that is, without the said ways and means) really wouldn't have had a  clue.


----------



## ASICK (16 November 2012)

*Re: Trilogy Uses Registry to Spruik its Fund - Your turn now?*



ASICK said:


> I received a gratuitous letter from Trilogy - I wasn't impressed.
> 
> Here's an amended copy of the letter - enjoy:
> 
> http://moneymagik.com/trilogy__funds_management_spruik_2012.jpg




For a more information about the use of the scheme's registry, here's an excerpt from a letter sent to a PFMF investor:

"For your information, there are also strict obligations imposed under the Corporations Act in relation to the way information contained in the register may be used. In particular, section 177 states:
"a person must not:
(a) use information about a person obtained from a register kept under this chapter to contact or send material to the person; or,
(b) disclose information of that kind knowing that the information is likely to be used to contact or send material to the person."

That limitation however does not apply if the use or disclosure of the information is:
"(a) relevant to the holding of the interests recorded in register or the exercise of the rights attached to them: or
(b) approved by the scheme.""

Applicable law: 
s. 173 Corporations Act 2001 (Cth) :
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s173.html
s. 177 Corporations Act 2001 (Cth) :
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s177.html


----------



## ASICK (17 November 2012)

*Asgard - Lost in Space?*

I notice the links from a previous post don't seem to work.  They check out on LM's site. Maybe I made a mistake when I make the links : http://www.lmaustralia.com/LM-Mortgage-Funds/Currency-Protected-Australian-Income-Fund.aspx

What went on?

1. An investor's/s' platform/s (let's call it/them the "convenor") decided to support Trilogy in its pusche for the fund.
2. 24 September 2012 - The convenor didn't want to be identified so it set up a company Convening Members' Agent Pty. Ltd. which was to become to the convening member.
3. 28 September 2012 - Rodger Bacon (of Trilogy Funds Management) signed as agent for Convening Members' Agent Pty. Ltd. (the convening member).

Why did they do it?

1. To oust LM as manager of the fund in order to reduce the management fee.

Would ousting LM from the fund improve Trilogy's chance of taking over the LM FMIF?

Essentially No - the vote would be the same other than Trilogy would have access to fund money which it could possibly use to promote itself in a run for the LM FMIF (of course, in the best interests of members of the fund).

What was the benefit (prior to 19 October 2012)?

For investors?
1. A reduction in management fee to .5% FUM
For Trilogy?
1. A .5% FUM fee which according to LM would be about $350k per annum.

What was the downside (prior to 19 October 2012)?

For investors?
1. None
For Trilogy?
1. None.

On 19 October 2012, LM disclosed it would wipe the fee for the fund:
http://www.lmaustralia.com/Downloads/Unitholder-letter/inv-cpaif-follow-up-proxy-19-10-12.pdf

What was the benefit (from 19 October 2012)?

For investors?
1. None.
For Trilogy?
1. A .5% FUM fee which according to LM would be about $350k per annum.

What was the downside (from 19 October 2012)?

For investors?
1. A .5% FUM fee which according to LM would be about $350k per annum.
For Trilogy?
1. None.

Prior to 19 October 2012, members stood to benefit because the fee on the fund would be reduced, but on 19 Octber 2012, that all changed - the benefit dissipated because LM had, as Trilogy says, capitulated - I would say, met investor demands because they saw the "writing on the wall" (or "Tablet" for new age thinkers).

All of a sudden, there was no benefit to continue along with Trilogy - in fact, continuing along with Trilogy was going to cost members' money.

As the meeting continued, there was only one entity which stood to benefit, and that was Trilogy.  The convening member (Convening Members' Agent Pty. Ltd.) continued along with the meeting in order to benefit Trilogy at the expense of investors (who now bore the brunt of a .5% FUM fee). 

Had the meeting been discontinued, it would have cost the fund nothing - and the big loser would have been Trilogy. Convening Members' Agent Pty. Ltd. certainly saved Trilogy's Bacon (literally).

But if Convening Members' Agent Pty. Ltd. is a construct of one or more "platforms", does/do the platform/s owe a duty of care to investors in the fund to act in members' best interests?  If it/they does/do, then did it/they act in members' best interests when they continued along with the meeting after 18 October 2012?

I really think those sorts of questions are worth pursuing.  Wouldn't it be ironic is the convening member/s (behing the mask of Convening Members' Agent Pty. Ltd.) were found liable to pay Trilogy's management  fee?  Perhaps that's a question ASIC might care to answer (that is, if a member of the fund was to put the question to ASIC).


----------



## ASICK (17 November 2012)

*Not an Ordinary Meeting Called by Ordinary Investors*

As I see it, there's a legal distinction between members of the fund and the platforms.  If members call a meeting they're entitled to bring meetings which might cause a fund loss - but can that be said for "platforms" and agents? 

What obligation (if any) does/do the platform/s have to act in investors' best interests?
What obligation (if any) does the company Convening Members Agent Pty. Ltd. have to act in investors' best interests?
What obligation (if any) does Rodger Bacon (as agent) have to Convening Members Agent Pty. Ltd.?

I think these are areas worth exploring.  The recent meetng was not what one might call an ordinary meeting called by ordinary investors - this seems to have been something that was entirely out of their hands.


----------



## RODENT69 (18 November 2012)

*Re: Asgard - Lost in Space?*

ASICK    I think your question re does it really matter has been answered by this post by you , the Who, What and When always matters, let alone the Why.
In my complaint letter  to Asgard I specifically asked on what actual date the Trustee/s decided internally within Asgard to support Trilogy. I am hopeful they will be honest.  FM from LM had previously told me when Asgard actually  lodged its votes.

Wonder of Wonders   -  the latest communication from LM popped out yesterday 16 Nov, and for the first tiime EVER its signed by Drake and *3 other Exec Dir*, and as a communication piece  they seem to be learning 
The other wonder is that LM has actually quoted some investor numbers. 

The one I find interesting is 237 Investors for the WFMIF, its interesting because its the EXACT number that Asgard had previously advised me that *they had as the Asgard investor number on their platform?*


----------



## ASICK (18 November 2012)

*APGF*

CYRE Trilogy took over some funds from APGF (they had disgruntled investors too).

CYRE Trilogy:
http://www.cyretrilogy.com.au/

APGF:
http://www.apgf.com.au/

Readers will notice that APGF discloses financial information about its fund - CYRE Trilogy does not.

CYRE Trilogy might spruik the odd bit of self-praise, but that's all the public see - just like Trilogy's site, only the spruiks.

There's some good news - a PFMF member contacted APGF and was told by the person contacted that this thread is watched very closely indeed.

I'll bet there's no love lost between APGF and CYRE Trilogy.

Trilogy's last run for an APGF fund didn't end well for Trilogy, and can you believe it? they had a grumble to ASIC - and what did ASIC do? probably SFA.  Good onya APGF - Trilogy foiled - you're all learning down there.
http://www.investordaily.com.au/cps/rde/xchg/id/style/14734.htm?rdeCOQ=SID-0A3D9632-3AF5B24D
(investor daily to carry a lot of Trilogy's spruiks)

Some new audio has been released on the front page of http://www.moneymagik.com/

Also, a link which shows how well a damaged fund taken over by Stacks is doing - want a replacement manager? Then consider Stacks - no, I'm not an agent for Stacks - I just think they're a solid performer.


----------



## Mysteryman (18 November 2012)

*Re: Not an Ordinary Meeting Called by Ordinary Investors*

A very astute analysis of the calendar of events laid out in your last few emails, Asick. One wonders who are the investors with 5% investment in the WFMIF, represented by the Convening Members Agent. Did they also have a vested interest in Trilogy, despite the fact that there appeared to be no further reason to continue with the meeting and hence vote, given LM had changed their plans. I don't suppose it is illegal even if they did have connections with Trilogy.

But to be devil's advocate for a moment - it could be argued that the investors represented by the Convening Member's agent (CMA) felt that the pain of fees in the short term were to be tolerated in order to achieve the long term gain of Trilogy acquiring the main fund when fees would then be zero!

None of the Investors behind the CMA would have achieved their aim of Trilogy becoming RE without the support of the likes of BT(Iselect wrap) and Asgard voting for Trilogy, so the question of why these 'platforms' voted for Trilogy still remains unanswered. A letter has been written to BT(Iselect wrap) requesting a reason but so far no answer has been received.


----------



## ASICK (18 November 2012)

*"The Devil's Advocate"*



Mysteryman said:


> A very astute analysis of the calendar of events laid out in your last few emails, Asick. One wonders who are the investors with 5% investment in the WFMIF, represented by the Convening Members Agent. xxxxx.
> 
> But to be devil's advocate for a moment - it could be argued that the investors represented by the Convening Member's agent (CMA) felt that the pain of fees in the short term were to be tolerated in order to achieve the long term gain of Trilogy acquiring the main fund when fees would then be zero!
> 
> None of the Investors behind the CMA would have achieved their aim of Trilogy becoming RE without the support of the likes of BT(Iselect wrap) and Asgard voting for Trilogy, so the question of why these 'platforms' voted for Trilogy still remains unanswered. A letter has been written to BT(Iselect wrap) requesting a reason but so far no answer has been received.




Hi Mysteryman.

re: Paragraph 1 - I was speaking about the question of whether negligence might arise out of a situation where a party/s might owe a duty of care to other parties, and if such a duty was owed, whether it was breached (that is, whether the tort of negligence (or breach of statutory duty) is applicable).

I've edited out the quote from your posting - if the answer to your (edited) query was in the affirmative, then a clear conflict of interest would arise, a situation quite troublesome for the parties you refer to.  However, I've no evidence to support such a proposition.

re: Paragraph 2 - As I understood it, investors didn't cast a vote to Asgard - and yes, investors are entitled to bring proposals which cause the fund to lose (I posted that too).  And, as posted, Trilogy achieving control of the fund did not give any advantage to taking over the LM FMIF (unless of course Trilogy is able to use the fund's resourses to spruik in its run for the fund - but that advantage would only be one for Trilogy - again, a cost to members on top of the .5% FUM management fee.). 

To my mind, there is a simple reality, and that reality is, that on and after 19 October 2012, any reason/s that I would understand as being in the best interest's interests had dissipated - there could be only one entity which could possibly benefit from continuing along with the meeting, and that was Trilogy.  There was nothing to stop the convening member pulling the meeting right up to the very eve of the meeting, perhaps later (anyone got more info on this point?).

re: Paragraph 3 - To my mind, it's  the case that the meeting could not proceed without the support of the convening member (Convening Members' Agent Pty. Ltd.). So, an inquiring mind might ask "What is the basis for the convening member continuing along with the meeting after 18 October 2012?":

1. Reduced fees? No. in fact, it would result in increased fees.
2. A leg-up to take over the LM FMIF? No. In fact, LM had amended the fund's constitution so members would have a vote in the processs (something they didn't have at the last meeting).

Trilogy was the clear winner - something that could not have happened if the convening member discontinued along with the meeting. 

The underlying problem, as  I see it, is that members in the fund didn't have their say in the vote - if members of the fund chose the path, then so be it - but as I understand it, that wasn't the case.  Again, I'm always happy to be corrected if I'm wrong.

I wonder what obligations (if any) Atchison has in relation to the report generated to support Trilogy's case, a report which is far from balanced and which falls way short of giving full disclosure about Triogy, in fact, as I read it, the report did not raise even one negative aspect in relation to Trilogy management history.  Maybe ASIC might know more about this subject?


----------



## Mysteryman (18 November 2012)

*Re: "The Devil's Advocate"*



ASICK said:


> The underlying problem, as  I see it, is that members in the fund didn't have their say in the vote - if members of the fund chose the path, then so be it - but as I understand it, that wasn't the case.  Again, I'm always happy to be corrected if I'm wrong.
> 
> I wonder what obligations (if any) Atchison has in relation to the report generated to support Trilogy's case, a report which is far from balanced and which falls way short of giving full disclosure about Triogy, in fact, as I read it, the report did not raise even one negative aspect in relation to Trilogy management history.  Maybe ASIC might know more about this subject?




True the investors in the WIMIF who had their monies invested through platforms like BT(Iselect wrap) and Asgard (referred to as platforms from now on) did not have the right to vote as individual investors.Those votes were used by the platforms to vote in favour of Trilogy.

According to LM:
"Out of the 237 investors in the LM Wholesale First Mortgage Income Fund, only five by number supported Trilogy, each making a unilateral decision in favour without any reference to or consultation with their underlying investors or advisers. "

So some or all of those five votes were sufficiently weighted by the fact that they represented many investors through various platforms to bring the votes in favour of Trilogy to over 50%. This, was as far as I am aware, without any consultation with the investors represented by these platforms and indeed in my case after informing them I did not want them to vote for Trilogy on my behalf.

So did the platforms take the Atchison report at face value and do no further research into Trilogy's past performance, which would appear to be negligence on their part, or do they have a reason, either clandestine or honourable, for voting in the way they did? An answer, even incognito or upfront on this site would be welcome.


----------



## ASICK (18 November 2012)

*Crawfish Mentality*



RODENT69 said:


> For Info of all-   just had a call from Trilogy man- they will not give me the other Report that was written in support of them. It did however go to all the Main Finincial Planners groups, so if any body has a planner that has it then maybe it could be published here? ...




While watching the rain drops fall, a few thoughts come to mind about the so-called Jansen report.

1. I'm reminded he's a consultant at Trilogy:http://nz.linkedin.com/pub/david-jansen/43/6b8/bab
2. Jansen's report went to the main Financial planners 
3. Trilogy wouldn't give Rodent a copy

Clearly investors are entitled to see such a document, after all, the document's intent was to unseat LM.  Investors are entitled to know if it was just as lacking in research and as biased as Atchison's report.  There is no reason it can't be published, after it, it can no longer constitute advice because the very reason for its production has now passed (the meeting is over) - the document now forms part of history, not advice about the future.

I think Trilogy is too shy to publish it in the light of day - just like it's too shy to disclose all the documents about the PMMMF and the Healthcare REIT on its website.  

It very well could be the case that investors might be a tad smarter now, and when it comes to assessing whether a report being held out to support Trilogy is balanced and well-reseached, investor might just apply a simple litmus test, and the test might be:

"What is being disclosed about Trilogy's past associations (Laton Capital Group/Laton Corporate Finance) and Trilogy's management history in relation to the losses in the Trilogy PMMMF, Trilogy Heathcare REIT, and Trilogy Pacific First Mortgage fund?" 
http://moneymagik.com/more_on_Trilogy_PMMMF.php (includes info about Laton Capital Group & Laton Corporate Finance)
http://moneymagik.com/analysis_REIT.php
http://www.moneymagik.com/

- and if the report doesn't mention every one of these four issues in detail, then the reader might say "This report is biased and/or poorly researched - it should be disregarded as being no more than a spruik" 

And if it the case that if Trilogy thinks that LM FMIF members are now a tad smarter, Trilogy might be just that tad shyer in disclosing certain documents, for example, a document such as the Jansen report - (Jansen, the man down at Trilogy).

My view - Trilogy is shy to give you guys the report - Trilogy has adopted a crawfish mentality on Jansen and has withdrawn into its corporate "cave".

Investors are entitled to "see" what's on offer - if one was out to buy a robot, a broom dressed up in a garbage can just isn't going to fit the bill, is it?


----------



## ASICK (18 November 2012)

*On the Down & Down*

A PFMF unitholder reports that she received her PFMF fund update with junk mail  enclosed.

The junk mail was a couple of fliers for Trilogy funds.

Come to the think of it, the .5% FUM ($350k per annum) might not be as attactive as having the ability to send out heaps of unsolicited junk mail attached to fund information to members of your fund.

Things must be on the down and down at Trilogy.


----------



## ASICK (18 November 2012)

*Re: On the Down & Down*



ASICK said:


> A PFMF unitholder reports that she received her PFMF fund update with junk mail  enclosed.
> 
> The junk mail was a couple of fliers for Trilogy funds.
> 
> ...




Here's an update on this issue:

http://moneymagik.com/trilogy_canberra_cbd_property_syndicate.php


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## RODENT69 (19 November 2012)

Dear Mysteryman and ASICK

Mysteryman,  you are on the ball, I agree that ASICK did a very good job of spelling out the timelines (calender of events) in his recent post #227.  FYI please refer to my post #229   you will note the 237 Investor figure I quoted and the reference to it by LM in their correspondence.  

I really wonder about this figure and will be writing today to my contact in LM  about this figure, because as I said its the EXACT figure Asgard had previously advised me they had for their Investor numbers in the WFMIF.

Something is odd here, because if the 237 Investor Number is correct and Asgard said that it is  their actual number, that can only mean that no other investors were involved in other Platforms for the WFMIF ,  and that cant be right?

Also re your postings #231 and #233.    Asgard commissioned its own separate report, but as yet I dont know what else they used, Atchison or other. Hopefully when I get my formal reply from their Case Director to my complaint all the points I have listed for a detailed reply will be covered off in full.

Mysterman   JFYI did you notice the reference in the latest communication from LM  16 Nov mentions in specie transfer possibility.  I will ask LM to tell me who the Platforms that seek the instructions from their underlying investors actually as clearly Asgard and BT are not one of these.  

Its past the middle of the Month, I wonder how close are the Audited Statements and RG 45 etc???


----------



## Mysteryman (19 November 2012)

Re #237

Yes I did see the mention about transferring my fund to another platform. I think it may also be possible, if your WFMIF is within a super fund to transfer the fund directly into your SMSF (if you have one) and thus eliminate the use of a platform ie Asgard, BT(Iselect wrap). I've still to check this out in detail. I want to make sure also that I don't get out of the frying pan and into the fire and incur further fees in transferring. Unfortunately, the move won't get me out of Trilogy's 0.5% fee umbrella but should allow voting rights in the main fund, which may prove useful in future.  

Also your reference to a proforma doc in #220 - FYI I believe some of the signatures may be those of LM employees with investments through Asgard. I have no idea if it was actually sent to Asgard.


----------



## RODENT69 (19 November 2012)

Mysteryman

More than 2 years ago I requested Asgard to Transfer my WFMIF assets from them to my own SMSF. The answer in simple terms was they had no systems functionality to allow this to happen. It could only be done by selling down the assets first and because the fund was frozen this sale could not happen.

However things may have changed by now, as they told me they were building the systems functionality to allow this to happen . I may be asking the in specie transfer question again in the near future, depending on how well they handle my complaint to the Trustee.

I have been advised by LM  that Netwealth is a platform (Super Wrap) that seeks instructions from its investors. I can also confirm that LM has seen the so called Janson report, but were not aware that Asgard had commissioned its own report. Perhaps I  will ask LM to give me a copy of the Janson Report ?


----------



## ASICK (21 November 2012)

*The "Mexican Standoff"*

Trilogy's shy to disclose the so-called "Jansen Report"

Dang, so is LM.

Who said Trilogy and LM didn't have anything in common?


----------



## ASICK (21 November 2012)

*Trilogy Junk Mail*

ASIC has confirmed it's okay for managers (eg. Trilogy) to send junk mail out to fund members.

So, I wonder if it's okay for others to use the registry list likewise? or it is a special for managers only?


----------



## RODENT69 (21 November 2012)

All  readers. I wrote to LM, and was advised the following

"The Jansen report  issued for financial advisors only and as such, unfortunately, I am unable to provide it to you.  I am  looking into posting a full rebuttal of same on our website, so stay tuned there".

There is however a back door source that may come good,   I will post IF I get it

My question about the 237 investor number  was answered. There are actually 237 Investors listed for the WFMIF

My individual investment, and all other investors with this fund through Asgard is counted as ONLY 1 of this investor number.  Of course as we know it was the $ amount of the investors that was counted , not the actual Investor numbers


----------



## ASICK (21 November 2012)

*Jansen Report*

Mysteryman, I"ve had a copy for a wee while now.  I'm astounded that the following notice appears on the front cover: "Private & Confidential, Prepared for NZ Financial Advisors Only, Not Intended For Advisor Clients".

I really haven't had time to look over the document in great detail.

The document is dated September 2012.

The document makes no effort to disclose Trilogy's past management disasters. For example, this excerpt on page  9, "Trilogy is well known to the Convening Members as an experienced Australian property asset manager that has first-hand experience in replacing an RE of a frozen mortgage fund." - I reckon this statement says a lot about the whole deal.  The Convening Member knew Trilogy well - interesting.

and this on page 10/11:

"Who is Trilogy:
Trilogy is an Australian mortgage fund management Company.
Trilogy currently acts as RE for a number of mortgage funds and property syndicates. Trilogy currently has funds under management of approximately A$300m spread across Queensland, NSW and Victoria.
Trilogy has a record of managing one of the few mortgage trusts in Australia that remained open through the GFC and continued to make regular income distributions whilst meeting all redemption payments when requested.
Trilogy has first-hand experience in replacing an incumbent RE for a frozen mortgage fund. In June, 2009, in joint venture with Balmain Corporation Ltd, the Members of City Pacific First Mortgage Fund voted at an extraordinary meeting to appoint Trilogy as the new RE of the Fund.

The City Pacific First Mortgage Fund had a degree of similarity with the LM First Mortgage Income Fund, specifically:
• It invested in higher yielding, higher risk construction and development mortgage loans in Australian. [Trilogy made a massive loss on the simple purchase of a single unit in an apartment block on the Gold Coast - extrapolate that]• The fund was leveraged. [and, after three and a half years of Trilogy remains leveraged]• The fund took on second mortgage positions. [Under Trilogy's management, the fund lost a further $14.4m on a second mortgage]• The fund was frozen.
• The majority of loans were in arrears. [and Trilogy didn't stop racking up accruals (interest receivables)]
• Fees were very high. [Trilogy took fees of $16.6m while returning members only $0.0875/unit and while losing 56% of the fund's value]
Once in place as RE, Balmain Trilogy put in place a strategy designed to improve Fund performance, start the payment of capital distributions and increase the transparency around the assets in the Fund. Management fees were dropped (from in excess of 3% to 1.5%) and a legal review was conducted to review the past conduct of the Fund with particular focus on related party lending. [see http://www.litigation.php (updated)]

More recently, Trilogy has been appointed the new RE for two property syndicates previously managed by APGF Management Limited. This follows the appointment of Trilogy over three syndicates and three unit trusts in May 2011, also managed by APGF." - and guess what? those APGF funds financial information is not visible on CYRE Trilogy's website - now, at least to me, that's not a surprise.

The document seems to crticize LM for doing in the LM FMIF that which Trilogy is doing in the PFMF.

Jansen says, "Disclosure: David Jansen is not involved in FMIF or any of its feeder funds and has no connection with LM or Trilogy other than as set out herein. Certain Fund Members have approached Trilogy and requested that a research document be prepared, the main purpose of this document being to provide a third party’s view of the quality of this Fund to financial advisors, to explore the issues around LM’s continued involvement in the Fund as the incumbent Manager and review the option available to members to change management of the Fund. David Jansen has entered into an agreement with Trilogy to provide this third party review and to thereafter meet with investment advisors to discuss the contents of this report. The agreement is on normal commercial terms and conditions. . This assessment has been undertaken by David Jansen on an independent basis and is not an investment or other recommendation."

I remind readers of Mr. Jansen's Linkedin profile which states, "Consultant & Service Provider at Trilogy Funds Management Ltd (Self-employed) "


----------



## ASICK (21 November 2012)

*Jansen Report*

The reason I'm not posting the report is that I'm not sure about a number of the facts contained in the report (about the location of properties and the like).  If someone else publishes the report, then good and well - that'll save me the bother.

However, I'll stick to what I do know and make maybe a couple of postings about some issues where Jansen seems to criticize LM for doing something, and yet, it seems to me, Trilogy is doing likewise in the PFMF.

Apart from lower management fees (which is now a moot point), I can't see where the report discloses how Trilogy could give investors a better outcome.  

"The Convening Members’ Agent (i.e. Trilogy) believes that the replacement of LM with Trilogy will have the following benefits to Members in the Fund, including:
• Major reduction in management fees. [no longer applicable]• Accelerated capital distributions to Members. [this cannot be guaranteed - in 3.5 years, Trilogy returned only $0.0875/unit to PFMF Members, with only $0.0075/unit from 1 July 2012 and no certainty about a further payment this year]• Regular information and increased transparency around the loan portfolio. [good luck on this one - http://www.moneymagik.com/ ]• Implementation of new strategies designed to enhance member value and deliver liquidity. [like this? http://tinyurl.com/auhgylu ]• Independence to review related party lending. [yes, true - but the deal's already done]"

Key elements of Trilogy’s strategy for the FMIF include:
These include:
• Reduced management fees.[not any more]• Undertake a review of all assets and report findings to members. [big bucks - in the PFMF, fund assets were devalued massively after the review - in my view, a lot of money for nothing]• Engage other investment and project managers to assist in the completion and realisation of certain assets.
• Conduct a legal review of the Fund’s previous dealings, lending protocols and disclosure material. [oh boy .. this can drag on for years and years and years - http://www.moneymagik.com/litigation.php - and the stories they can tell you .. the carrot they'll dangle - you'll be on the end of your seats, literally ]
• To make capital distributions as expeditiously as possible. [http://www.moneymagik.com/yardy_yardy_yah.php - the representations, the targets, and the disappointments - it can drag on for years, and years, and years]• To repay or refinance the Deutsche Bank facility as soon as possible. [oh boy .. good luck on this one too .. in the 3.5 years that Trilogy managed the PFMF, the debt was repaid behind investors until the CBA pulled Trilogy up by its corporate "jock straps" - good luck indeed ]"

I should point out that all information in this (and my last posting) which is highlighted in red and contained within square backets are my comments.

Trouble is, the convening member (which knows Trilogy well) didn't call for "Jansen Mark II" to incorporate the LM updates.


----------



## ASICK (21 November 2012)

*LM - update / Asset Report*

http://lmaustralia.com/Investment-P...s-Attach-on-Corporate-Fund-Raider-Trilog.aspx

For those who haven't seen the documents.

I forgot to deal with this issue in my previous post, "Engage other investment and project managers to assist in the completion and realisation of certain assets." - there's heaps to talk about on this one - I'll leave it for a rainy day.


----------



## Irishdan (23 November 2012)

Judging by phone call to Ernst and Young, financials and audit are well and truly complete and have been provided to LM. 

Auditor Paula McClusky is in Newcastle so couldn't ask directly of her.

Obviously her staff could not discuss specifics of financials (nor did I ask them to) but it would appear that LM have them. 

Clearly they do not want to publish them...


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## Mysteryman (23 November 2012)

Irishdan said:


> Judging by phone call to Ernst and Young, financials and audit are well and truly complete and have been provided to LM.
> 
> Auditor Paula McClusky is in Newcastle so couldn't ask directly of her.
> 
> ...




Any idea when they were sent to LM?


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## ASICK (24 November 2012)

*LM financials & RG45*



Mysteryman said:


> Any idea when they were sent to LM?




A little birdie told me to look for a release this month - but you know birds, they twirp.

www.moneymagik.com has been rearranged (for those who might like to read more about Trilogy)


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## ASICK (26 November 2012)

*Trilogy Hype*

In November 2010, Andrew Griffin told PFMF members at the Sydney Info Session about the directors' liability  insurance: http://www.moneymagik.com/only_20_million_insurance.mp (the extra audio (after the break) is from the Fund's Martha Cove Info Session in April 2011)

On 27 April 2012 Trilogy sued the former Citypac directors for $60m: http://tinyurl.com/c2627lb

In early November 2012 Rodger Bacon said that $20m was possible : http://www.moneymagik.com/bacon_nail_em.mp3

There was never a snow flakes' chance in hell of anything greater than $20m.

It's fine to spruik the value of a claim, but what's actually possible to recover is something  very different altogether - Punters must have been elated with the $60m claim - but now it's down to $20m (claim maximum), and perhaps even to ZERO if Sullivan's allegations hold up about there being no insurance because Trilogy didn't make the necessary insurance premiums.


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## Irishdan (26 November 2012)

Financials appeared over the weekend.

Dismal reading but not unexpected.

Signed off on by EY on the 16th November so took a week to release to unitholders.

Unit price deterioration to 59c with a qualifying statement that accurate price will only be determined after sale of remaining assets

Auditor has also put some qualifying statements in their report.

Another 9m in management fees and over 4.8m in "loan management fees" . $13.8m for managing a capital loss of investors funds that currently stands at 41% and is likely to go further

Equates to a fee gouge of 4.77%


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## ASICK (26 November 2012)

*What a Wonderful Reward for Failure*



Irishdan said:


> Financials appeared over the weekend.
> 
> Dismal reading but not unexpected.
> 
> ...




to be sure .. to be sure .. good times for LM, that's for sure.

I agree about the unit price - I don't believe it for a second - if anyone has the RG45, could it be posted on the forum?  and true, the only price that should interest investors is the sale price, but for the rich and famous, it's the assessed value (to calculate the fees) - and look at those fees for taking over from receivers - it very well might have been cheaper to appoint receivers, and those guys and gals (the receivers) are the new "million dollar" men (and women).  What a wonderful reward to LM for failure.

Who in their right minds would invest in an MIS ever again?

It's terrible that a manager is able to take millions of dollars for losing - what a joke to have to rely on mobs like LM and Trilogy - the government should be ashamed of itself for allowing these schemes to even exist in the form they've allowed them to exist.


----------



## Edgen (27 November 2012)

So Asick is there nothing we as investers can do about this ? do we just sit back and watch our money disappear ? .
I was told only last week by our FA (who we go through if we have any questions about LM) that we should still come out with about 70% of our money , what BS that was . 
We where miss sold this fund by a FA , which i stated to in e mails to  that i did not want anything risky and we where not prepared to loose the money . It would be more easier to accept if we had put it in something high risk or even medium risk then i could say well we took the risk so it is the price we pay , but this was not the case we where just niave mum and dad investers who have lost a great deal of our hard earned money, which could have been for our kids future .The whold thing makes us sick to the stomache.


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## ASICK (27 November 2012)

*Where to turn?*

*A Viable Alternative*

I still think that Stacks is a reliable manager - a better alternative than LM.   Shame is that you're got a mob like Trilogy in the game.  Trilogy with a proven track record of failure in taking over a damaged managed fund, the PFMF.  Like LM, Trilogy has been well rewared for failure in the PFMF.

Stacks took over the damaged Kingsway fund which now seems to be travelling well:
http://tinyurl.com/c7nlyzb

I think that a group of you should approach Stacks and see if they're interested - you really need a manager you'll have confidence in.  Stacks seems to be able to get a grip on things - good or bad, I think you'll get it straight from Stacks.

*LM: re: receivers*

Receivers may be appointed, or the manager may take over the loans. When managers take over loans, it normally means that such an action saves investors' money, but in the case of LM it seems to me that the exercise has been a boom for LM with no savings for investors - as I see it, it's a grab for more fund dollars.   I'll say it again, LM is being doubly rewarded for FAILURE.

*Trilogy is out for More Too*

Don't kid yourselves about Trilogy either.  Trilogy's out for more too:

"Project Management - Where appropriate, CYRE Trilogy will engage project managers on behalf of the
FMIF, including Knight Frank and Avive Asset Management Pty Ltd (a related party of CYRE Trilogy) and other specialists, to assist in the completion and realisation of certain assets. Knight Frank, an international property advisory group, has agreed to work with CYRE Trilogy on a project by project basis as agreed between the two parties. Fees charged by such specialists will be charged to the FMIF."
http://tinyurl.com/csozm3z

Avive Asset Management Pty. Ltd. was registered on 20 April 2012:
http://tinyurl.com/c62al55

*The Role of a Manager*

I may be wrong, but I think most investors have NO idea of the constitutionally defined role of a manager.  It's quite a shame, because managers manage, and that's it - no more, no less.  Everything else is costed on top, that is, contracted out at the fund's sole expense - and if work can be contracted out to a relative (or even taken over by the manager (as in LM's case, work normally done by receivers)), then that gives the manager a bigger share of the pie (and more $$$ - what it's all about - business).

Managers really have a simple "job description" but, I guess because of the fees these mobs charge, investors mistakenly believe that managers do much more, but managers do not do any more than manage, a singular and simple role (except if they wish to expand that role at no cost to investors - the  exception rather than the rule).

The shame of it all is that detailed particulars of expenditure are never disclosed to investors so investors have no idea which entity does what work (and gets the $$$$$).

A manager might say that it's doing this or that, even if  all the work was contracted out at the fund's sole expense - in such a case, the manager has done no more than manage, but takes the credit for all the work - how would LM investors know what work is being paid for by the fund and by the manager? well, they wouldn't have a clue.

*Appointing a Receiver*

That's a good option, but I have no idea how to do it. I'm sure ASIC won't step in - ASIC isn't a prudential regulator, so merely losing capital value will not motivate ASIC to act.

Maybe a proposal at a meeting to direct the manager to apply to the court for the appointment of a receiver might work - you'd need to get legal advice on whether its possible.  Of course the manager has the $$$ and could make such an application fraught with danger - eg. "Your Honour, yes, we're following investors' wishes, but we think ..."


----------



## Irishdan (27 November 2012)

Edgen said:


> So Asick is there nothing we as investers can do about this ? do we just sit back and watch our money disappear ? .
> I was told only last week by our FA (who we go through if we have any questions about LM) that we should still come out with about 70% of our money , what BS that was .
> We where miss sold this fund by a FA , which i stated to in e mails to  that i did not want anything risky and we where not prepared to loose the money . It would be more easier to accept if we had put it in something high risk or even medium risk then i could say well we took the risk so it is the price we pay , but this was not the case we where just niave mum and dad investers who have lost a great deal of our hard earned money, which could have been for our kids future .The whold thing makes us sick to the stomache.




Hi Edgen,

the Financial Ombudsman Service may well be able to assist you depending on how much your loss is. They recently found against an adviser for recommending basis capital to a client without explaining the extent of borrowings/gearing internal to the fund. If you were not explained the extent of the borrowings in the fund and the inherent risk involved you may well have a case against your FA. IN the basis capital case the adviser argued that because the investment was on their recommended list they had no reason to doubt its suitability but FOS found that the adviser also has a responsibility to conduct their own research as well. 
 Remember in the early days LM were actually blaming CBA for their woes because CBA got nervous about the debt. LM then refinanced to Deutsche at ridiculous interest rates to basically protect their own cashflow.


----------



## ASICK (27 November 2012)

*FOS Decision*



Irishdan said:


> Hi Edgen,
> 
> the Financial Ombudsman Service may well be able to assist you depending on how much your loss is. They recently found against an adviser for recommending basis capital to a client without explaining the extent of borrowings/gearing internal to the fund. If you were not explained the extent of the borrowings in the fund and the inherent risk involved you may well have a case against your FA. IN the basis capital case the adviser argued that because the investment was on their recommended list they had no reason to doubt its suitability but FOS found that the adviser also has a responsibility to conduct their own research as well.
> Remember in the early days LM were actually blaming CBA for their woes because CBA got nervous about the debt. LM then refinanced to Deutsche at ridiculous interest rates to basically protect their own cashflow.




http://forms.fos.org.au/dapweb/CaseFiles/ILIS/18959.pdf


----------



## RODENT69 (27 November 2012)

For General Info

Trilogy has just posted on its website a doc about the LMFMIF  dated 23 Nov, I was sent this doc  yesterday, but ONLY got it because *I asked for an update*. The Doc may be of interest to all fellow investors

I attach these Email EXTRACTS to and from Trilogy  for information of others

Q to Trilogy - are you posting the Audited Financial Report for WFMIF *Answer From Trilogy *- The accounts for LM were lodged recently (I believe today) although LM was still the RE post the lodgement date for the accounts for the LM Wholesale Fund...Trilogy has made contact with the external auditor and also LM.  Once we have all the files and documentation we will expedite the lodgement of the accounts.

*To Trilogy *

I thank you for this info, HOWEVER how would I have ever seen it UNLESS I  had asked  these questions?

As I have said more than once I have no Financial Planner, I sit on the **** end of the Asgard Platform  and even if they got this, I would never see it

I ask again that if you are managing distribution of information I request  that you please include me in all future distribution, AND formally acknowledge that this will be ongoing as far as the WSFMIF is concerned please.

Last point about the Jansen Report, LM is about to publish a rebuttal of its content on their Website,  

Trilogy  and LM are hiding behind the B…S… about it only being for Advisors – so even if I read the LM rebuttal I may not  be able to relate it to a content I have not had an opportunity to read. I am advised that on the cover of the report it says -Private and Confidential , prepared for NZ  Financial Planners only- not intended for Advisor Clients!!!-  END of subject

PS the Unit Price for the fund is 0.59c as from 16 Nov !!!!   

Regards in more pain 

.....................................................................................................................................................

*From Trilogy  *- I note your comments regarding being kept in the loop...apologies for not including you in the latest update.  I will make sure this does not happen again.

Yes a  unit price of 59 cents causes some pain....
......................................................................................................................................................

Again for information although the Unit Price is quoted @ 0.59c as from 16 Nov the LM Historical data re Unit Prices as at YESTERDAY still showed 0.73c


----------



## ASICK (27 November 2012)

RODENT69 said:


> ...
> 
> *From Trilogy  *- I note your comments regarding being kept in the loop...apologies for not including you in the latest update.  I will make sure this does not happen again.
> 
> Yes a  unit price of 59 cents causes some pain. ...




but, rest assured, a Trilogy inflicted pain of $0.15/unit in just twelve months inflicts more.

http://moneymagik.com/PFMF_letter_11_October_2012.pdf


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## Edgen (28 November 2012)

Thanks guys for the advice much apreciated. I think i will contact the Financial Ombudsman and see what they say, They might have a hard time tracking down the FA as he left the company just after the fund closed . 
Approaching Stacks sounds like a good idea , but its just a matter of getting hold of more investers who want to do something about it, as there only seems like there are a handfull of them on here .


----------



## Mysteryman (28 November 2012)

Edgen said:


> Approaching Stacks sounds like a good idea , but its just a matter of getting hold of more investers who want to do something about it, as there only seems like there are a handfull of them on here .




Not very likely to happen. Don't forget you would have to persuade the likes of the BT Financial group, who carry a large portion of the votes, to change their allegiance from Trilogy in order to be sure of voting in another RE.


----------



## ASICK (29 November 2012)

*Does BT have any idea of the real word*



Mysteryman said:


> Not very likely to happen. Don't forget you would have to persuade the likes of the BT Financial group, who carry a large portion of the votes, to change their allegiance from Trilogy in order to be sure of voting in another RE.




Yes, that's probably true, they seem like the mobs which'd see no point looking for a manager which has a proven track record of a good outcome after taking over a damaged fund.

I can only summize that they took a trip to Wakerley, or perhaps down to Grande Pacific.  Geez, then they'd have been  impressed with the more than 74% loss in just six weeks down at The Entrance.  Ah.. the cincher would have been the loss of $0.15/unit  in just twelve months in the PFMF - Seems like BT (not Balmain Trilogy) just loves those sorts of failures.

Does BT have any idea of the real world?  Perhaps a rename to "Ostrich Enterprises"?

http://www.moneymagik.com/


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## Irishdan (30 November 2012)

If Drake turns his hand to stand up comedy I'd go and watch because the latest page on the LM website would be a real laugh if not for the fact that investors have lost at least 41% of their funds

He's got a testimonials page now (copied below) and it appears he has been flying in advisers from all over the place for one of his adviser information days.(read JUNKET. IN the past he has flown the entire staff of firms to the Goldie for these days to do "DUE DILIGENCE" in one case I know of, even the receptionist went!! No doubt falls into the marketing budget for the funds and ultimately paid for by investors. Great Southern plantations used to do the same thing...I bet they all got an autographed pair of shiny white shoes whne they flew out as well...

Of course there are no testimonials from Australian advisers or clients and of course no names..


[*I]We have done our due diligence on LM Australia and asked some deep questions about the company, its structure and ownership.  All our questions have been answered more than satisfactorily and we are very happy for LM Australia to manage parts of our clients’ portfolios where appropriate and really appreciate your integrity and openness.

Read full testimonial  »

Financial Adviser, Gibraltar, Supporter of LM for One Year




Two days of openness, transparency, enlightenment and confidence building for those that appreciate the LM business model. Maddison Estates represents a genuine and unique opportunity to capitalise on a patient investment, but worth the wait. The LM team are proud of their country, construct and achievements to date and rightly so. Going forward with their ambitions will see remarkable sustained returns for investors willing to stay the course. 
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Financial Adviser, Bangkok, Supporter of LM for Five Years





Many thanks for your hospitality and for that of your staff during my recent due diligence visit to LM, Australia. As financial advisors, funds are often presented to clients based upon global trends and heresay from other advisors, but seldom from an in depth knowledge of the fund or the fund company itself.

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Financial Adviser, Dubai, Supporter of LM for Five Years





The presentations we attended were informative and interesting, but I must say the visit to the Maddison was most significant to me as an Advisor. I was overwhelmed by the size of the project and amazed at the celebrities LM has lined up to not only lend their names and develop their own business, but also to help market and promote the project. I have spoken to several clients since my return and without exception they are enthusiastic to invest and be part of this.

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Financial Adviser, Dubai, Supporter of LM for Three Years





The recent due diligence trip to LM Head Office was very enlightening and extremely informative, it enabled me and I’m sure the other attendees, the chance to understand more clearly the objectives of LM, the Funds and the Assets under management. Every question that was put forward to the LM team was answered clearly and concisely and went a long way in allaying any fears or worries that anyone may have had.

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Financial Adviser, Bangkok, Prospect [/I]*


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## ASICK (30 November 2012)

*The Dessicated Carrot*

Avoided a fire sale? Investors would never be able to judge for themselves.  

Seems LM's spruiking machine is locked into "Full Steam Ahead".  I'm always amazed when I see these mobs citing the spruiker of their own media releases rather than making the statements themselves from their own corporate "lips".

Already the dessicated carrot of capital distributions (NOT income distributions as spruiked not so long ago) even while the facility sits at $17m at one hell of an interest rate.   

http://www.lmaustralia.com/Investme...trategies-Avoid-Fire-Sale-of-Fund-Assets.aspx

"The company told the stock exchange yesterday asset sales had already reduced the debt and the fund's current $29 million facility balance is forecast to further reduce to $17 million by month end"."

http://www.lmaustralia.com/Investme...s-Capital-Distributions-Soon-as-it-Updat.aspx

"According to a director’s report audited by Ernest & Young, since the fund was closed in 2009, the “Responsible Entity’s (LM) prime focus has been to see the repayment of all loans to create the cash flow required to effect the progressive repayment of the fund’s line of credit facility and to realise distribution of capital for investors.”"

IrishDan, could you please post a link to the so-called "testimonials"?


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## Irishdan (1 December 2012)

http://www.lmaustralia.com/About-LM/Testimonials.aspx


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## Irishdan (1 December 2012)

Hey Asick, I just searched the archives of the gold coast bulletin for that article you posted about LM avoiding a firesale and could find no reference to it being published. There is a PDf on the LM site that is on LM Letterhead and refers to GCB page 98.

I don't think it was published. I think it is doctored up to look as though it was an article to somehow give it credibility or to paint the picture that LM is an effective and responsible fund manager. 

I believe it is there to mislead overseas investors.  The article refers to "the company telling the Stock Exchange...."

Why would Drake tell the Stock exchange anything. LM is not listed

http://www.lmaustralia.com/Downloads/News/LM-strategies-avoid-fire-sale-gcb-24-11-12.pdf


Would anyone have a copy of the GC Bulletin from the 24th November to confirm my suspicions


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## Irishdan (1 December 2012)

Interesting that when other "media clippings" are put up on the LM site from the GC bulletin they are photocopied onto the letterehead as per below.

http://www.lmaustralia.com/News/2012/Maddison-plan-unfolding-for-Pimpama.aspx

http://www.lmaustralia.com/Downloads/News/news-maddison-plan-unfolding-for-pimpama.aspx


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## Irishdan (1 December 2012)

This was in the NZ press

http://www.nbr.co.nz/article/auditors-doubts-over-a344m-mortgage-funds-accounts-dw-133001


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## mapc (1 December 2012)

I am not an investor in LM but have followed this thread with interest.   In answer to your query re GCB articles, I do remember reading an article similar to the one on the LM website in last Saturday's 24th Nov GCB.  I am not sure if it was exactly the same or a cut down version.  From memory it was tucked away on a left hand page, could have been easily missed.


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## ASICK (1 December 2012)

*It's how things go in a damaged MIS.*



Irishdan said:


> This was in the NZ press
> 
> http://www.nbr.co.nz/article/auditors-doubts-over-a344m-mortgage-funds-accounts-dw-133001




IrishDan, you tempt me yet again with a spruik from the famour Philip Ashley Ryan aka the man who was found by the Supreme Court of Queensland to have breached a client's trust, and also known as the man who signs the PFMF's annual returns, each of which has contained a likewise statement. http://moneymagik.com/trilogy_more_on_ryan.php

Such as, "Material uncertainty regarding continuation as a going concern - Without qualification of the above opinion, we draw attention to note 3(I) to the consolidated financial report which indicates that the ability of the Group to continue as a going concern is dependent upon the Group realising sufficient cash funding from the repayment or refinancing of existing mortgage loans of the Group, to repay debt funding, provide funding for the ongoing business operations including the completion of security properties to enable realisation, recommence the payment of distributions and make periodic redemption offers and/or capital distributions to investors. Due to the matters set out in note 3(I), a material uncertainty exists which casts significant doubt about the Group’s ability to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the consolidated financial report."
http://moneymagik.com/PFMF_return_jun_2010.pdf

But it didn't stop Trilogy drawing $16.6m in fees in the first three years (while returning only $0.08/unit to investors).

Even if another manager took over your fund, the auditor would still spruik the same qualification - after all, your fund is damaged.

This statement from Ryan is mind-numbing, "Trilogy managing director Philip Ryan says the accounts leave questions over the unit price's true value. "It's so speculative in a mortgage fund to turn around and say, we've actually got to complete this project to get the value but we don't know where we're going to get the money from.""

And I guess the boys at Trilogy'd know all about what constitutes an unsustainable unit price - after all, under Trilogy's management of the PFMF, the fund lost FIFTY-SIX percent in three years - unit price dropped $0.15/unit in the last TWELVE MONTHS!

Investors in LM schemes should get used to the auditor's remarks - such comments are standard spruik in damaged funds - just ask Philip Ashley Ryan about the Pacific First Mortgage Fund.

And how about Trilogy's Healthcare REIT? http://moneymagik.com/analysis_REIT.php
of Trilogy PMMMF? http://moneymagik.com/more_on_Trilogy_PMMMF.php

I wonder who signed those accounts? Could it have been Mr. Philip Ashley Ryan, the man who the Supreme Court of Queensland found had breached a client's trust?  Well, he signed the Healthcare REIT's accounts (all  full year accounts are available at the link) - and he signed all of the PFMF's.

If I was an investor in the LM FMIF, I wouldn't worry if the debt facility isn't renewed - it'd mean that the facility would be paid down first, and that, as far as I'm concerned, could only be a good thing.  Something Trilogy didn't do in the PFMF, and now the CBA is pulling the strings in the PFMF anyway.

Have a look at the PFMF's returns and see the auditors remarks about a "going concern" in every one of them: http://www.moneymagik.com/general_information.php

Ah, Trilogy knows well. 

PS. for a good read, read about the disappeared pollution (Pollution? What Pollution?), and Grande, What?  See recent pics of the PFMF's asset at Wakerley.  Trilogy's management is a real treat.
http://moneymagik.com/pollution_what_pollution.php
http://moneymagik.com/grande_what.php
http://moneymagik.com/wakerley_pictures_01_11_12.php


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## ASICK (1 December 2012)

*Trilogy - Spruiks & Disappointements*

sorry - I forgot to add the following (in relation to speculative statements). 

http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/litigation.php

Just in case anyone out there thinks that Trilogy isn't in the business of speculative statements (BIG TIME).

Now, I can understand Mr. Philip Ashley Ryan not wanting to talk about his breach of a client's trust, but I would have thought he'd have mentioned the PFMF's auditors' (yes, plural, good ol' BDO took over from KPMG - who I get the impression BalmainTrilogy didn't get along with) comments about "a going concern"  in relation to the PFMF - heck, he might have mentioned a few of Trilogy's own spruiks and how so many of them had no "legs".

Again, notice the man from Trilogy in NZ - Philip Ashley Ryan.
http://www.moneymagik.com/trilogy1.php

Oh, did I tell you? Trilogy sued a dead man?
http://moneymagik.com/trathen_the_disappearing_man.php


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## Irishdan (1 December 2012)

mapc said:


> I am not an investor in LM but have followed this thread with interest.   In answer to your query re GCB articles, I do remember reading an article similar to the one on the LM website in last Saturday's 24th Nov GCB.  I am not sure if it was exactly the same or a cut down version.  From memory it was tucked away on a left hand page, could have been easily missed.




Thanks for that.


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## ASICK (11 December 2012)

*Yawn ....*

Yawn - is the Trilogy onslaught still under way?


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## Irishdan (13 December 2012)

LM are holding a teleconference tomorrow for advisers with clients who have exposure to LM First Mortgage income fund through BT Wrap. (I suspect a similar one will be held for other platforms as well)

Topics covered in this call will include:
•	Recap on LM First Mortgage Income Fund Audited Financials;   
•	Deutsche Bank Facility; 
•	Timeframe expected before investors will receive a pro rata return on investment.

If you hold investments in the fund through BT, Asgard, Macquarie or Colonial First State or any other platform for that matter it is likely your adviser has been asked to attend one of these teleconferences.

If you have invested in LM through an overseas platform (eg Onepath in NZ) I would check with your adviser whether a similar conference call has been planned.

I will attend and report on this forum following the end of the teleconference


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## ASICK (13 December 2012)

*Trilogy Offers "Woodgrove" in One Line*

IrishDan, words are cheap, it's actions that count - and speaking of words and actions, after nearly three and a half years of spruiking and making fees for themselves and the receivers (PKF, now part of the fund's auditor, BDO), Trilogy is offering "Woodgrove" at Wakerley (a PFMF fund asset) for "in one line" sale via an EOI campaign.

http://moneymagik.com/moss_road_information_memorandum.pdf

Andrew Griffin (of BT) defined a fire sale at Martha Cove in April 2011:
http://www.moneymagik.com/fire_sale_defined.mp3

Griffin also made the following comments at a PFMF Information Session:
"... sold as is, akin to a fire sale"
"We will complete developments to enable the sale of completed product rather than seling assets to developers for them to make their development profits from your fund" 
http://pfmf.com.au/watch.aspx?id=31

Now, the remainder of "Woodgrove" is offered "as is" (akin to a fire sale), "all in one line" (being defined as a fire sale), and being offered for sale "to developers for them to make their development profits".  

As it unfolds:
http://www.moneymagik.com/
http://moneymagik.com/wakerley_2_sep_2009.php
http://moneymagik.com/wakerley_1_may_2010.php
http://moneymagik.com/wakerley_pictures_01_11_12.php


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## RODENT69 (13 December 2012)

Irishdan  You are exactly correct in your recent post. I to am aware of the LM hook up for Friday 14th. 

Through my Platform  Management I have requested that they ask about these two issues of concern.
*First is the Unit Price @ 0.59C *  this needs much more detailed explanation.   

Heaven knows the missing RG45 may even appear tomorrow, and perhaps the promised  BIS Shrapnel reports soon after?  Remember all that reading  we were promised before Trilogy put their hand up, (opp's sorry somebody put them up)?

*The second issue* is that LM say that they may be able to make Capital Distributions in the near future, while this is important, also of importance is the missing 8 x Monthly Distributions for *May 2010 to Dec 2010  *

Yes it was really 2010!!

These were promised by LM and claimed to be accounted for in the books that were signed of in previous years, so if by some miracle LM has some cash they should address this issue first, as small pittance to long suffering Investors!!

*ASICK *   don't fret about Trilogy lying quite, I am sure there still there and are clearly  very much after  the other feeder funds, and the FMIF. My guess is that what LM has said about having investors being tied to them, when push comes to shove in 2013 LM may find they are very wrong about the support they actually have.


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## Irishdan (13 December 2012)

This was in the Cairns Post recently.

Student Lodge sold for 3.75m, previous sale was 10m and the owners handed the property back to LM when they went into receivership. Wonder how much LM lent them in the first place.

http://www.cairns.com.au/article/2012/12/05/237284_local-business-news.html


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## ASICK (13 December 2012)

RODENT69 said:


> ... *First is the Unit Price @ 0.59C *  this needs much more detailed explanation.
> 
> Heaven knows the missing RG45 may even appear tomorrow, and perhaps the promised  BIS Shrapnel reports soon after?  Remember all that reading  we were promised before Trilogy put their hand up, (opp's sorry somebody put them up)?
> 
> ...




Re: [A]: Ah! The unit price - the meaningless value - what does it really matter? If it was $0.30/unit? or $0.80/unit? Does anyone out there seriously believe that it matters? I think the unit price is a load of nonsense, because it's a value that cannot be transacted upon by members of the fund. The manager's the only one who gets REAL value in the form of a management fee calculated from value assessments - but punters, nah! it doesn't matter.

It's all "feel good" - look! $0.59/unit - wow! sleep well tonight.  But the reality is that is that it doesn't matter.  What matters is how much you get back, and my guess is $0.59/unit will fade into the mists of time.  I haven't seen one single fund hold it's value once assets start to hit the market - and I'd be surprised if LM is any different.

Let's hope you don't see images like these in three years time:
http://www.moneymagik.com/wakerley_7.jpg
http://www.moneymagik.com/wakerley_8.jpg
http://www.moneymagik.com/wakerley_9.jpg

Take a look at the rolled-over loans and the tens of millions in accruals - lucky it's Xmas - "Oh what fun"!  Crickey, LM even made $$$$ ($112k)  on rolling over the loans - not bad, make loans which go bad and then profit - also make millions ($4.8m)  by way of taking over the receiverships on those same loans.  There you go, reward for failure.  I'm bemused by the statement in relation to the $4.8m "receivership" fees that "These fees are charged directly to the borrowers to facilitate possible future recovery" - ho hum - now, that's an optimistic view given the sad state of the loans, but maybe there's some out there who take such statements seriously.

It seems to me that many investors still haven't cottoned-on to the fact that the management fee provides for no more than mere management - everything else comes at a cost - EVERYTHING! 

(as an aside, I'm quite surprised by the enormous legal costs borne by the fund over the past two years - 2012, $523k and 2011, $407k - also by the auditor 2012, $560k and 2011, $416k)

Re: *: Interest distributions? Pray tell, where from? I wonder why you feel the "8 x monthly distributions" are important (with fund value = $0.59/unit)? Lay back, relax - don't think too much - don't think about the legal costs, receivership fees, management fees, auditors fees .. etc .. etc ..  etc .. (said like Yul Brenner in "The King & I"). 

Trilogy took a $630m fund and ... well, you know .. $0.0875/unit returned  ... etc .. etc .. etc ..

Forget about income distributions, and forget about capital distributions, there's nothing you can do - which ever the manager - forget the unit price - just hold your hand out and hope for some of your capital back.

Interestingly "Kostag" spoke to these issues on the "Equititrust" thread - I think he's right on all points.  It's a hopeless situation.

Dear Rodent, 'fret'? fear not - I do not fret, I merely jest.   Janus is said to be the God of beginnings & transition, and Janus-like figures adorn many a gate or door - However, I struggle to see any Janus-like visage wafting in the aura surrounding LM's funds - the visage I see at the beginning resembles the one I see in transition - while the earthly beings surely cannot be the same, my vision of the fund's  future discloses the outcome for investors will be very much the same - to me, it seems there is no benefit to have one, and there is no benefit to have the other. 

Trilogy have drawn about $17m in fees in over three years, and have only returned $0.0875/unit in that time.  If you think Trilogy's performance has been good down at "Woodgrove" or at "Grande Pacific", then you'll just love what they're capable of doing with your fund.
http://moneymagik.com/wakerley_2_sep_2009.php
http://moneymagik.com/grande_what.php

Geez, you'll be lucky if you get some disappearing pollution:
http://moneymagik.com/pollution_what_pollution.php

And there'll probably be spruiks about litigation:
http://www.moneymagik.com/litigation.php

And there'll probably be spruiks about capital repayments:
http://www.moneymagik.com/yardy_yardy_yah.php

But fear yea not, I'll enjoy keeping a watchful eye on Trilogy's performance in your fund (if they take it over) - yes, and I do look forward to saying that I told you so - I enjoy being right.*


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## RODENT69 (13 December 2012)

ASICK   I really do find the way you write to be most enjoyable, even funny at times, even when the issue is serious. I certainly cant hope to be as amusing

I was *not saying* the Unit price of *0.59c was either, good, bad or anything else*, I agree as a number its almost pointless UNLESS you are on a Centrelink Age Pension where all these Frozen Assets are still counted as Assets, in the Asset Test, irrespective of whether they are earning money or not. The 0.59c  multiplied by Units held equals the  Asset Value counted by Centrelink - so as specific number its very important. 

Yes I know full well its meaningless in relation to what we will eventually receive back from LM, if ever? As an age pensioner the lower LM Unit price the better for me, at the moment.

 Of course you are right about why my concerns re the missing Distributions when so many other $ are going west.  To my simple mind its a matter of principle and goes to the heart of LM's total lack of credibility, and transparency on that simple issue, (and many others). They said they had the money and would pay. When challenged often they did not actually have the money, but continued to say they would pay. I am just trying again to remind them.  

Re Trilogy and lying low, your yawn comment #271

Just trying to say that LM should not sit back and assume they have investors on side, my informed sources clearly are indicating the Trilogy will get control of the the feeder funds and the Main fund in early 2013.

Nobody with an LM investment likes any of this. Most of us would not have wanted Trilogy, however several important Institutional Investors with bulk $ ie votes supported Trilogy, in the  informed belief, after doing both internal and external due diligence on Trilogy and its people, that Trilogy will actually get the numbers to gain full control of the main and feeder funds. 

I am reliably informed that LM was given multiple chances to review its fee structure and improve its transparency to the Platforms, they never did, and only ever reacted  to reduce its fees when forced to do so by Trilogy being involved.


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## ASICK (13 December 2012)

RODENT69 said:


> ... I was *not saying* the Unit price of *0.59c was either, good, bad or anything else*, I agree as a number its almost pointless UNLESS you are on a Centrelink Age Pension where all these Frozen Assets are still counted as Assets, in the Asset Test, irrespective of whether they are earning money or not. The 0.59c  multiplied by Units held equals the  Asset Value counted by Centrelink - so as specific number its very important.
> 
> Yes I know full well its meaningless in relation to what we will eventually receive back from LM, if ever? As an age pensioner the lower LM Unit price the better for me, at the moment.
> 
> ...




Rodent,  well, I couldn't imagine that LM would be sitting back assuming anything - I think they've had one hell of shock.  I note you speak to the lack of stated distributions as going to the "heart of LM's total lack of credibility, and transparency on that simple issue" - you seem to have some sensitivity on what you regard as a simple issue.

However, you don't seem too bothered that in August 2010, Trilogy (as RE of the PFMF) represented a target of $295m to be returned by October 2012 and failed miserably in its efforts.  In fact, as late as August 2011, Trilogy still spruiked the $295m.  The spruik was $0.33/unit returned by October 2012 with Martha Cove remaining (about $0.10/unit), resulting in a total value of $0.43/unit.

As at 30 June 2012, Trilogy had returned only $0.08/unit with about $0.13/unit remaining in the fund.  That's a total of $0.21/unit - a loss of $0.21/unit - that's a 50% loss on the spruik.  Now, Trilogy released a fund update, the 2012 return, an accompanying letter, and the fund's RG45, and believe it or not, every document is completely  silent to the $295m.

What do you think about that? Have you formed a view about Trilogy's credibility and transparency on which might be regarded as quite an important issue - Trilogy didn't spruik a mere few months of distributions, Trilogy spruiked $295m + $89m - yipes!  

Then there's the litigation - I know I've been over this ground many times before - but after spruiking more than $300m on 1 September 2010, the final claim lodged in April 2012 was for $60m - but there's only $20m in insurance to cover it (and that's if there is insurance).

So, you're looking for credibility and transparency, and you choose Trilogy?  I guess it's true, we can see anything if we choose to close our eyes to reality.

Then there's the matter of the unit price down at Centrelink - as a pensioner, that's important to you, but how do you know that Trilogy will reduce the unit price? and even if they do, how long would it take?  

Did you look at the links to "Grande Pacific", "Woodgrove", and the disappearing pollution? Do any of these strike you as an ernest effort by Trilogy to repay investors' capital?   Did you see the loss at The Entrance? More than 74% of value in just SIX weeks!

I understand the helplessness you guys feel with LM - and I'm with you, LM should go - but do you really think, that with Trilogy's track record in the PFMF, Heathcare REIT, and PMMMF, that Trilogy would be a better performer in the LM FMIF than LM?

Trilogy issued $3.555m units at $1.00 in 2009 when the current value for a unit as at 30 June 2008 was only $0.63 - that's an immediate loss of $0.37/unit for every one of those units.  Is this the manager you think has a better record of transparency and credibility? http://moneymagik.com/analysis_REIT.php

How about Trilogy's PMMMF? http://moneymagik.com/more_on_Trilogy_PMMMF.php  Maybe the investors in the Healthcare REIT figured that about the losses in the PMMMF (if they knew about them), and maybe that's what the steering group thought about the losses in Trilogy's Healthcare REIT (if they knew about them), but ... it didn't help investors in the PFMF - about 56% of value lost since Trilogy took over the PFMF, and I reckon there's much more to come.

I guess you guys must figure that what's happening to you is caused by LM, and what Triogy did happened to others - so, it'll be different to you, right?   Well, good luck on that one.

To take on Trilogy, in my opinion, you have to keep your eyes wide open when assessing LM, and keep your eyes wide shut when assessing Trilogy - then it'll be all right,  but ..


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## ASICK (14 December 2012)

*Trilogy Comes Calling: Been There - Done That!*

I've seen it all before:

http://www.balmaintrilogy.com.au/pdf/bti3751_stop_the_rot.pdf

Trilogy said (of City Pacific Limited),
"City Pacific Limited (CP) must be removed as manager of your investment in the City Pacific First Mortgage Fund.
Why?
• Your distributions are frozen
• They are telling you very little about the state of your investment
• They have lent money to related companies which has not been repaid
• According to their auditor there is a material uncertainty regarding continuation of City Pacific Limited as a going concern
• Up until now CP have continued to charge significant fees for acting as Responsible Entity
• They are seriously conflicted."

Were distributions frozen? Yes - after a number of seriously negative articles by Michael West (SMH), investment in the fund dried up while a substantial number of existing investors sought redemption from the fund. Of course, Trilogy did not speak to the negative market sentiment about the fund, nor did it speak to the affect on the value of the fund's assets borne by the GFC - Bacon admitted to a fund member that  fund's major asset, "Martha Cove",  was unfortunately "hit" by the GFC : http://www.moneymagik.com/bacon_visionary_asset.mp3
Did City Pacific tell us much about the state of investments? No
Was money lent to related companies which had not been repaid? Yes - but money lent to non-related parties was also not repaid - such was the market at that time.  It's interesting to note the number of City Pacific related entity loans which remain in the fund today - Bacon said that Martha Cove was a "visionary" asset:
http://www.moneymagik.com/bacon_visionary_asset.mp3
Was there a material uncertainty about the fund being a going concern? Yes - of course, once the fund suffered certain impairments, that was the case, and unless the fund regained value, it would continue to be the case. Of course Trilogy has not criticized itself for the fund continuing to remain with such an uncertainty.
Did CP charge signficant fees? Yes. CP made a big mistake by not dropping its fees to match Trilogy. I'm of the view that if CP had dropped its fees, Trilogy would not have gained management of the (then) CPFMF.
Was CP seriously conflicted?  I find that question difficult to answer - even to this day there is no concluded proceedings which answers this question in the affirmative.

Trilogy said (of themselves),
"If BalmainTRILOGY is appointed as the new manager of
Your Fund you will have a manager:
• committed to restarting distributions as soon as possible and rebuilding the fund
• committed to recovering your money and not presiding over a firesale
• who does not have any conflicts of interest
• committed to providing you full and frank information on the state of your investment
• committed to slashing fees"

Definitions:
A fire sale - selling assets in-one-line to a developer (Investor Sessions)
http://www.moneymagik.com/fire_sale_defined.mp3
Akin to a fire sale - selling unimproved/unfinished assets (Investor Sessions)
http://pfmf.com.au/watch.aspx?id=31
The fund was valued at $630m (about $0.71/unit) [about 887m units on issue]
http://www.balmaintrilogy.com.au/pdf/BRW_Aug20.pdf

Were distributions started? No.
Was the fund rebuilt? No. 
Were investments recovered? As at 30 June 2012, $0.08/unit recovered, spruiked  value remaining $0.13/unit.
Were fire sales conducted?  Using the above definitions, make your own mind up:
http://moneymagik.com/martha_cove_ad.php
http://moneymagik.com/the_entrance_in_one_line.php [over 74% loss in just six weeks]
http://moneymagik.com/wakerley_2_sep_2009.php
Were there conflicts of interests? There is a matter before the FOS on this issue at this time.
Also, there's PSA (which resides/resided at the same address as BT): http://moneymagik.com/PSA.php
and AMAL in which Balmain (of BT) is a major shareholder : http://moneymagik.com/amal.php
Was full and frank disclosure made in relation to investments made? I'd guess that'd depend on what one settles on as the definition for "full and frank disclosure" - personally, I think Trilogy fell way short - others might think differently.
No disclosure about NIL sales in over three years at "Grande Pacific" : http://moneymagik.com/grande_what.php
No disclosure about Wakerley being a mess : http://moneymagik.com/wakerley_pictures_01_11_12.php
No disclosure about more than 74% loss in six weeks at The Entrance : http://moneymagik.com/the_entrance_in_one_line.php
Representations of pollution at Braeside when there wasn't any : http://moneymagik.com/pollution_what_pollution.php
Were fees cut? Yes.  However, I'd question whether the cut in fees (in itself) has been of value to fund members since the value of the fund fell by at least 56% under Trilogy's management.

Yesterday I noted in my previous post that Trilogy didn't mention the spuriked $295m in any document since August 2011 - this is what Bacon told a fund member earlier this month:
http://www.moneymagik.com/295_gone_and_thats_that.mp3
This is what Griffin said in April 2011 at the Martha Cove Information Session: 
http://www.moneymagik.com/MCIS_re_295.mp3

So, how did things turn out?

1. No distributions.
2. $0.0875/unit distributed after nearly three and a half years.
3. A $60m claim which, at best, has potential of only $20m
4. Major assets rendering up fees to Trilogy at members' expense ("Grande Pacific", "Carrara", "Woodgrove", "Martha Cove", and "River Views Industrial Estate")
5. Substanitally unmet targets:
http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/litigation.php
6. An asset review which proved to be a waste of time.
7. A legal review that proved to be a waste of time.
8. Work parcelled out to benefit a related entity of Balmain:
http://moneymagik.com/amal.php
9. A material uncertainty continues to exist about the PFMF being a "going concern".
10. Trilogy's fees = $17m, returns to investors = $77.6m, value remaining (estimated) = $98m
11. Overall loss from 1 July 2009 (as revalued by Trilogy) to 30 June 2012 = 56%

In the LM funds, regardless of the manager, IMO:

1. There will be NO distributions (of profit/income)
2. Material uncertainty WILL remain as to the fund being a going concern.
3. Distributions of Capital will be SLOW.
4. Any legal review WILL be a waste of time and money.
5. Any asset review WILL be a waste of time and money.
6. Related entities WILL engage in one form or another.
7. Unit price will largely be determined by the market.
8. Full and Frank disclosure will be no more than a "pipe dream".
9. There'll be more than a pretty penny to be made by many a party (but, not investors).

In the LM funds, if Trilogy becomes manager, IMO:

1. Items 1 - 9 above
2. There's always LM to blame.
3. There's a chance that the LM funds will fall in line behind the PFMF:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

With LM, members have the continum of blame - with Trilogy, that doesn't change.   Do you see it? the more things change, the more they seem to stay the same?


----------



## Irishdan (14 December 2012)

Teleconference was a non event.

Drake didn't front, but the other directors and some former directors(who are now consulting to LM) were there.

There was some discussion about the unit price and whether they saw any further deterioration. They are actually due to be revalued now (December) for the 6monthly update so in theory we should know by March

Refinanced with DBcapped at 25m ( they currently owe 29.5m) and will be fixed for 2.5years

When asked about interest rate, despite falling rates they said it will still be in the order of 14 -15%.!!! 

RG45 will be released in Early January

BIS SCHrapnel report will be released at same time(they are waiting on one piece of info apparently)

2x income catch up payments will happen shortly and will advise in early January about capital distributions schedule but said first capital distribution will be in March


They expect the sales programme to take 3 years!!


----------



## ASICK (14 December 2012)

Irishdan said:


> Teleconference was a non event.
> 
> Drake didn't front, but the other directors and some former directors(who are now consulting to LM) were there.
> 
> ...




Ok, call me crazy, but why would LM pay investors anything? Why wouldn't the facility be paid off ASAP? (the interest rate is over the top - murderous).   For investors to put some money in the bank at 5% and leave that amount in the fund paying 14% - 15% - I'd call that nonsensical.

Keep in mind, Trilogy only paid back $0.0875/unit in nearly three and a half years (nothing for the first year) - and made more than $17m for its management services.

I don't think it's a good look for Drake not to turn up and inspire investors - quite the shame really.  They don't seem to have learned too much at all.

They're shy with a RG45, that's worrying.  The RG45 will disclose how much risk in the loans in table "H" (loans in LVR ranges), regardless of the spruiked unit price.

If the facility is paid off promptly, that'll mean asset sales, and if LM assets follow the PFMF's assets, that'll mean a drop in the unit price  which in turn puts pressue on the fund to repay (a viscious circle) - after all, the bank isn't going to lose, investors will.   If LM is being paid its management fee on FUM (Funds Under Management), then it'll be picking up a fee on the bank debt too - such arrangements are nice little earners and, to my mind, disincentives for managers to pay down debt in such circumstances.

Looking from "outside", I'd say things aren't looking good at all.

PS... well, at least the Bank'll have a merry xmas  - ah! those stupid Australians!


----------



## RODENT69 (14 December 2012)

Thanks to IRISHDAN for his summary, I may also get some info soon to compare from my Platform people.

ASICK  I can't let some of your recent comments go without some clarity

* ASICK Quote *- you seem to have some sensitivity on what you regard as a simple issue. *Answer* yes I do, and maybe IF LM starts paying distributions again, as indicated by Irishdan, then I will be a little more happy.

*ASICK Quote*   However, you don't seem too bothered----   *Answer*how would you know?, of course I am bothered, so much so I wrote to ASGARD and strongly advised them NOT to support Trilogy, based on a lot of what you have written.  Asgard/BT chose to ignore me, because a very large Institutional Investor was pushing them hard.

*ASICK Quote  So, you're looking for credibility and transparency, and you choose Trilogy? Answer I did not choose Trilogy , The Platforms did!!!

ASICK  I think you may have misunderstood my reason for mentioning Centrelink, it was so that you may have another perspective on what may be of concern to some investors. I have no control of the Unit Price irrespective of whether its LM or Trilogy as RE


PS   a few moments ago Trilogy just posted an LM WFMIF update , I have just received it, it makes interesting reading*


----------



## ASICK (14 December 2012)

*Trilogy: Double Standards ?*



RODENT69 said:


> Thanks to IRISHDAN for his summary, I may also get some info soon to compare from my Platform people.
> 
> ASICK  I can't let some of your recent comments go without some clarity
> 
> ...



*

Hi Rodent, Sorry, I assumed (yes, nasty word) from the tenor of your posting. Thanks for setting me straight on those issues.

Is this the update? from 23 November 2012? http://www.trilogyfunds.com.au/site/assets/files/23 November 2012 - LM Wholesale Fund update.pdf

I note this excerpt with particular interest, "3. As the RE of the Wholesale Fund, our first question to LM relates to the disposal of a Holding Fund asset, described as a ‘student accommodation property’ located in Cairns. The property was last purchased for $10 million but recently sold for as little as $3.85 million. We also understand that the carrying value of the loan was more than $10 million. If this is correct, we need to understand how this gross loss of investor funds came about under LM’s management."

From the company which resided over the devaluation of the PFMF's Martha Cove assets by $0.08/unit, or about $71m ! That's SEVENTY-ONE MILLION DOLLARS !!!!
http://balmaintrilogy.com.au/pdf/BTI 5125 Unitholder Letter.pdf

From the company which resided over a further fall in non-Martha Cove assets' value by $0.07/unit, or about $62m ! That's SIXTY-TWO MILLION DOLLARS !!!
http://balmaintrilogy.com.au/pdf/BTI 5125 Unitholder Letter.pdf

A total downing of the unitholders'  equity by $133m in ONE YEAR - That's ONE HUNDRED & THIRTY THREE MILLION DOLLARS !!!

and from the company which resided over a more than 74% loss on the PFMF's remaining NSW asset at The Entrance: http://moneymagik.com/the_entrance_in_one_line.php

And Trilogy feels the need to get to the bottom of the loss even though it doesn't know what the carrying value for the loan is - it very well could be that the carrying value is about .59 * $10m, or $5.9m (in line with an even write down of fund security assets over time) - heck, that's just a guess too !

Three and a half years of Trilogy : At Wakerley - http://www.moneymagik.com/wakerley_4.jpg

Further, Trilogy says, "We have met with the Wholesale Fund auditors Ernst & Young, who are also the auditors of the Holding Fund, to understand why the 2012 accounts are so late. Without access to the accounts, investors remain oblivious to the true financial state of the Fund and the value of their investment. This is particularly concerning given successive write downs in unit value and LM’s 8 November admission that a further write down for the 2012 financial year is likely."

Trilogy, as manager of the Wholesale Fund, is not entitled to have confidential information in relation to the LM FMIF disclosed to it.   IMO, such disclosure would put the auditors in a difficult position.

Trilogy also said this, "Through an Extraordinary General Meeting held in Sydney on 1 November 2012 (the Meeting), 69% of Members representing 53.8% of the value of the Wholesale Fund" - it seems to me that they got the fund by a the slimmest of margins and that some big unitholders didn't agree with a switch to Trilogy.  Further takeovers might be a tad difficult for Trilogy - Trilogy might just have to settle in with its seven grand a week - ah! that's be a nice earner for not too much to do!

Oh! I didn't note a "Thanks for the seven grand a week" - I guess investors must just have to take that for granted.*


----------



## ASICK (14 December 2012)

*Trilogy (as RE of the Wholesale Fund)*

Geez, I just can't let it go:

"3. As the RE of the Wholesale Fund, our first question to LM relates to the disposal of a Holding Fund asset, described as a ‘student accommodation property’ located in Cairns. The property was last purchased for $10 million but recently sold for as little as $3.85 million. We also understand that the carrying value of the loan was more than $10 million. If this is correct, we need to understand how this gross loss of investor funds came about under LM’s management."

Maybe Trilogy (as RE of the Wholesale Fund) should have taken the time to have a quick chat with Trilogy (as RE for the PFMF) and it might have found out that the PFMF has itself suffered gross losses, and that Trilogy (as RE for the PFMF) might have disclosed that:-

The PFMF's assets are continuing to erode, "Despite the continuing erosion of the Fund’s underlying real property values,"; and the market conditions are exacerbating,  "In doing so, we have sought to tailor the timing and method of asset realisations in order to maintain their value and counteract, as much as possible, the exacerbating market conditions."
http://balmaintrilogy.com.au/pdf/BTI 5125 Unitholder Letter.pdf

"ex·ac·er·bate  [ig-zas-er-beyt, ek-sas-] Show IPA 
verb (used with object), ex·ac·er·bat·ed, ex·ac·er·bat·ing. 
1. to increase the severity, bitterness, or violence of (disease, ill feeling, etc.); aggravate."
http://dictionary.reference.com/browse/exacerbate

Trilogy (as RE for the Wholesale Fund) might reason that, "maybe the market is continuing to erode with exacerbating market conditions?"

Trilogy (as RE for the PFMF) might also inform Trilogy (as RE for the Wholesale Fund) that the loss at the PFMF's commerical properties at The Entrance was in excess of 74% in just six weeks and that, even if the holding value of Cairns property was $10m, a return of $3.85m, a loss of 61.5% is actually a better performance than Trilogy (as RE of the PFMF) with a loss of in excess of 74% in only SIX WEEKS!

So, if Trilogy (as RE of the Wholesale Fund) did have a chat to Trilogy (as RE for the PFMF), then the problem would have been solved and Trilogy (as Wholesale fund RE) could have reported its findings to the members of the Wholesale fund who are doubtlessly hanging on for some affirmation that Trilogy is doing something of value for its seven grand a week.

In the circumstances, the findings might be:-

"1. that the market might be eroding with conditions exacerbating (causing substantial impairments) just like those suffered by the PFMF with Trilogy (as PFMF RE), and
2. the outcome is better than a sale experienced by Trilogy (as RE of the PFMF) at The Entrance NSW.
3. A good outcome for LM FMIF investors, and therefore a good outcome for Wholesale Fund investors!
Three cheers for LM"

I'm still a tad bemused about Trilogy failing to mention that the auditors couldn't discuss LM FMIF confidential information with them -  I guess it's all about spin and perception - reality isn't going to earn brownie points with the punters.

Trilogy has had some experience in groaning to ASIC.
http://www.investordaily.com.au/cps/rde/xchg/id/style/14734.htm?rdeCOQ=SID-0A3D9632-44A6960E

Yes, a meeting with ASIC -- that'll scare the pants off LM.


----------



## ASICK (14 December 2012)

*Seven Grand a Week - No Way!*

Why did I think it was only $7,000 per week - darn, if only !

It's $28,846 per week - now, that's a really good earner for not too much to do !

Page 1, paragraph "*Our appointment as RE of the Wholesale Fund has provided immediate benefits for investors:* ... 2":-

"LM Wholesale First Mortgage Income Fund
Before Meeting: $3.8m
After Meeting: $1.5m
Saving: $2.3m"

http://www.trilogyfunds.com.au/site/assets/files/23 November 2012 - LM Wholesale Fund update.pdf


----------



## ASICK (14 December 2012)

*Dream On ...*

http://www.trilogyfunds.com.au/site/assets/files/23 November 2012 - LM Wholesale Fund update.pdf

"In the mean time, we welcome the opportunity to discuss any concerns you may have or to share with you the vision for your Fund that your fellow investors have asked us to pursue." - yep, I guess it is a "mean time", but during that "mean time", wouldn't it be a buzz to see the "vision" of the fund that other investors have asked Trilogy to pursue? 

Ah .. vision ... a noun?

"vi·sion [vizh-uh n] noun  
1  the act or power of sensing with the eyes; sight. 
2. the act or power of anticipating that which will or may come to be: prophetic vision; the vision of an entrepreneur. 
3. an experience in which a personage, thing, or event appears vividly or credibly to the mind, although not actually present, often under the influence of a divine or other agency: a heavenly messenger appearing in a vision.  Compare hallucination (  def 1 ) . 
4. something seen or otherwise perceived during such an experience: The vision revealed its message. 
5. a vivid, imaginative conception or anticipation: visions of wealth and glory.
http://dictionary.reference.com/browse/vision

I had a vision once - it came about when I partook of some GLM - perhaps I was hallucinating?

Now Trilogy has a vision to share.  Will it be a vision of wealth? is it prophetic? It's the vision that other investors have asked Trilogy to pursue - "to pursue a vision" - interesting concept, yet it sounds somewhat biblical to me: Trilogy wanting to share a vision, a vision sought by others - soft heavenly music is all that's needed to make the scene complete.

Of course, if one is too optimistic in the course of attempting to fulfil a vision, then one need only say so:
http://www.moneymagik.com/295_gone_and_thats_that.mp3
(Rodger Bacon of Trilogy speaking with a fund member in early December 2012)

So, what's the vision? distributions? redemptions? legal actions? increased unit price? Full and frank disclosure? 

Big Bubbles? .... No Troubles!  

and look, to find out more about the vision, you can phone/email David Jansen, the author of that independent report which recommended Trilogy --> "David Jansen on + 64 21 675 244 or jansendw@gmail.com" - now, that's handy.


----------



## georgiannawadi (15 December 2012)

*Re: Dream On ...*

Hi

I have been following this post with increasing concern for my money. I invested in a 3 year term of the LM Managed Performance Fund about six months ago as an off-shore investment through a financial adviser. Now having moved to Australia I see that things are not entirely smooth at LM. How do I get myself and my money out of this?


----------



## ASICK (16 December 2012)

*LM Managed Performance Fund*



georgiannawadi said:


> Hi
> 
> I have been following this post with increasing concern for my money. I invested in a 3 year term of the LM Managed Performance Fund about six months ago as an off-shore investment through a financial adviser. Now having moved to Australia I see that things are not entirely smooth at LM. How do I get myself and my money out of this?




Hi georgiannawadi,

Here is some information I've found online (I'm sure you'll have all of this):-

Re: LM Managed Performance Fund:
Disclosure Update as at 23 October 2012: http://www.lmaustralia.com/Downloads/Portfolio-updates/MPF_portfolio_update.pdf

$365m in loans with the largest of 18 mortgages being $224m
72% residential loans with 73% (5 loans = $266.5m) of all loan value being located Queensland. (with one loan of $224m, clearly that loan is in Queensland). 

I guess this update is the fund's RG45 disclosure - there's no mention of any loans being rolled over - given the locations and types of the assets I would have expected damage to the fund, and if not damage, then some rolling-over of loans going on.

Just a week later,  in the fund fact sheet dated 31 October 2012,  $385m in FUM is disclosed (which includes loans as well as cash) http://www.lmaustralia.com/Downloads/FactSheets/MPF-fact-sheet.pdf

The fact sheet discloses an 8.3% return for 2012 (in AUD)

georgiannawadi, do you have the 2012 financial return for the fund? If you have it, please post it on line, or post a link to it.  Sometimes I lose track when I attempt to navigate around LM's site.

Given the problems the LM FMIF is experiencing, I'm a little curious to know why the managed performance fund is travelling so well?  

Looking at the information, it seems (at this time), nothing happening in the LM FMIF seems to have anything to do with your fund.  Perhaps it'll take a long, serious conversation with your financial advisor to either put you at ease, or alternatively, to cause you to lose sleep.

If you do have a problem with your investment, then a trip to a solicitor for some serious legal advice is warranted.


----------



## RODENT69 (16 December 2012)

ASICK   no that's no the Doc, I will try and attach it here, if I can remember how. Just checked their Web site cant find it

Let's see what happens  Doc is called LM Wholesale Fund Update 14 Dec 2012 PDF


----------



## ASICK (16 December 2012)

*Ah Trilogy - You've Done it Again!*



RODENT69 said:


> ASICK   no that's no the Doc, I will try and attach it here, if I can remember how. Just checked their Web site cant find it
> 
> Let's see what happens  Doc is called LM Wholesale Fund Update 14 Dec 2012 PDF




Thanks Rodent.

Ah .. at last, I note from Trilogy's 14 December 2012 update that BDO comes on board (BDO also audits the PFMF) - I won't be surprised if PKF (as I understand it, now part of BDO) is appointed as receiver to some assets if Trilogy takes over the main fund.

PKF is the receiver appointed to this asset :http://moneymagik.com/wakerley_2_sep_2009.php

Ah, Trilogy, the "captain of spin":-

"2012 Financial Statements
We have now received a ‘draft’ copy of the 30 June 2012 Financial Statements from LM. In order to finalise the accounts, Trilogy needs to be satisfied that the accounts have been prepared in accordance with the Corporations Act and that they present a true and fair view of the Fund’s financial position as at 30 June 2012.  Trilogy will need to work with the Fund’s external auditors in order to achieve this. Due to the unavailability of the external auditors, we will not be able to finalise the accounts until early January 2013."

And off they go to spend some of your money - to ensure that LM's accounts are prepared in accordance with the corporations act and that they present a true and fair view of the funds' financial position as at 30 June 2012. So, you're all very lucky indeed to have an auditor check an auditor - (note below, Triogy have changed the fund's auditor to BDO - lucky BDO to get all this business)

"Net asset value - According to the draft 2012 Financial Statements received from LM, the net asset value per unit is 59 cents. This corresponds with the net asset value per unit as disclosed in the LM First Mortgage Income Fund’s (the First Mortgage Income Fund) financial report for the year ended 30 June 2012. Please note that we are unable to independently verify this net asset value. We are not yet in receipt of sufficient information from LM to enable us to provide daily unit pricing."

Spin, spin, spin - unless there's some sort of arrangement between the Wholesale fund and the LM FMIF, Trilogy isn't going to be able to independently verify anything more than investors in the Wholesale fund will able to independently verify anything Trilogy does ! 

Now, why is daily unit pricing important? Well, it could be (as in the PFMF), that the manager's fees are calculated daily - wow! over $28k a week and calculated daily - Trilogy will want to make sure it gets its just deserts - how does it affect investors? well, it realy doesn't.

Of course this steady and careful expedition to oncover the real value - hum... I wonder if they did that when they issued $3.555m in $1.00 units in 2009 in the Trilogy Healthcare REIT fund when the current value for each unit as at 30 June 2008 was only $0.63/unit? [you know, I would have thought Trilogy would have approached those investors and said "Hey, listen, We know you guys paid was $1.00/unit, but they were only worth $1.00 per unit, so we'll refund the $0.37/unit" - but, they didn't ! ] :  http://moneymagik.com/analysis_REIT.php

page 8 at this link tells the whole story : http://moneymagik.com/Trilogy_Healthcare_REIT_2010.pdf

129,800 units issued for $1.00 each when the current value for each unit was only $0.60 !

Not once, but TWICE:-

In 2009: 3.555m units for $1.00 (current value $0.63), and
In 2010: 129.6k units for $1.00 (current value $0.60)

In comes BDO:

"2012 Tax Statements
We have been advised by LM that work has not yet commenced on preparing the tax statements for investors in the Fund. As a consequence, we have appointed BDO as tax agent and have commenced discussions with them to expedite the completion of the Fund’s year end tax statement. Our initial review would suggest that there is no taxable income to investors for the year ended 30 June 2012. We are working towards releasing statements very early in the new calendar year."

Really, just a "suggestion" that there'll be no taxable income?   Okay, call me crazy, but are they leaving the door open for investors to think there'll be some taxable income ?   ho hum.

"Outstanding redemptions and unpaid distributions
It has been brought to our attention that a number of investors requested to redeem their units in the Wholesale Fund prior to it being frozen. Many of these investors have contacted us to ask whether their request can now be processed. We have also received a number of queries from investors in relation to a distribution that was declared by LM but never actually paid.

We are not yet in possession of sufficient information to make a statement regarding unpaid distributions. In terms of outstanding redemptions, the sole assets of the Wholesale Fund are units in the First Mortgage Income Fund, which is currently still being managed by LM. As such, the Fund can only generate liquidity if LM sells the assets in the First Mortgage Income Fund and distributes the net sale proceeds. While we don’t have any direct control over the disposal of assets in the First Mortgage Income Fund, LM has agreed to an orderly sell down of assets, which we intend to monitor. As such, returns to investors are likely to be by way of capital returns rather than redemptions."

On the face of it, I would have thought that the declared current value of a LM FMIF unit at $0.59 would be enough information to say that there'll be no distributions (other than capital) - no big surprise there, but it gives Trilogy much to spruik about - it really does make them look like they're doing something.

What'll really be the fun part will to look at see just how much on management, legal and auditing fees - and to see just how much of each $1.00 parceled out the Wholesale fund from LM's FMIF actually gets to investors.

"... LM has agreed to an orderly sell down of assets, which we intend to monitor. ..." - hey, good on 'em - just like we'll love to monitor Trilogy's "in one line" sales of PFMF assets, like down at The Entrance, NSW:
http://moneymagik.com/the_entrance_in_one_line.php


----------



## ASICK (17 December 2012)

*Re: Ah Trilogy - You've Done it Again!*



ASICK said:


> ... "Net asset value - According to the draft 2012 Financial Statements received from LM, the net asset value per unit is 59 cents. This corresponds with the net asset value per unit as disclosed in the LM First Mortgage Income Fund’s (the First Mortgage Income Fund) financial report for the year ended 30 June 2012. Please note that we are unable to independently verify this net asset value. We are not yet in receipt of sufficient information from LM to enable us to provide daily unit pricing."
> 
> ... Of course this steady and careful expedition to oncover the real value - hum... I wonder if they did that when they issued $3.555m in $1.00 units in 2009 in the Trilogy Healthcare REIT fund when the current value for each unit as at 30 June 2008 was only $0.63/unit? [you know, I would have thought Trilogy would have approached those investors and said "Hey, listen, We know you guys paid was $1.00/unit, but they were only worth $1.00 per unit, so we'll refund the $0.37/unit" - but, they didn't ! ] :  http://moneymagik.com/analysis_REIT.php
> 
> ...



 (emphasis added)

The comment should be amended thus, "Hey, listen, We know you guys paid was $1.00/unit, but they were only worth $0.63 per unit, so we'll refund the $0.37/unit"  (emphasis added)

Here's Trilogy performance in the PFMF (as the 30 June each year):
2009 $0.48/unit Loss  = 0%
2010 $0.43/unit Loss = 10%
2011 $0.36/unit Loss = 25%
2012 $0.21/unit Loss = 56%
http://moneymagik.com/general_information.php
(see Table headed "The PFMF is Going Down")

For one, I find it difficult to handle Trilogy spruiking , "3. As the RE of the Wholesale Fund, our first question to LM relates to the disposal of a Holding Fund asset, described as a ‘student accommodation property’ located in Cairns. The property was last purchased for $10 million but recently sold for as little as $3.85 million. We also understand that the carrying value of the loan was more than $10 million. If this is correct, we need to understand how this gross loss of investor funds came about under LM’s management." (emphasis added)

Generally, the comment is a fair one, that's a hell of a loss - but then, the reality is that it's not unlike losses suffered by the PFMF under Trilogy's management.   Crickey, unit price for Trilogy's Healthcare REIT (as at 30 June 2012) was NEGATIVE - Can you believe it? A negative unit price? http://moneymagik.com/analysis_REIT.php

In fact, as stated in a previous posting, LM has outperformed Trilogy when two sales were compared - however, $0.63% loss is not too bad when compared with Trilogy's overall performance in a number of its funds:-
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

Putting it into perspective, as at 30 June 2012, Trilogy lost 56% of its starting value in the PFMF.  That's$0.26/unit, or about $230.4m - *TWO HUNDRED & THIRTY POINT FOUR MILLION !*  NEARLY HALF OF WHICH WAS LOST IN 2012 ALONE !

Readers know about the loss at The Entrance : http://moneymagik.com/the_entrance_in_one_line.php
about the over three years of NOT ONE unit sold at "Grande Pacific" : http://moneymagik.com/grande_what.php
about the disappeared pollution down at Braeside : http://moneymagik.com/pollution_what_pollution.php
and about the mess at "Woodgrove" : http://moneymagik.com/wakerley_pictures_01_11_12.php

but the clincher is the purchase of the unit at "King Tide" on the Gold Coast (Qld):-

Of they went and formed a Group (the PFMF and an entity owing one unit in "King Tide"):-

"Wholly owned subsidiary of the Scheme - The Responsible Entity established a separate wholly owned subsidiary of the Scheme on 7 April 2010, namely King Tide Management Pty Limited (King Tide). This entity was created in order to acquire the management rights associated with a property over which the Group holds security. The subsidiary did
not commence trading activities during the year." [PFMF return 2010]
http://moneymagik.com/PFMF_return_jun_2010.pdf

Then in 2012 [PFMF return 2012]:-

[note 4] - "On 7 April 2010, the Group established a separate wholly owned subsidiary named King Tide Management Pty Limited (King Tide), giving it a controlling interest in the shares of the company. The subsidiary company was incorporated and domiciled in Australia and was a dormant entity for the period to 30 June 2012." http://www.vasin.com.au/faq/How-do-I-close-down-a-company.html
(December 2012 may see the "Group" return to a mere lossy fund)

[note 8] - "The Investment Manager recommended that the Group acquire a residential apartment with a strategy to gain control over the entire complex (of which the Group holds a number of apartments as security for a mortgage loan) with the intention of selling the potential development opportunity of this site as a whole, in order to
maximise returns to unitholders. The Group paid a deposit to acquire an additional apartment, as well as the management rights over the entire complex.

Subsequent to the proposed acquisition of the additional apartment and management rights, the South East Queensland property market experienced further significant deterioration which no longer made the Investment Managers strategy feasible. As a consequence, the apartment held by the Group was placed on the market for sale. The planned acquisition of the additional apartment and management rights cancelled with deposit monies returned to the Group." http://moneymagik.com/PFMF_return_30_June_2012.pdf

The Investment Manager (that'd be Balmain Trilogy, a construct of both Balmain and Trilogy) recommended the Group (that'd be the PFMF and the entity which acquired the sold unit at "King Tide").  

Trilogy's little adventure cost the fund $256,331 (lost) from an outlay of $473,831 (adjusting for refunds).   In percentage terms, a loss of 54%.

Now, we're not talking the dates as outlined in LM's asset at Cairns, we're talking purchasing a unit in 2010 - and even purchasing in 2010.

So, if anyone out there thinks Trilogy is only capable of losing investors' money in managed schemes with security assets acquired in 2007/2008 and revalued, think again - it's even capable of losing big time in buying an apartment on the Gold Coast in 2010 - as I understood it, in 2010, the Gold Coast was a buyer's heaven.


----------



## Irishdan (17 December 2012)

*Re: LM Managed Performance Fund*

Asick, the large loan in QLD is associated with Maddison estate Which we know is controlled by none other than Peter Drake. Essentially lending money to himself!!! 

It would appear that Managed Performance fund is not subject to same reporting provisions as the other funds as it is only for overseas investors and platforms. Probably explains why some of the advisers who provided testimonials for the website referred to visiting "Maddison" as part of thier Junket,

Georgiannawadi, I would agitate with LM to get your money out and I agree with Asick, it might be worth getting a lawyer to assist you




ASICK said:


> Hi georgiannawadi,
> 
> Here is some information I've found online (I'm sure you'll have all of this):-
> 
> ...


----------



## ASICK (17 December 2012)

*Re: LM Managed Performance Fund*



Irishdan said:


> Asick, the large loan in QLD is associated with Maddison estate Which we know is controlled by none other than Peter Drake. Essentially lending money to himself!!!
> 
> It would appear that Managed Performance fund is not subject to same reporting provisions as the other funds as it is only for overseas investors and platforms. Probably explains why some of the advisers who provided testimonials for the website referred to visiting "Maddison" as part of thier Junket,
> 
> Georgiannawadi, I would agitate with LM to get your money out and I agree with Asick, it might be worth getting a lawyer to assist you




IrishDan, I don't know much about his "Maddison" estate?

If it's a development that's not generating cash flow, then how are investors paid? 

To comment, we really need to see a financial statement.


----------



## Loiner (17 December 2012)

Hi Guys,

as an investor in the long frozen LM CPAIF I was stirred by your recommendations for Georgiannawadi to take legal advice. Although a first time poster, I have been following your thread with great interest since the early days and found it very informative, even if a bit soul destroying. I do appreciate the time and effort that you guys have been putting into research and making posts. ASICK has obviously had a long and bitter experience with a similar bunch of charatans, which I'd like to avoid if possible.

Some of the earlier posts referred to Piper-Alderman and their potential Class Action, plus another mention of Selbourne Chambers as possible barristers. I have contacted both of these firms, but cannot see very much happening so far. Do any of the other thread readers know what the current status is regarding any sort of possible legal action? I provided some details requested by Piper-Alderman but their wheels of justice are grinding far too slowly. Are there other law firms out there doing anything or making any progress at all?

With my fund now having only a provisioned unit value of 59 cents, and reducing rapidly, I am looking for any alternatives to recouping some of my losses. (Or LM's losses on my behalf, thankyou.) My confidence in LM ran out long ago, but from the financial details you have been digging up it's clear that their mismanagement of the funds is much more than just a bit of bad luck due to the GFC, or whatever else they try to blame on the market values. The threat from Trilogy eventually squeezed some action out of LM regarding their fees, and I'm convinced that more pressure to clear up their mess must be brought upon them from whatever source available.
Any ideas?


----------



## ASICK (18 December 2012)

*Trilogy: A Perspective Gained From Experience*



Loiner said:


> Hi Guys,
> 
> as an investor in the long frozen LM CPAIF I was stirred by your recommendations for Georgiannawadi to take legal advice. Although a first time poster, I have been following your thread with great interest since the early days and found it very informative, even if a bit soul destroying. I do appreciate the time and effort that you guys have been putting into research and making posts. ASICK has obviously had a long and bitter experience with a similar bunch of charatans, which I'd like to avoid if possible.
> 
> ...




Hi Loiner, I'm pleased to see yet another fund member join the forum.  While it's fine for outsiders like myself to post, it's fund members' money at risk, and in the end, their decision about what's to be done about how the fund is managed.

Members of the PFMF had a choice back in 2009 and, by a slight majority, Trilogy was voted in as manager.  City Pacific Limited (the then manager) had a choice too, and it chose not to lower its fees and speak openly to investors - that was a big mistake for City Pacific, and I think, in the end, it caused investors to make a bad decision by voting in Trilogy - a very bad decision indeed.

Investors in LM's funds are in no different a position, except that LM (as you rightly point out) had made substantial movement in the right direction by giving up the idiotic "asset split" proposition, undertaking to wind up the fund, and reduction of its fee.  From my experience, I think it's better to keep the "devil" you know, and more importantly, it's important to keep the one you know you can blame for things going wrong.

I'm sure you'll note how Trilogy tries to undermine LM at every turn, re: the accounts, and re: the Cairns assets.  Yet, as manager of the PFMF, Trilogy has resided over massive (actually, MASSIVE) fund losses.

It seems LM has fared much better with the LM FMIF than Trilogy has with the PFMF:
http://www.moneymagik.com/general_information.php
(see the table headed "The PFMF is Going Down")

One might say, "Well I don't trust LM's figures", well I would say, "Take a look at Trilogy's figures in the PFMF".

I wouldn't hold out too much hope for recovery by way of litigation - first there's got to be a course of action, and that's a lot more difficult to find that one might think.  On face value, members think that losses (per se) are recoverable because they're losses - but the manager isn't obligated to make a profit - ASIC also isn't bothered about mere loss, even the loss of all of one's investment (ASIC is not a prudential regulator), unless of course, such loss is caused by fraud or by non-compliance.

So, I wouldn't be getting too excited about a meddling "ambulance chaser" in circumstances where there's no evidence to support a course of action.

Litigation had been held out as a carrot for members of the PFMF:
http://www.moneymagik.com/litigation.php

IMF (a litigation funder) funded public examinations of a number of former City Pacific directors (and others) in the Supreme Court (NSW) tp tune of $2m, yet did not fund the current proceeds against a number of former City Pacific directors in the Federal Court - one has to ask the very serious question "Why?" - the claim was for $60m, yet there's only $20m in insurance available (that's if there is insurance) - my guess is that there isn't, otherwise IMF would have been in there "boots and all" to gain 26% of that $20m - but it didn't. Still, many members of the PFMF hold out hope of recovery thru litigation (I'm not one of them).

Members in damaged funds are vulnerable - many are still suffering from shock - I'm bet there are many out there still coming to the grips with the reality  that it hasn't just happened to others, it's happened to themselves.   IN what other circumstances could an entity with Trilogy's history be even considered as an alternative manager?

Try and get a successful manager with a really good management history to take over the fund and see how difficult it is - it's bloody hard - for them, it's not about the money - why? because they're concerned about how the losses in the fund would impact on their reputations.

In my view, if Trilogy performed in the LM as it has in the PFMF, your fund will be decimated, and there will be nothing you'll be able to do about it.  Trilogy would rake in the fees and you'd be watching your unit price plummet - and the blame would be either the market or LM.

Trilogy has never disclosed the sale price of even one PFMF fund asset - not one.  Neither has Trilogy disclosed the value of loss suffered by the fund on any one asset as a result of a sale.  I think you'd all be deluding yourselves to think that Trilogy would bring on a new age of transparency. 

You say that I've had a "long and better experience" - yes, I have, and believe me when I tell you, I would really hate to see you guys suffer likewise.  "Blind Freddy" could see that if I was pleased (or even slighly displeased) with Trilogy that I wouldn't waste my time with this stuff, but it's much much worse than that.  Even at just 1.62% management fee (including fund expenses), $17m went to Trilogy and about $80m to investors - out of a fund valued at $630m by City Pacific when Trilogy took over in July 2009.

How do you think you'd feel if you'd found out that not one unit in a Broadwater highrise had been sold in over three years since Trilogy took the fund?
http://moneymagik.com/grande_what.php

How do you think you'd feel if you visited a fund asset after over three years with Trilogy as manager and found this?
http://moneymagik.com/wakerley_pictures_01_11_12.php

How do you think you'd feel if you were told in 2011 that a site was "fairly heavily" polluted and then told in 2012 there was none?
http://moneymagik.com/pollution_what_pollution.php

I could go on, it's all been posted before. 

In the end it will be your membership's collective decision, but don't ever think that things can't get worse than having LM as manager - even if you don't think so, it really is possible to "cut off your nose to spite your face" (so to speak) - I continue to say, "be careful, you might get what you wish for".

If you appoint Trilogy and suffer in your fund as we have in the PFMF, then you'll look back at these postings and I guarantee that you'll see them in an altogether different light, and there'll be nothing you can do about it. Then you'll know what a "long and bitter experience" really feels like.

(http://www.moneymagik.com/yardy_yardy_yah.php)


----------



## Irishdan (19 December 2012)

*Re: LM Managed Performance Fund*

The Managed performance fund invests in first and second mortgages and can only be invested in by non resident investors and platforms who have no protection under Australian law.

Michael West dug up details of the fund as copied below

_The celebrity numbers surrounding Maddison are just as impressive as the celebrities themselves. Over $217 million of the $370 million in the LM Managed Performance Fund is committed in this single project yet it appears that investors have only a second mortgage.

Suncorp is owed $22 million ahead of investors in the LM Managed Performance Fund and of the $217 million presently owed by Maddison, $101 million is capitalised interest on the loan.  The acquisition cost of the land was $76 million.

Interest is paid to Suncorp, distributions are paid to investors, and management fees paid to LM. These are now five per cent but can rise as high as 10 per cent each year.

Let’s not forget the fees to financial advisers. Those who tipped the investors in receive another 3 per cent per year. With a touch of extravagance, the marketing materials for the fund describe it as a "bank-like facility".

Back of envelope, you could smoke $30 million a year, on this one project, just to keep the money flowing.


Read more: http://www.brisbanetimes.com.au/bus...-be-elusive-20121026-28b4k.html#ixzz2FSRjMDtM_


ASICK said:


> IrishDan, I don't know much about his "Maddison" estate?
> 
> If it's a development that's not generating cash flow, then how are investors paid?
> 
> To comment, we really need to see a financial statement.


----------



## Irishdan (19 December 2012)

Details of managed performance fund as at end of Sept in attached link

http://www.lmaustralia.com/Downloads/PDS/MPF_IM.pdf

p 39 and 40 deal with related party transactions which account for 270million dollars.


----------



## ASICK (19 December 2012)

*Yipes --- Where Did the Money Go?*



Irishdan said:


> The Managed performance fund invests in first and second mortgages and can only be invested in by non resident investors and platforms who have no protection under Australian law.
> 
> Michael West dug up details of the fund as copied below
> 
> ...




Yipes .. that's a fund I wouldn't like to have any $$$s in 

Where's the cash? If "Maddison" was purchased for $76m and it's pumped to $217m with $101m in accrued (and then capitalized) interest (plus $40m of ?), where did the $141m ($217m - $76m) go?  I spoke to the sales office and they don't even have any demo houses on site yet (maybe mid 2013?).  A lot of money going out - nothing coming in: that is a worry.

Ouch ! and how about the other loans...  more capitalization?

The fund's financial reports must be an interesting read ...  just how much cash is the fund generating?

and this from the Equititrust thread -- McIvor (ex-spruiker from Equititrust):
http://www.fairgomate.com.au/Portals/Fairgomate/Novella/Strange-Animals-Part 1-Mark-McIvor.pdf


----------



## Irishdan (19 December 2012)

*Re: Yipes --- Where Did the Money Go?*

Asic they are old numbers the new figures disclosed by LM, the related party loans have grown to 270m from 217 just a few monthsw ago


ASICK said:


> Yipes .. that's a fund I wouldn't like to have any $$$s in
> 
> Where's the cash? If "Maddison" was purchased for $76m and it's pumped to $217m with $101m in accrued (and then capitalized) interest (plus $40m of ?), where did the $141m ($217m - $76m) go?  I spoke to the sales office and they don't even have any demo houses on site yet (maybe mid 2013?).  A lot of money going out - nothing coming in: that is a worry.
> 
> ...


----------



## ASICK (19 December 2012)

*Re: Yipes --- Where Did the Money Go?*



Irishdan said:


> Asic they are old numbers the new figures disclosed by LM, the related party loans have grown to 270m from 217 just a few monthsw ago




Then I'd mulitiply my concerns by 1.25 or thereabouts ! I'd be surprised if there isn't massive losses in the pipeline for that fund.


----------



## RODENT69 (20 December 2012)

This Trilogy Doc got sent to me today

Trilogy update - LM Currency Protected Australian Income Fund 

With the end of the 2012 upon us, we felt it timely to provide an update in relation to the LM Currency Protected Australian Income Fund (‘Currency Protected Fund’ or ‘the Fund’) and outline the progress we have made to date in agitating for change on behalf of investors and our strategy for the New Year.

Through an Extraordinary General Meeting (the Meeting) on 1 November 2012, 69% of investors in the LM Wholesale First Mortgage Income Fund (Wholesale Fund) voted in favour of replacing LM Investment Management Limited (LM) with Trilogy Funds Management Limited (Trilogy) as Responsible Entity (RE). 

Following our formal appointment on 16 November 2012, we have been working through the transition timetable set by LM as well establishing working relationships with the external auditor, the regulator and several of the investment platform providers who hold units in the Wholesale Fund on behalf of investors.

We remain committed to investors in the Currency Protected Fund

We believe that our appointment as RE of the Wholesale Fund confirms widespread investor support for a change in RE and we remain firmly committed to our strategy to bring about this change for concerned investors in the Currency Protected Fund and the LM First Mortgage Income Fund (First Mortgage Income Fund). We are currently considering our options around a suitable timeframe in the new calendar year.

It is pleasing to see that since the Meeting in November, LM has followed our lead and significantly reduced management fees for the Currency Protected Fund, Wholesale Fund and First Mortgage Income Fund. Investors in the Currency Fund will now save $3.1 million in management fees per year. LM also appears to have improved its communication with investors and advisers, providing more regular and more detailed updates.

Important issues for investors to consider
On behalf of investors in the Currency Protected Fund and Wholesale Fund, we continue to monitor LM’s management of the First Mortgage Income Fund. The recent release of the 30 June 2012 accounts for the First Mortgage Income Fund highlighted what we believe are important questions for investors to consider: 

1.	How did LM arrive at a unit price of 59 cents without obtaining any external independent valuations? 

2.	An asset held in the First Mortgage Income Fund, described as a ‘student accommodation property’ located in Cairns, was recently sold by LM for $3.85 million but we understand that the carrying value of the loan was more than $10 million. Why did LM allow the property to sell for such a huge loss? 

3.	It appears that the proceeds from the sale of a $40 million asset held in the First Mortgage Income Fund located near Wollongong, south of Sydney were used in part to repay loan(s) held in another LM managed investment scheme believed to be the LM Managed Performance Fund. Why was an unsecured creditor and related party repaid in priority to unpaid distributions and redemptions of investors?  

4.	Related scheme lending has increased to $60 million (as per the 30 June 2012 accounts for the First Mortgage Income Fund). Why has related scheme lending increased, further entangling the interests of First Mortgage Income Fund investors with other LM schemes such as the LM Managed Performance Fund? 

These issues reinforce our view of the need for improved transparency in relation to the administration, management and performance of the fund. Like you we are focussed on achieving improved outcomes for investors in the Currency Protected Fund and look forward to working with you to achieve this in 2013. Until then we wish you a safe and happy Christmas.


----------



## Loiner (20 December 2012)

*Trilogy  -  Absolutely NO Confidence*

Rodent69, thanks for that.
I haven't seen the Trilogy Doc yet, but they do take some time to get to me by post. 
You can be sure it will be returned to them upon receipt, together with a short riposte. Why would they think I would be interested in a "Trilogy update - LM Currency Protected Australian Income Fund", to a fund over which they have no authority? Or is this a prelude to another attack on my already dwindling funds?

ASICK had already long ago convinced me of the folly of voting for Trilogy. Although I was quite prepared to replace LM as the RE, my voting sheet definately did not have a cross in the second box for Trilogy. I suspected that so many other CPAIF investors had shown a similar pattern, was the reason for the abandoned voting. Does the nature of the CPAIF investor profile mean that 'The Platforms' cannot swing this fund's vote and there is an inherent level of protection against the vultures waiting to pick our bones? 
Does anything further need to be done to proctect the CPAIF fund, or perhaps I'm missing something here?


----------



## ASICK (23 December 2012)

RODENT69 said:


> ... Until then we wish you a safe and happy Christmas.




Trilogy took over the PFMF in July 2009, and for Xmas 2009, (from Trilogy), "The Board and staff of BalmainTRILOGY would like to wish you and your family a happy and safe Christmas." 
(http://www.moneymagik.com/general_information.php - under the heading, "Christmas Cheer")

It was the first and LAST christmas greeting ever received from Trilogy - The fund has paid about $17m in fees to date and not even a "Merry Xmas Losers" from Trilogy.

**** Merry Xmas to ALL ****


----------



## RODENT69 (2 January 2013)

Dear all -- happy new year.  Guess which company has not paid the distributions before XMAS to investors that were mentioned in the recent hook up?

Also that company has a link on their website so that an investor can request a copy of the RG45 for the FMIF, I have requested it.

Also good old Trilogy has yet to advise Platforms of the new official Unit Price, nor have the posted the Audited WFMIF statements.

They did issue an *updated version *of their doc titled -LM Currency Protected  Aust Incom Fund  dated 
18 Dec 2012


----------



## ASICK (3 January 2013)

*That Which is Unable to be Given*



RODENT69 said:


> Dear all -- happy new year.  Guess which company has not paid the distributions before XMAS to investors that were mentioned in the recent hook up?
> 
> Also that company has a link on their website so that an investor can request a copy of the RG45 for the FMIF, I have requested it.
> 
> ...




*** Happy New Year ***

Rodent, I'm a little perplexed about these "distributions" - as I understand it, the "distributions" were accounted for some time ago, but as I see it, such "distributions" are only able to paid from current cash, cash which could only be described as a portion of capital, and could only be discribed as a capital return.  

Correct me if I'm wrong, but the "distributions" were accounted for in a period of substantial loss, not profit, and therefore could only be described as a return of capital in any event (regardless of what term is actually used).

I'm always puzzled as to why investors hang onto the idea of receiving distributions (of profit) when there is simply no profit (regardless of whether such distributions are promised or even hinted at by a manager).

No one is able to give that which is unable to be given (and that includes Trilogy).

http://www.moneymagik.com/litigation.php
http://www.moneymagik.com/yardy_yardy_yah.php

Re: Trilogy not furnishing the 2012 Wholesale fund accounts - at a guess, I wouldn't be surprised if Trilogy blames LM - so it goes.

LM update: http://www.lmaustralia.com/Downloads/Trilogy-Article/trilogy-facts-dec-12.aspx


----------



## ASICK (5 January 2013)

*Bad News?*

*Bad News? * 

*This is bad news:-*http://equititrust.com.au/Pdfs/Receiver/Receivers Reports - 20130104 - 10th Report to Investors.pdf
9 November 2012, estimated unit price between $0.15 - $0.22 per unit, revised as at 31 December 2012 (less than 2 months) to between $0.11 - $0.19 per unit, "primarily due to a revision of the estimated vatues of certain property securities (based on offers received being less than the professional vatuations held) and the accrual of outstanding rates and land tax."
*This is bad news too:-*
http://www.moneymagik.com/yardy_yardy_yah.php - fund value dropped from $273m to $117m in one year !


----------



## ASICK (10 January 2013)

*The PFMF's security assets at Wakerley ("Woodgrove")*

Seeing Trilogy is so concerned about getting to the bottom of the LM sale in Cairns, I wonder if Trilogy will be so keen to disclose to investors in the PFMF the outcome for the fund's security assets at Wakerley ("Woodgrove")?  

Andrew Griffin (Information Sessions 2010/2011), "So I guess we now come to the final part which is the future of your fund. There are only limited strategies available in relation to the assets of your fund. Leaving aside Martha Cove for a moment, in respect of the other remaining assets of the fund, they can either be sold as is, which is akin to a fire sale, which we've undertaken not to, or they can be improved in value, by us, to the maximum extent possible prior to a sale to an investor or a developer. I've already discussed the types of work we do to maximize value, but let me summarise again by saying that we will improve these assets right up to the point where an investor or developer will pay the maximum possible price for each asset which returns the greatest capital value to you, the investor. Specifically, we will procure valuable rezoning or development approvals prior to the sale of vacant unimproved vacant land. We will complete developments to enable the sale of completed product rather than selling assets to developers for them to make their development profits from your fund. And finally, once complete, we will sell the finished stock to individual owners occupiers and investors to try and maximize returns to unitholders. Perhaps this slide will explain a little better what we're doing. We are taking the current assets of the fund and trying to improve them to the greatest extent possible before development would commence on the site. We are not taking them beyond that level, but as soon as we've managed to increase the value from .. rezoning or development consent. Once we've maximized the value, we will then sell the site to the open market. We are of the firm view that this is the best strategy in respect of these assets to recover the greatest value for you while minimizing additional expenses"

http://moneymagik.com/wakerley_2_sep_2009.php
http://moneymagik.com/wakerley_1_may_2010.php
http://moneymagik.com/wakerley_pictures_01_11_12.php

Read the latest at: http://www.moneymagik.com/


----------



## Irishdan (15 January 2013)

Seems a couple of small distributions have been made to investors as per advice provided in teleconference in December.

Has anyone seen an RG45 yet?


----------



## RODENT69 (16 January 2013)

Irishdan said:


> Seems a couple of small distributions have been made to investors as per advice provided in teleconference in December.
> 
> Has anyone seen an RG45 yet?




Irish Dan  I have not had any distributions yet (Asgard) I  applied in writing to LM on 8th Jan for the RG45 LM says  available ONLY as post to Investors, it should be here by today?  will advise when I receive it


----------



## ASICK (17 January 2013)

*"An Inquiring Mind"*



Irishdan said:


> Seems a couple of small distributions have been made to investors as per advice provided in teleconference in December.
> 
> Has anyone seen an RG45 yet?




Good morning IrishDan.

"Seems"? No money in your bank account yet?
If you don't mind, is the "distribution" taxable (as income), or is it, in fact, a capital distribution?


----------



## Irishdan (17 January 2013)

*Re: "An Inquiring Mind"*



ASICK said:


> Good morning IrishDan.
> 
> "Seems"? No money in your bank account yet?
> If you don't mind, is the "distribution" taxable (as income), or is it, in fact, a capital distribution?




Hi Asick,

A client of mine received 2 distributions in Dec but I have not received copies of the statements from him yet to see how LM have classified them. In the phone hookup with LM Francene Mulder said that they were paying "catch up" distributions in Dec so I would think they will be "income" rather than a return of capital


----------



## sht4branes (17 January 2013)

Hi,,

This is my first post. I invested into the Currency Protected Fund on the advice of a NZ based financial advisor. Fortunately it wasn't enough to cripple or impact significantly on my future as it was 20% of one year's gross salary. in many ways the situation has a silver lining in the fact that I now manage all of my own investments and will never employ a financial advisor ever again: or invest in Gold Coast Property!

From reading far better informed individuals with greater understanding of investments and mortgage funds, i would like to summarize the trail.

There was a world financial crisis which affected property developments.

As borrowers were not able to repay the lent funds ,LM took over the properties in default and managed them, closed the fund, waiting for the market to improve 

LM  then gorged on the closed fund with high fees and used delaying tactics to keep the funds closed so they could collect the fees.

Trilogy forced LM's hand into action by attempting to take over the funds so properties are now being sold by LM to return capital to investors.

LM is bad but Trilogy is worse so it is better to stick with the devil you know.ASICK alledgedly got completely shafted by Trilogy and has informed us with his insight and knowledge of the likely turn of events based on his previous experiences.

The fund assets have been valued at a unit price of 59cents but we have to wait for the market to see what the actual price is. The recent low price for the Cairns University Hostel would imply that the 59 cent value is over inflated.

There is nothing we as investors can do but wait for the return of capital over the next 2-3 years and pray our losses aren't too great.

Is there anything else to be done?


----------



## ASICK (18 January 2013)

sht4branes said:


> ... LM is bad but Trilogy is worse so it is better to stick with the devil you know.ASICK alledgedly got completely shafted by Trilogy and has informed us with his insight and knowledge of the likely turn of events based on his previous experiences. ...




http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/general_information.php
http://www.moneymagik.com/litigation.php

facts, dear sht4branes, facts.


----------



## RODENT69 (18 January 2013)

For information of other investors. This is the latest Info I have received regarding the RG45

 Quote from LM  -  Further to our telephone conversation, I have asked for an update regarding the distribution of the RG45. I have been advised they have to go via the mailhouse and we expect you will receive it in the mail next week.


----------



## ASICK (19 January 2013)

*PFMF Asset at Wakerley ("Woodgrove")*



ASICK said:


> http://www.moneymagik.com/yardy_yardy_yah.php
> http://www.moneymagik.com/general_information.php
> http://www.moneymagik.com/litigation.php
> 
> facts, dear sht4branes, facts.




Well, the remainder of the PFMF's asset at Wakerley has been sold.
http://www.realestate.com.au/property-residential+land-qld-wakerley-200441151

(background:
http://moneymagik.com/wakerley_2_sep_2009.php
http://moneymagik.com/wakerley_1_may_2010.php
http://moneymagik.com/wakerley_pictures_01_11_12.php)

It must have been a real nice little earner for Trilogy & BT and the receiver for these last three years.  Just sitting there idle for all that time.

Here's what the advertisement (above, and in part) had to say, "This is an ideal opportunity for a small developer or builder to take advantage of the limited supply of stock in this location"

Remember, this is what Trilogy (at the investor sessions) said it would do, ""So I guess we now come to the final part which is the future of your fund. There are only limited strategies available in relation to the assets of your fund. Leaving aside Martha Cove for a moment, in respect of the other remaining assets of the fund, they can either be sold as is, which is akin to a fire sale, which we've undertaken not to, or they can be improved in value, by us, to the maximum extent possible prior to a sale to an investor or a developer. I've already discussed the types of work we do to maximize value, but let me summarise again by saying that we will improve these assets right up to the point where an investor or developer will pay the maximum possible price for each asset which returns the greatest capital value to you, the investor. Specifically, we will procure valuable rezoning or development approvals prior to the sale of vacant unimproved vacant land. We will complete developments to enable the sale of completed product rather than selling assets to developers for them to make their development profits from your fund. And finally, once complete, we will sell the finished stock to individual owners occupiers and investors to try and maximize returns to unitholders. Perhaps this slide will explain a little better what we're doing. We are taking the current assets of the fund and trying to improve them to the greatest extent possible before development would commence on the site. We are not taking them beyond that level, but as soon as we've managed to increase the value from .. rezoning or development consent. Once we've maximized the value, we will then sell the site to the open market. We are of the firm view that this is the best strategy in respect of these assets to recover the greatest value for you while minimizing additional expenses"

Oh .. yeah ! Praise be to Trilogy !

Here's what the EOI (in part) said (http://moneymagik.com/moss_road_information_memorandum.pdf)
"Foxwood is pleased to offer for sale Lot 500 on SP 241869 on behalf of 57 Moss Road Pty Ltd (Receivers Appointed) (In Liquidation).
The offer presents the opportunity to acquire an outstanding residential site in the Brisbane suburb of Wakerley.
Prominent features of the site include:
• Located in the established and developing Brisbane residential suburb of Wakerley.
• The lot is incorporated within the ‘Woodgrove’ master-planned community.
• Existing residential use.
• Excellent connectivity to all major nearby attractions and infrastructure.
• Take advantage of substantial commencement of the estate.
• Receiver appointed, must be sold." 

Geez, you'd nearly get the idea that a receiver had just been appointed, but that's be a tad misleading - a receiver was appointed years ago !

Look at all the benefits, and  then also note the comment about the "limited supply of stock" in the area spoken to in the (above) advertisement.

Then go back and take a look at Griffin's spruik from the information sessions (above).

Yes, the remainer of stages 2 & 3 is in the middle of a built up area of quite attractive homes (just have a look with google street view).

And yet, the whole shooting match is rumoured to have been knocked off for just (about) $4.2m after sitting idle for THREE AND A HALF YEARS!  The slabs, the weather-beaten frames, and the torn sarking - all sat there for over three and a half years while Trilogy and the receiver made $$$$$ with nothing coming to investors.  For three and a half years!!!

Given Trilogy concern over sale of the small LM fund asset at Cairns, what I'd like to know is:

1. What was the loan value relating to the PFMF's asset at Wakerley (known as "Woodgrove") as at 30 June 2009, 30 June 2010, and 30 June 2011?
2. When did construction commence for the completion of stage 1 (together with a few of the houses in one of the other two stages, 2 & 3)?
3.  What was the total amount recovered prior to the recent sale of what remained of stages 2 and 3?
4.  What was the amount recovered from the sale of what remained of stages 2 and 3 (that is, the sale in December 2012)?
5.  What the net amount (on the complete asset - stages 1, 2, and 3) recovered by the fund.
6.  How much was the total amount paid to the receiver/s (from date of appointment  to date of sale in December 2012).
7.  How much did Trilogy draw on fees in relation to the complete loan (from July 2009 to date of sale in December 2012).

My guess is that investors in the PFMF suffered a MASSIVE loss at Wakerley - a loss which would make the loss at Cairns puny by comparison, yet Trilogy speaks not one word of it.

Hypocracy - http://en.wikipedia.org/wiki/Hypocrisy

Ah, Trilogy - you've done it again!


----------



## ASICK (20 January 2013)

*Some PFMF Rumblings*

http://moneymagik.com/the_pusche.php


----------



## ASICK (21 January 2013)

*Trilogy - Is it Struggling?*

More gratuitous garbage from Trilogy:

http://www.moneymagik.com/


----------



## Irishdan (21 January 2013)

And another one...

http://www.couriermail.com.au/news/...uffer-big-losses/story-e6freonx-1226558166641


----------



## ASICK (21 January 2013)

*Trilogy & a Do-or-Die Pusche?*



Irishdan said:


> And another one...
> 
> http://www.couriermail.com.au/news/...uffer-big-losses/story-e6freonx-1226558166641




Yep ... I heard about that one on the radio this afternoon - oh well, receivers (or whatever) will do well.

Now twenty-one days into the new year and no pusche from Trilogy for the LM FMIF - there's so many rumours running around that it makes a listerner's head spin.   

I think Trilogy's not in a good position - the PFMF is sinking in value, ergo a falling income stream to Trilogy  - at least from the LM side, there's not much of an income in the LM fund Trilogy took over (about $350k) - it really could be that if Trilogy makes a run for the LM FMIF, it just might be a do-or-die effort if Trilogy's income stream is drying up.   

The harder the pusche, the higher the cost.

Is Trilogy about to fall?


----------



## ASICK (22 January 2013)

*Trilogy Licences*

https://connectonline.asic.gov.au/R..._afrWindowMode=0&_adf.ctrl-state=ci8d5dzw9_22

Seems no new licences since 2009.

So, how about the licence required to manage the LM fund Trilogy took over?


----------



## ASICK (24 January 2013)

*Keeping The Thread Alive*

This document is under construction.  If you have any interest, it'll be completed over the next week or so, time permitting.

The document discusses some issues about Trilogy's management of the PFMF as well as the two other funds so often mentioned in my postings.

I'm trying to put as much as I can into one concise document.

http://www.moneymagik.com/draft_email_to_members_november_2012.pdf


----------



## Mysteryman (25 January 2013)

*Re: "An Inquiring Mind"*



Irishdan said:


> Hi Asick,
> 
> A client of mine received 2 distributions in Dec but I have not received copies of the statements from him yet to see how LM have classified them. In the phone hookup with LM Francene Mulder said that they were paying "catch up" distributions in Dec so I would think they will be "income" rather than a return of capital




Have just received the latest communication dated 24th January from LM via financial advisor which states:

"Investor Income Catch Up (applicable only to investors in the LM First Mortgage Income Fund who
elected not to reinvest income)

At the end of December/beginning of January, two months of income payments were made to investors
for the months July and August 2010.  

By the week ending 25th January, we will have processed the next two months of income catch up for
the months of September and October 2010.  

We will shortly report when the final two payments in the catch up will be made."

For those poor souls like me in the wholesale fund, the following statement:

"With respect to the LM Wholesale First Mortgage Income Fund, LM is no longer the responsible entity of that fund and all decisions regarding distributions to be made to investors in that fund are a matter for the new responsible entity of that fund.   LM will however be making the appropriate payment to the new responsible entity for distribution to investors and we will notify the market of such payments."

Further enquiries reveals this may happen in March. Those in the LM WFMIF are now obviously 3rd class citizens with no definite promise of when we will receive any money. I don't know about anyone else in the WFMIF, but I still have not received May 2010 or June 2010, let alone any real promise of the further six payments for 2010.


----------



## ASICK (25 January 2013)

Hi Mysteryman, it might be a matter of Trilogy's licence.  If Trilogy doesn't have a proper licence, it could be that payments are not being made to the fund.  This could be easily checked out by contacting Trilogy.

Further, Trilogy's fee would accrue from the date it was appointed.  If the payments to your fund are small, the money could well be taken by Trilogy as management fees.  Again, contacting Trilogy would resolve this issue.

In any event, it might be best to write/email Trilogy and ask for a likewise reply.


----------



## ASICK (29 January 2013)

*The RE without a licence to operate the fund?*



ASICK said:


> Hi Mysteryman, it might be a matter of Trilogy's licence.  If Trilogy doesn't have a proper licence, it could be that payments are not being made to the fund.  This could be easily checked out by contacting Trilogy.
> 
> Further, Trilogy's fee would accrue from the date it was appointed.  If the payments to your fund are small, the money could well be taken by Trilogy as management fees.  Again, contacting Trilogy would resolve this issue.
> 
> In any event, it might be best to write/email Trilogy and ask for a likewise reply.




A search of ASIC's professional registery in relation to Trilogy Funds Mangement reveals that the latest update to its licence was in 2009:

" 1 -  18/03/2009

1. This licence authorises the licensee to carry on a  financial services business to:
   (a) provide financial product advice for the following classes of financial products:
      (i) deposit and payment products limited to:
        (A) basic deposit products; and
      (ii) interests in managed investment schemes limited to:
        (A) own managed investment scheme only;
   (b) deal in a financial product by:
      (i) issuing, applying for, acquiring, varying or disposing of a financial product in respect of the following classes of financial products:
        (A) interests in managed investment schemes limited to:
        (1) own managed investment scheme only; and
      (ii) applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of the following classes of products:
        (A) deposit and payment products limited to:
        (1) basic deposit products; and
        (B) general insurance products; and
   (c) operate the following kinds of registered manage investment schemes (including the holding of any  incidental property) in its capacity as responsible entity:
      (i) schemes which only hold the following types of  property:
        (A) direct real property;
        (B) financial assets; and
        (C) mortgages;
      to retail and wholesale clients."

https://connectonline.asic.gov.au/R...9390051447098164&_adf.ctrl-state=16exggr770_4

(if the form comes up blank, just enter Trilogy Funds Management in the organization name, and select the Australian Financial Services Licencee.)

Checking under the authorised rep of an AFSL, there are no enteries for Trilogy.


----------



## Mysteryman (30 January 2013)

*Re: The RE without a licence to operate the fund?*



ASICK said:


> A search of ASIC's professional registery in relation to Trilogy Funds Mangement reveals that the latest update to its licence was in 2009:
> 
> " 1 -  18/03/2009
> 
> ...




I am a little confused. Managed to find all you point out about Trilogy and no entries for Trilogy under authorised rep of an AFSL, but on going through the same procedure using 'LM Investment Management Ltd', I can not find anything for them under authorised rep of an AFSL. I am not familiar with searching any of these registers, so maybe I'm looking in the wrong place or entering an incorrect title for LM. Need clarification.


----------



## ASICK (30 January 2013)

*Re: The RE without a licence to operate the fund?*



Mysteryman said:


> I am a little confused. Managed to find all you point out about Trilogy and no entries for Trilogy under authorised rep of an AFSL, but on going through the same procedure using 'LM Investment Management Ltd', I can not find anything for them under authorised rep of an AFSL. I am not familiar with searching any of these registers, so maybe I'm looking in the wrong place or entering an incorrect title for LM. Need clarification.




https://connectonline.asic.gov.au/R...afrWindowMode=0&_adf.ctrl-state=17g91s2eqq_13

AFSL for LM Investment Management Limited ACN 077 208 461
(see page 6 here: http://www.trilogyfunds.com.au/site...ncy (NOM + EM)_INTERNAL PAGES_ WEB_FINAL.pdf)

"1 - 07/09/2012

1. This licence authorises the licensee to carry on a  financial services business to:
   (a) provide financial product advice for the following classes of financial products:
      (i) life products limited to:
        (A) life risk insurance products as well as any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds; and
      (ii) superannuation;
   (b) deal in a financial product by:
      (i) issuing, applying for, acquiring, varying or disposing of a financial product in respect of the following classes of financial products:
        (A) interests in managed investment schemes limited to:
        (1) own managed investment scheme only; and
      (ii) applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of the following classes of products:
        (A) deposit and payment products including:
        (1) basic deposit products;
        (2) deposit products other than basic deposit products; and
        (3) non-cash payment products;
        (B) derivatives;
        (C) foreign exchange contracts;
        (D) life products limited to:
        (1) life risk insurance products as well as any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds;
        (E) interests in managed investment schemes including:
        (1) investor directed portfolio services;
        (F) securities; and
        (G) superannuation;
   (c) operate the following kinds of registered managed investment schemes (including the holding of any incidental property) in its capacity as responsible entity:
      (i) "Lm Australian Structured Products Fund" scheme  (ARSN: 149 875 669),
        (A) a scheme which only holds the following types of property:
        (1) derivatives; and
        (2) financial assets; and
      (ii) schemes which only hold the following types of property:
        (A) direct real property;
        (B) financial assets; and
        (C) mortgages; and
   (d) provide the following custodial or depository  services:
      (i) operate custodial or depository services other than investor directed portfolio services to retail and wholesale clients."

An entity is able to either hold a licence (AFSL) or be the authorised representative of a licencee.  Therefore it's necessary to seach both for the holding of a licence, and for being an authorised representative.

You'll be able to compare the conditions of Trilogy's licence and those of LM's licence and note the glaring differences.  Such conditions are subject to change if licence holders seek variations to licence conditions.


----------



## ASICK (30 January 2013)

*Ah .. Trilogy .. You've Done it Again !!*

Well, the PFMF was worth about $113m as at 30 June 2012.

It's now the end of January 2013.

In that SEVEN month period, Trilogy paid members of the PFMF only 0.0075/unit - three quarters of one cent per unit.

Ah .. Trilogy .. You've done it again !!

http://moneymagik.com/yardy_yardy_yah.php

This information document re: Trilogy and Balmain Trilogy is as finished as it's going to be (unless a new topic arises):

http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


----------



## RODENT69 (31 January 2013)

Interested Parties

Well I finally have a Hard and Soft copy of the new RG45 for the LM FMIF and am going through it with interest

Mysteryman,  yes us investors in the WFMIF are being shafted regarding the distributions we are OWED, LM's Latest position is because they are no longer the RE then that's Trilogy's issue, despite the fact that these Distributions were accrued and accounted for in past years when LM was the RE.  More re this later

Also FYI the Asgard system has just had the Unit Price changed from 0.73  down to 0.59 as from Dec 2102, which Trilogy has said is in INTERIM price only!!!

Also watch what happens with the Capital Distributions proposed in March as the reach Trilogy. We all know they will take a % of whats paid to them, BUT I am informed that Investors will have the Dollars and other details fully disclosed by LM so that we can see the differences re what leaves LM  and what WFMIF investors actually receive, IF AND WHEN!!!


----------



## Irishdan (31 January 2013)

Rodent,

can you post a link to the RG45 please

cheers


----------



## ASICK (31 January 2013)

RODENT69 said:


> Interested Parties
> 
> Well I finally have a Hard and Soft copy of the new RG45 for the LM FMIF and am going through it with interest
> 
> ...




Good afternoon Rodent,

I notice you didn't publish the RG45 even though you have a "soft" copy of it.

I think you're being unfair to LM in relation to the distributions which you say "were accrued and accounted for in past years when LM was the RE".  Since Trilogy is now the responsible entity for the WFMIF, it IS Trilogy's responsibility, LM are not being smart a#$es, it is simply a matter of fact.  LM no longer have any control over the fund.

Any amounts owing to you (as a member of the WFMIF) are owed to the WFMIF to be distributed (less costs) to its members.  You can no longer pressure LM in relation to the WFMIF, you have to pressure Trilogy.  

In relation to the $0.59 (as at 31 December 2012), it could be no more than an interim for two reasons, (1) LM has not released the mid-year figures, and (2) it is not an audited amount in any event.  I'm sure the figure will be updated when LM releases the mid-year accounts.  The updated unit price would remain the result of unaudited accounts (as all such accounts are).

As to the disclosure of the amounts by LM (so that you'll be able to see how much Trilogy takes (including fund expenses)), is LM allowed to do that?  IMO, the WFMIF is the member of the FMIF (not the members of the WFMIF), so any amounts payable by the FMIF to the WFMIF would seem private information.

In any event, Trilogy has to account for the fund's expenses (which include management fees), so members will be informed anyway.


----------



## Irishdan (31 January 2013)

My Understanding is that the 59c price is the audited value as at the financial for the 30th June 2012. Financial weren't completed and publsihed until Dec but auditors signed off as at 30th June figures. I am expecting that Dec price will see further deterioration and this is not the fault of Trilogy but clearly the result of LM's incompetence as the fund manager


----------



## RODENT69 (31 January 2013)

Here I go , trying to attach the RG45
	

		
			
		

		
	

View attachment LM  FMIF RG45 Dec 2012.pdf


----------



## RODENT69 (31 January 2013)

Trilogy comments re Unit Price

LM Wholesale First Mortgage Income Fund - Unit pricing

Following our most recent communication in December, we are pleased to be able to provide an interim* unit price for each class of unit in the LM Wholesale First Mortgage Income Fund (‘Wholesale Fund’ or ‘the Fund’) as at 30 June 2012. 

Please note the ‘product name’ may be different to that reported by the previous manager. There has not been a change of name, it is reflective of what was included in the information we were provided with by the previous manager. We have added columns highlighting the ‘type’ and ‘term’ of the unit class to help identify your class of investment.


The delay in publishing this data was largely due to difficulties we experienced in reconciling the Fund’s investor register with the accounts. The preparation of the annual financial report has also been delayed due to this issue. We anticipate that the report will be completed by the end of February 2013, at which point we will be in a position to calculate unit prices for the period since our appointment as Responsible Entity. Further information will be provided at this point.

*These prices are ‘interim’ prices and may vary subject to the finalisation of the audit for the year ended 30 June 2012. Trilogy takes no responsibility for the accuracy of these prices until verified by the auditor.

I have removed the Table, only included these words


----------



## RODENT69 (31 January 2013)

Trying to post Doc  LM FMIF Asset Report Dec 2012  2MB  - pretty pictures

View attachment LM FMIF Asset Report Dec 2012.pdf


----------



## ASICK (31 January 2013)

Irishdan said:


> My Understanding is that the 59c price is the audited value as at the financial for the 30th June 2012. Financial weren't completed and publsihed until Dec but auditors signed off as at 30th June figures. I am expecting that Dec price will see further deterioration and this is not the fault of Trilogy but clearly the result of LM's incompetence as the fund manager




Yes IrishDan, that's right - so, that's the only figure that able to be given until such time as LM releases the mid-year (31 December 2012) return some time on or after 15 March 2013.

As to you comment about further deterioration of the unit price, one only has to take at look at RG 45, Table H - LVR Ranges on page 8: (note: the table is not headed as Table "H", but that's in fact what it is)

LVR Range (90.01% to 100.00%) 27 loans $326,102,759

My guess is that there's no way that the $0.59 / unit is able to be sustained.  This table is not much different to the one produced for the PFMF by Trilogy.

Managers have a choice to put the LVR range where they want - it's arbitary when loans are so damaged that the value of the loans have dropped BELOW the security asset values for those loans.

If the managers chose a high LVR, they're able to report the hight possible unit price, but in my view, investors would be "lost in space" to believe they'd be able to recover that amount for each of their units.  However, if they report, what I would regard to be a more realistic LVR, let's say 85%, that'd mean a far reduced unit price, but a unit price more likely to be recovered.

In any event, in such damaged funds (as the LM FMIF and Trilogy PFMF), one shouldn't focus on the unit price - rather focus on how much one gets back.  As I've posted before, the (net/gross) value (as declared by the manager) is only good for the manager to calculate its fees.

Members might find comfort with the $0.59/unit but since all the 27 loans valued at $326m are secured by 100% LVR, I think investor comfort will be very short lived indeed (LM discloses under the LVR table that the average LVR is 100%) - IMO, don't rely too much on any unit price given by the manager.

In fact, LM has placed the HIGHEST possible unit price on the fund for the RISKIEST LVR possible (100%).  

It seems that ALL the loans are capitalized and pumped with accrued interest - and there's a substantial facility with scary interest - not a good look.

My guess (and that's all it is), is that fund will follow the Equititrust and PFMF funds to a place none of you really want to go, way down under $0.50/unit.

re: interim report - okay, I note it relates to the 30 June 2012 return.   There's Trilogy with nothing much to do, and they're not up to date with financial year 2012.  Ah.. it's okay, there's LM to blame.


----------



## ASICK (31 January 2013)

ASICK said:


> ... Managers have a choice to put the LVR range where they want - it's arbitary when loans are so damaged that the value of the loans have dropped BELOW the security asset values for those loans.
> ...




This quote should have been "that the security asset values have dropped BELOW the loan values".   Then a new value for each loan has to be calculated by reference to a decided-on value of LVR.

so, LVR = Security Asset Value / Loan value (expressed as a percentage)

if LVR = 100% and security asset value  = say, $326m, then loan = $326m

100% = ($326m / $326m) * 100%

To recover the unit price of $0.59/unit, all assets MUST be sold for a total of  $326m.

If the sale of the Cairns security asset (loss = 62%) is used as a very nasty guide, that'd produce a unit price of $0.59 * .38 = about $0.225/unit.

Could be that fund could actually drop below $0.22/unit, especially if vacant land is in the mix.


----------



## ASICK (31 January 2013)

*A Whole Lota Lovan Goin' On*

RG 45, page 6 (in part), "* Only as part of a structured exit strategy for a loan the Responsible Entity may subordinate the priority of a first mortgage. As at 31 October 2012 there is one loan which has been subordinated as an exit and recovery strategy. The total amount of the loan is $14,034,904 and the combined first and second loans constitute 68% of the value of the property held as security and the Responsible Entity expects to make full recovery of the lovan." (emphasis added)

Now, I make typos and other errors all day long, but when I see a professional document containing a typo, I always give the paragraph containing the error a re-read.

As I read the paragraph, I understand it to mean that the first ($?) and second mortgage loans ($14m) constitute 68% of the total security assets held by the fund.  Yardy yardy yah: "the responsibile entity expects to make full recovery of the lovan" (note: (1) 100% LVR for all loans, and (2) all loans 90 days (or more) in arrears)

Could this loan be the land down at the Gold Coast?  By the way, where's the land down at the Gold Coast in the Asset Progress Report? 

Expecting full recovery with a 100% LVR and at least 90 days in arrears?  Now, there's optimism for you !

Interestingly, LM says that the two related party loans are performing, yet discloses (1) all loans have a  100% LVR, and (2) all loans are 90 days (or more) in arrears.

There's no disclosure about the cash held by the fund as at 31 December 2012.  I haven't read the requirements, maybe such disclosure isn't mandatory)

Cause for concern?:
"As at 31 October 2012 there were 21 borrowers. 15.89% of total monies was lent to the Fund’s largest borrower and 79% of total monies was lent to the Fund’s ten largest borrowers. The Fund has one borrower that exceeds 10.00% of the Fund’s assets and 9 borrowers that exceed 5% of the Fund’s assets. As the assets are sold and the number of mortgages decreases it is the Responsible Entity’s expectation that the exposure of the Fund to each borrower will increase." (emphasis added)

Would the preceding paragraph have something to do with the land down at the Gold Coast?

Oh Dear - it really isn't looking very good at all.


----------



## ASICK (1 February 2013)

*Re: A Whole Lota Lovan Goin' On: Exposure*



ASICK said:


> ... Cause for concern?:
> "As at 31 October 2012 there were 21 borrowers. 15.89% of total monies was lent to the Fund’s largest borrower and 79% of total monies was lent to the Fund’s ten largest borrowers. The Fund has one borrower that exceeds 10.00% of the Fund’s assets and 9 borrowers that exceed 5% of the Fund’s assets. As the assets are sold and the number of mortgages decreases it is the Responsible Entity’s expectation that the exposure of the Fund to each borrower will increase." (emphasis added) ...




For example about exposure increasing for members of the PFMF with Trilogy as manager read about "Martha Cove": http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf

Excerpt: 

"Martha Cove 30 June 2009: 155,951,001
Martha Cove 30 June 2010: 141,060,782 
Martha Cove 30 June 2011: 117,657,495
Martha Cove 30 June 2012:  47,000,000"

2009 - 2010 = - $14.902m (or, - 09.6%)
2010 - 2011 = - $23.403m (or, - 16.6%)
2011 - 2012 = - $70.658m (or, - 60.0%)

The PFMF's RG45 for September 2012:
http://moneymagik.com/PFMF_RG45_30_September_2012.pdf

Note the high risk potential (Table "H") in the PFMF after over three years of massive write downs.

It's easy to see how Trilogy made heaps of fees out of the asset (and the receiver did well too), but look at the final value for investors after THREE YEARS.  

Frankly speaking, I was surprised the LM disclosed that the average of the loans in LM's fund (in the 90.01% LVR- 100% LVR range) was 100%.  While the fact disclosed is quite bad, I was nevertheless quite surprised with its disclosure.  LM could have left members hoping that the $326m fell to the 90.01% LVR end of the range.

I note from the LM FMIF RG45 the following excerpt (bottom page 9), "The Fund will seek to recover all interest entitlement on behalf of investors but the Responsible Entity has ceased interest accrual based on recoverability analysis." 

IMO, LM has "pumped" the loans to the max (100% LVR) with accruals which (in the circumstances) so much is  unlikely to be recovered.  "Blind Freddy" could see that recovery of 100% of a unit price based on assets, each with an 100% LVR and at least 90 days in arrears, is the reason accruals HAD to stop - if accruals were to continue, LM would have had no other choice except to drive loans in LVR ranges IN EXCESS of 100%, and that would have been inexcusable.

LM "pumped" the value of fund by way of accruals as far as it could (as one might pump up a tyre to the max).

And the beneficiary? Well, LM of course - fees, fees, fees - glorious fees.

http://www.youtube.com/watch?v=kV2uXwDwg2s

For investors? An expectation that's unachievable. (IMO, always moderate the unit price with the information provided in RG45 Table "H" (loans in LVR ranges))

I invite members of this thread to read the sorry tale of accruals in the PFMF with Trilogy as manager:

30 June 2010 - http://moneymagik.com/PFMF_return_jun_2010.pdf 
30 June 2011 - http://moneymagik.com/PFMF_return_jun_2011.pdf 
30 June 2012 - http://moneymagik.com/PFMF_return_30_June_2012.pdf

See how much accruals were "pumped" into the fund, see how much of that was impaired, and see how much of that was finally written off.

IMO, accruals accounting should NEVER have been permitted in MIS/MIFs - in many cases, along with woeful valuations, accruals have led investors to believe unit prices which have been unachieveable. 

The only beneficiaries of such woeful valuations and accruals have been managers and "wishful thinking".

..


----------



## ASICK (1 February 2013)

*LM MPF : Second Mortgages - lost causes?*

LM FMIF RG45 dated 31 December 2012:

"As at 31 October 2012 the Fund has two related party loans totaling $9,272,569 granted to entities controlled by the LM Managed Performance Fund (MPF). Both loans are performing assets for the Fund at commercial rates. Combined they equate to 2.84% of the total loan portfolio. In accordance with the Fund’s policy, these loans were approved by the Credit Committee on commercial, arm’s-length terms. They were approved at full Board level and are subject to review by the Board. The Fund does not have any loans to any LM directors.

LM is the Manager of the MPF. The MPF, in its own right, has second mortgages behind loans to third party borrowers that are first mortgages of the Fund. As at 31 October 2012 the MPF holds 3 such second mortgages in the total amount of $41,426,410. In each instance the Fund has entered into a Priority Deed to protect its own first mortgage position with the borrower as part of normal loan documentation procedures."

With ALL LM FMIF loans at 100% LVR, at least 90 days in default, and maxed to hilt with accrued interest, what chance does the $41.43m lent by the MPF as second mortgages have? 

If the LM FMIF is unlikely to recover its first mortgage, then it seems to me that the chances for the LM MPF to recover its $41.43m in second mortgages must be zilch - (I don't know if the $41.43m is the original loan, its capitalized value, or if interest is still accruing).

I'm also surprised that LM is disclosing LM MPF information in the LM FMIF RG45.

IMO, the loans standing behind the LM FMIF must be of great concern for LM MPF investors.

Yipes .. is the FMIF's related party loan to the MPF safe?


----------



## ASICK (1 February 2013)

*LM MPF : How Do They Do It?*

Notes: 
All LM FMIF loans are in arrears by at least 90 days (page 10 of latest RG45)
All LM FMIF loans are at 100% LVR (page 8 of latest RG45)

Michael West (SMH), in his (now) famous article on LM, "A Man With Some Many Hats ...", said (in part):

"The celebrity numbers surrounding Maddison are just as impressive as the celebrities themselves. Over $217 million of the $370 million in the LM Managed Performance Fund is committed in this single project yet it appears that investors have only a second mortgage.

Suncorp is owed $22 million ahead of investors in the LM Managed Performance Fund and of the $217 million presently owed by Maddison, $101 million is capitalised interest on the loan.  The acquisition cost of the land was $76 million.

Interest is paid to Suncorp, distributions are paid to investors, and management fees paid to LM. These are now five per cent but can rise as high as 10 per cent each year."

How do they do it? 

Why is the FMIF's loan to the LM MPF maxed out to 100% LVR? (see "notes" above)

Why is the FMIF's loan to the LM MPF in arrears by at least 90 days? (see "notes" above)

Now, why do I ask these questions? Well, it's because the MPF is paying financial advisors a fee - it's paying the manager a management fee - it's paying a % return (since it's still open) - it's repaying bank interest (and repayments?) (to Suncorp as alleged by Michael West) - I expect MPF expenses are being paid - yet, it's at least 90 days in arrears and maxed out with a 100% LVR on a loan from the LM FMIF !

All this in circumstances whereby members of the LM FMIF have their hands out for a return of capital !

To my mind, it seems the LM FMIF is standing behind the MPF - I couldn't imagine LM FMIF members would be happy about this - but hey, that's only my opinion.

Michael West added, "LM rejects this. Its own valuation must have grown a lot lately to justify its further lending. Last September, the largest loan in the fund was $142,155, 456. This had risen to $191 million in July, $211 million in August and to $217 million in September."

The latest from LM (31 December 2012), the loan had grown to $233,838,04 (up about $16m since September 2012)
http://www.lmaustralia.com/Downloads/Portfolio-updates/MPF_portfolio_update.pdf

If the MPF is in such great shape, why aren't repayments on the FMIF's loan brought up to date? Why isn't the loan LVR on the FMIF's loan brought back in line with the PDS?

Too many hats?


----------



## ASICK (1 February 2013)

*Are FMIF Loans Compromised?*



ASICK said:


> LM FMIF RG45 dated 31 December 2012:
> "... LM is the Manager of the MPF. The MPF, in its own right, has second mortgages behind loans to third party borrowers that are first mortgages of the Fund. As at 31 October 2012 the MPF holds 3 such second mortgages in the total amount of $41,426,410. In each instance the Fund has entered into a Priority Deed to protect its own first mortgage position with the borrower as part of normal loan documentation procedures." ...




I think members should be very concerned about these loans.  

"City Pacific's mortgage trust (CPFMF) is only allowed to take first mortgages over property, chief executive Phil Sullivan said.

The company (City Pacific Limited) sometimes follows the fund with its own money, creating a second mortgage.

"We can't end up behind a hostile lender," Mr Sullivan said." (bracketed information added)

http://www.heraldsun.com.au/busines...-at-city-pacific/story-e6frfh4f-1111114202243

That was Phil Sullivan's view back on 17 August 2007.

However, I'm of the view that such lending potentially compromises the first mortgage holder's position if the entity controlling the first mortgage is the same entity controlling the second mortgage.

And we find that LM is in a likewise position with first mortgages held by the FMIF and second mortgages held by the MPF, both entities controlled by LM.

LM disclosed in the latest FMIF RG45 (31 December 2012) that the MPF has second mortgage exposure of at least $41m on loans subordinate to first mortgages held by the FMIF.  Such FMIF loans at 100% LVR and at least 90 days in arrears.

As responsible entity for the FMIF, LM has a duty to members of the FMIF to act in their best interests and should not be concerned that if the security assets held for loans which the MPF has second mortgages need to be disposed of, then those assets should be disposed of, regardless of the losses borne by the MPF.

No first mortgage holder should be concerned about the outcome for the second mortgage holder - never.

Would a change of manager change anything - no, it cannot (unless the LM FMIF fund manager was changed, and not the MPF manager)

What is the cost to the FMIF to hold onto these first mortgages? 

What is the cost to the MPF if the FMIF sells the security assets?

To my mind, the first mortgage loans (after which the MPF is subordinate) are potentially compromised.  It's only my opinion, but that's the way I see them.


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## RODENT69 (1 February 2013)

Just in case you have not seen these docs,

On the LM Website - under Unit Holder Archives are two docs-  LM Strategy for Fund dated 20 Dec 12, the other is  titled  Misinformation   ........  dated 18 Dec

These make interesting reading and highlight for me the difficulties for us investors  in feeder funds WFMIF  etc are going to be kept informed, as clearly now that LM is no longer RE for this WFMIF, it has no real interest in telling us anything. Often information about the WFMIF is included in FMIF info OR  that info re FMIF is directly relevant for us WFMIF investors

I fully realise we will have to chase Trilogy , which I am doing, but its all to easy for them to blame LM , and for LM to say its Trilogy's fault

When questioned about catch up payments for WFMIF  (sorry ASICK about flogging this horse) LM replied as follows

"It is a fact that the “catch up” investor income is a liability of the wholesale fund that is included as such in the accounts of that fund and is owing to investors in that fund.  Hence we clearly stated that it would be paid.

As the assets in the FMIF are sold, its liabilities and expenses can be paid and  capital distributions will be made to all investors.  As an investor in FMIF, the wholesale fund will receive the pro-rata equivalent amount as the FMIF and the other feeder funds.  As the RE of the wholesale fund, it will be a matter for Trilogy to determine how to distribute the payment to the investors in the wholesale fund.

The first capital distribution will be made in March and we will notify the market of same.

There is a legal process that we are required to follow given the fund’s strategy and as the fund is now deemed “illiquid” .  That process ensures fairness to all investors including the wholesale fund".


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## ASICK (1 February 2013)

RODENT69 said:


> Just in case you have not seen these docs,
> 
> On the LM Website - under Unit Holder Archives are two docs-  LM Strategy for Fund dated 20 Dec 12, the other is  titled  Misinformation   ........  dated 18 Dec
> 
> ...




Good afternoon Rodent,

Thanks for the info.  I read this letter:
http://www.lmaustralia.com/Download...response-to-wfmif-trilogy-letter-18-12-12.pdf

and in particular, I note this excerpt:
"Trilogy has absolutely no bearing on the LM First Mortgage Income Fund strategy. For Trilogy to suggest that they are monitoring the sale of assets is ridiculous. Trilogy is not managing the LM First Mortgage Income Fund assets. The reality is that all Trilogy will be doing is receiving payments and communication along with every other investor in the LM First Mortgage Income Fund." (emphasis added)

and this:
"3. Net Asset Value
Trilogy makes a statement that they are yet to independently verify the net asset value.
(i) They do not manage the underlying assets of the Fund, which are held by the LM First Mortgage Income Fund. It is misleading for Trilogy to suggest that they can undertake such review, as they are not entitled to any of the asset information that would be required in such a review."

as for the daily unit price, can you guess what that's used for? It's used to calculate Trilogy's fee on a daily basis.

Rodent, I still think you're being harsh on LM, to wit, "These make interesting reading and highlight for me the difficulties for us investors  in feeder funds WFMIF  etc are going to be kept informed, as clearly now that LM is no longer RE for this WFMIF, it has no real interest in telling us anything. Often information about the WFMIF is included in FMIF info OR  that info re FMIF is directly relevant for us WFMIF investors."

It's got nothing to do with "no real interest in telling (you) anything", it's a fact that the WFMIF is now no more than investor in the FMIF, just as any other investor in that fund.  So, LM has to communicate with Trilogy as RE for the WFMIF.  It is for Trilogy then to communicate with investors in the WFMIF.

You say "that info re FMIF is directly relevant to us WFMIF investors": sadly, that is not true.  The information is indirectly relevant to WFMIF investors via Trilogy (as RE) for the WFMIF.   Each fund manager is responsible to communicate with unitholders, and for the FMIF, the WFMIF is the unitholder, not the members of the WFMIF.

Rodent, knock yourself out about the so-called "distributions" -  in my view, everything coming back to you will be capital anyway, and if it isn't called that, that's what it is - it's coming out of the same pool of money.

The Blame Game - yes, and I posted about that a long time ago.  Expect more of it.

It is for Trilogy to distribute money received into the WFMIF - to make payments to fund expenses including management fees, and set aside monies for anticipated ongoing expenses, and then maybe some to investors.  LM is not at liberty to tell WFMIF members how much money is paid to the WFMIF since members of the WFMIF are not members of the FMIF.


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## Mysteryman (1 February 2013)

RODENT69 said:


> Just in case you have not seen these docs,
> 
> On the LM Website - under Unit Holder Archives are two docs-  LM Strategy for Fund dated 20 Dec 12, the other is  titled  Misinformation   ........  dated 18 Dec
> 
> ...




Rodent69 - you can keep banging the drum as far as I am concerned. I feel pretty annoyed too that we in the WFMIF are being treated unfairly by LM in that the main fund is receiving catch up payments and we are not, especially as they received two of those payments, namely, May and June 2010, before Trilogy was ever RE.

I have contacted LM about this disparity and their last letter was a real brush off and stated that:
 "the LM Wholesale First Mortgage Income Fund will be the beneficiary of liquidity at the end of the first quarter in 2013 along with all other investors throughout the closed funds. Trilogy will be advised of payments made, however it will be up to them as the new responsible entity as to how those payments will be allocated in the Wholesale First Mortgage Income Fund."

On contacting Trilogy after this, they say that they have taken up this matter or inequality of payments with ASIC. Also they state they are not aware of any lump sum payment to be made to them at the end of March 2013 but when payment is received will endeavour to pay it out as soon as possible, dependent on the level of information made available by LM.

They also state that they possess the necessary license to be RE of the WFMIF, something which I know ASICK disputes.

I fear that we are going to spend many years being bounced around between LM and Trilogy, both companies blaming the other for non payment of monies. I'd like to hope Trilogy comes good but fear the worst after hearing ASICK's many tales of woe.


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## Mysteryman (1 February 2013)

ASICK said:


> Rodent, knock yourself out about the so-called "distributions" -  in my view, everything coming back to you will be capital anyway, and if it isn't called that, that's what it is - it's coming out of the same pool of money.




ASICK, I am sure Rodent knows the distributions will come out of capital, but the thing is, the distributions for 2010, of which we are missing eight, were accounted for in tax assessments for 2011 and thus depending on how the fund was held, some people will be out of pocket due to tax paid on mythical distributions in that year. Also, LM have always said they will pay out distributions (even if it comes out of capital) before paying out the rest of the capital. What is probably annoying Rodent as well as myself is the inequality of the main fund being paid distributions before the wholesale fund and this indeed started before Trilogy even became RE.


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## ASICK (1 February 2013)

*Let the Games Begin!*



Mysteryman said:


> ASICK, I am sure Rodent knows the distributions will come out of capital, but the thing is, the distributions for 2010, of which we are missing eight, were accounted for in tax assessments for 2011 and thus depending on how the fund was held, some people will be out of pocket due to tax paid on mythical distributions in that year. Also, LM have always said they will pay out distributions (even if it comes out of capital) before paying out the rest of the capital. What is probably annoying Rodent as well as myself is the inequality of the main fund being paid distributions before the wholesale fund and this indeed started before Trilogy even became RE.




Good afternoon to you too Mysteryman.   

Ah, a rose by another name would smell as sweet - and that's the case with capital called "distribution".  Capital is all that's left - it simply has to come from there.  But, as I say, knock yourself out, there's no "blood" coming from any "stones" in the FMIF.

As to the licence, I merely point out that Trilogy has not obtained any new licence - and it was LM which stated Trilogy didn't have the requisite licence. 

I suggested that the fact that if LM has not made payments to your fund, it may be that Trilogy does not possess a proper licence to run the fund (as LM alleged).  Trilogy says they do - LM says they don't.  I have no idea which of the cases is correct.

I suggested also that if a payment is made to your fund, that payment (if small) might be consumed by management fees (and of course, fund costs).

It's not hard to see that LM doesn't have much $$$ in the FMIF - from the latest RG45, cash on hand as at 31 October 2012 was only $3.50m (on page 6 of the RG45)

I really can't see the MPF remaining open either - I wouldn't be surprised if it shut up shop sooner rather than later.

I'll reiterate one of my woes, Trilogy only paid members of the PFMF a lousy three quarters of one cent per unit in SEVEN MONTHS.

Don't be surprised if any repayment is slow, no matter what it's called.

There's a simple reality, and that is that Trilogy is entitled (as manager of your fund) to no more information than any other investor in the FMIF, and I'd guess that's a tad painful for Trilogy.

Nevertheless, the battle lines are forming - let the games begin!


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## ASICK (2 February 2013)

*Issues of Concern?*

This graphic may (or may not) be of interest to LM fund members:

http://moneymagik.com/LMFMIF_MPF_Concerns.jpg


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## ASICK (2 February 2013)

*Related Party Loans to MPF*



ASICK said:


> This graphic may (or may not) be of interest to LM fund members:
> 
> http://moneymagik.com/LMFMIF_MPF_Concerns.jpg




I've updated the graphic with this one excerpt:
"The Responsible Entity uses the terms “arrears” and “default” interchangeably." (on page 10 of the fund's RG45 dated 31 December 2012) - a loan in arrears is therefore a loan which is in default.  Since all 27 loans are in arrears, consequently every loan is in default.

It's quite astounding to wonder how it's possible for LM to say:

"... As at 31 October 2012 the Fund has two related party loans totaling $9,272,569 granted to entities controlled by the LM Managed Performance Fund (MPF). Both loans are performing assets for the Fund at commercial rates. Combined they equate to 2.84% of the total loan portfolio."

All loans are in arrears, therefore in default.  All loans have 100% LVRs, therefore maxed out with accrued interest, and/or alternatively impaired by a falling security asset value (whichever the case may be).

Are the two related party loans (above) really "performing loans"?  It's your fund, what do you think?

UPDATE - I think I've figured it out - "performing" and "arrears" and "default" are each interchangeable with the others?

The 31 December 2011 fund accounts disclose only one related party loan associated with MPF, and that's to Australian International Investment Services Pty. Ltd.  I've only got the 31 December 2011 accounts which disclose a loan of $7,849,504. The note applicable to the loan states:

"Peter Charles Drake is a director and guarantor of Australian International Investment Services Pty. Ltd. (AIIS). The entity is wholly owned by LM Managed Performance Fund (related party) and Peter Charles Drake is the nominated director of the Responsible Entity on behalf of the scheme. AIIS is a joint borrower in a loan facility outstanding to the scheme as at 31 December 2011 for $7,849,504 (30 June 2011: $7,849,604). This transaction was approved on an arm's-length basis and is on normal terms and conditions."

Since ALL loans are in default and arrears at 90 days (or more) with 100% LVR, I wonder why LM hadn't recovered the outstanding monies from the guarantor, Mr. Drake? 

Now, what was that about "hats"?

Don't forget Trilogy:
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


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## ASICK (2 February 2013)

*Back to the Future?*

It's always interesting to go back to look at previous fund information:
http://112.109.66.18/~collins/uploads/LM Latest news.pdf

From page 10, "The average loan to valuation across the mortgage portfolio as at 30 June, 2010 is 86.56%. The average loan to valuation ratio of the fund has increased from sub 70% to 86.56% since the Fund closed to protect capital value and to prioritise repayment of the previous CBA line of credit facility. The unit price remains $1.00.1,3,4 *It is the loan to valuation ratio that has absorbed the impacts during this time, not the unit price.* The conservative loan to valuation position the Fund adopts on initial setting of its loans has insulated it from the 2008 and 2009 softening in asset valuations. In addition the loan to valuation ratio has absorbed necessary capitalisation of interest and loan realisation costs which are due to the Fund and which are accruing for collection by the Fund when the borrower repays the Fund."

Ah ... the good ol' arbitrary LVR.

"It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price"

We all know that LVR = ( Loan ($) / Security ($) ) * 100%

So, if the fund is suffering, how is it possible to maintain unit price? Oh.. so easy - just increase the LVR.

What is the effect? The effect is that unit price is maintained, but RISK has increased - and yes, I'm sure you all know what happens next - impairments/losses, and eventually the unit price has to drop because of the downward pressure of falling security asset values.  See what happened above, the LVR rose from 70% to 86.56% - that means risk has increased by slightly more than 20% - ugh!  So, loans are not as likely to be recovered.

"It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price"

Reading the excerpt, one would be foregiven if one thought that a magical thing called the loan to valuation ratio (LVR) came along and ABSORBED the impacts of the market, and that as a result of the intervention of that magical thing (LVR), unit price was maintained.

But, you'd all probably know it as simple transposition.

For example, 

we lend $100m with security assets of $150m - that's an LVR of about 67%.
Let's say that there's 100m units in the fund - the unit price is $1.00
Assume the market is not good, and the security assets drop to $120m - LVR = 83%
What's happened is that the unit price is maintained, but risk has increased by 24% - that's not good and most probably is outside the LVR guidelines set out in the PDS.
another drop to $100m security would bring the LVR to 100% and that's scary.
But unit price would stay the same $100m/100m units = $1.00/unit.

It's also possible to reduce the unit price to maintain the security LVR of say, 65%.
Let's say the security asset drops from $150m to $120m.  
For a 65% LVR, Loan ($) = $120m * .65 = $78m : unit price = $78m / 100m = $0.78m/unit.
A recovery of 65% of the security value of $120m is more likely and thus a unit price of $0.78/unit.

But I'm sure you'll all realise that the second method isn't too popular with MIF/MIS managers, but IMO maintenance of the LVR should be more important than maintenance of unit price - a high unit price along with high LVR is for dreamers.  A low unit price with lower LVR (say 65% / 70%)  is for realists.

Yes, for the LM FMIF, "It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price", but the fund couldn't escape the reality of high LVRs, and will not do so in the future with fund LVRs now all at 100%.


----------



## RODENT69 (2 February 2013)

Mysteryman said:


> Rodent69 - you can keep banging the drum as far as I am concerned. I feel pretty annoyed too that we in the WFMIF are being treated unfairly by LM in that the main fund is receiving catch up payments and we are not, especially as they received two of those payments, namely, May and June 2010, before Trilogy was ever RE.
> 
> I have contacted LM about this disparity and their last letter was a real brush off and stated that:
> "the LM Wholesale First Mortgage Income Fund will be the beneficiary of liquidity at the end of the first quarter in 2013 along with all other investors throughout the closed funds. Trilogy will be advised of payments made, however it will be up to them as the new responsible entity as to how those payments will be allocated in the Wholesale First Mortgage Income Fund."
> ...





Mysterman,   Your statement of support and your understanding is correct, I have and will keep chasing Trilogy, watch for the latest reply from Trilogy to my questions. It is interesting that the replies you receive from Trilogy are slightly different to their comments to me, more re this later.

As actual investors in LM of course our views  on some aspects may differ to ASICK's but I am sure you will agree  with me that much of his analysis and interpretation is on the ball, however where I disagree with something I will say so, as I would expect ASICK to do also.

From my perspective LM has ALWAYS had the cash available ie estimated @ $500k per month for the missing months of our distributions that would have allowed them to be paid long ago, and this issue would not get a mention any longer!!


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## RODENT69 (2 February 2013)

Trilogy was asked these questions, as a follow up to earlier questions

QUOTE -In discussions with LM and other investors there is clear evidence that LM has recently paid Catch Up Distributions to investors of the FMIF.

 As the RE for my fund -WFMIF, which is an investor in the LMFMIF,  I should be receiving a part of these distributions. Would you please recheck that Trilogy has NOT recently received these distributions, they were paid in Dec, with more to come - Refer previous Emails re details please

 Based on what you say below WHEN you do receive these what is Trilogy's process for payment, do you have all the links in place so that my Platform BT./Asgard will receive these payments. Remember these are catch up Distributions that were accrued in past Fin Years.

This is the reply received today!!!

Quote -I can assure you we have not received any distributions from LM into the Wholesale Fund.

We are utterly perplexed by this and have raised the matter directly with ASIC and also LM....we are yet to receive a satisfactory answer and will be pursuing this matter with vigour.


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## ASICK (2 February 2013)

*Too Many Hats?*



RODENT69 said:


> ... As actual investors in LM of course our views  on some aspects may differ to ASICK's but I am sure you will agree  with me that much of his analysis and interpretation is on the ball, however where I disagree with something I will say so, as I would expect ASICK to do also. ...




Hi Rodent, 

Yes, I agree ... the aim of the forum is for the benefit of fund members.  

My experiences in the PFMF is that at the beginning we knew very little about managed funds, financial reports, and RG45s.  Many investors refuse to read the RG45s and financial reports - I was one of that number, but not any more, and where I'm able to, I try to give some understanding about those documents to MIF/MIS members who feel they're in the dark.

I don't expect members who understand to bother too much about my postings, but if I can help those who are confused, then that's okay for me - it's not going to bring my losses back, but I happy to help where I can.

I can see you guys are where we were years ago (2008/2009), and I understand why many members of the Equititrust and LM funds are confused. 

I think if LM members took the time to go back and compare the RG45s for the past four years (especially the LVR ranges for loans), then they'd learn to predict the outcome for the period following each RG45, including the most recent one (31 December 2012).  I'm also confident they'd learn to moderate unit price with risk to form a more realistic view of the fund's performance, or lack of performance (whatever the case may be).

Re: payments.  I remember posting about what I thought were some inequities in relation to payments to various funds from the LMFMIF, but I really couldn't work about the mechanism - it all seemed a bit strange.  I thought it might have been so that the other funds might be able to cover operating costs (management fees, auditors, and the like), but truthfully, I couldn't unravel what was happening.  

I concluded that certain payments must have been made by way of agreements between various funds - but, that was only a guess.  

I think that it's possible to overlook procedure when there's so many transactions between funds managed by the same manager - too many hats might not be a good idea.


----------



## ASICK (3 February 2013)

*LM FMIF LVRs OVER THE YEARS*




*30 April 2009: Average LVR 73.56%*




*30 June 2010: Average LVR 86.56%*




*31 May 2011: Average LVR 91.88%*




*31 October 2012: Average LVR 100%*

This excerpt fom 30 June 2011 is interesting:
"In addition the loan to valuation ratio has absorbed necessary capitalisation of interest and loan realisation costs which are due to the Fund and which are accruing for collection by the Fund when the borrower repays the Fund."

Again, that magical LVR has "absorbed" the capitalisation of interest (loans in default, so interest is added to capital - interest is then calculated on capital + interest) and the loan realisation costs.    What in fact has happened is that the likelihood of recovery has become much less because LVR had risen to 86.56%.

IMO, nothing is being "absorbed": in order to hold the same unit price, or alternatively limit any fall in unit price, LVR is simply increased (that is, RISK is increased).  Average LVR in the LMFMIF has been under pressure for increased loan values due to capitalisation on the loan side, and falling asset values on the security asset side (both top and bottom putting pressure to the middle (so to speak)) - of course, it all came to an end as at 31 October 2012 when capitalisation ceased at LVR = 100%.  Geez, it's possible to keep the unit price from falling by increasing beyond 100% LVR - Wouldn't that be fun - I wonder how many members would be happy to see an LVR of > 100% in the LMFMIF now?  

A plump fund full of accruals which is ripe for the making of handsome fees.  A frozen fund is most certainly a manager's delight.

Now every downward pressure on asset security asset values will mean impairments and/or losses.  In the absence of any increase in security asset value/s, ALL costs will result in fund losses.  It seems the LM FMIF is right on its limits.

It's interesting to graph each RG45 LVR (in ranges) table and then overlay the graphs.  In the case of the LMFMIF, it'd most certainly show how the fund's losses were "squeezed" out through the top of the LVR table, and IMO will continue to do so.

If LVR had been maintained at, say 75%, all RG45s would have disclosed an ever-falling unit price which, IMO, would have given members an indication of the state of the LMFMIF that they would have understood.

I'm of the opinion that members don't look to LVR, they look only to unit price - and that's a BIG mistake in damaged funds such as Trilogy's PFMF and LM's FMIF.


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## ASICK (3 February 2013)

*The Prudent Lender*

20 April 2012, "As previously advised, and in line with the loan covenants, further principal repayments on the Fund’s core finance facility have taken place. *This is required to ensure the finance facility does not exceed 10% of the Fund’s gross mortgage assets *and is a direct result of asset devaluations, asset sales and the slowdown in mortgage asset realisations." (emphasis added)
http://balmaintrilogy.com.au/pdf/BTI 5028 UnitholderLetter.pdf

15 November 2012, "The six-month extension of the CBA Facility, which expired on 31 August 2012, has now been formalised, enabling us to continue with our structured asset disposal program. *To ensure the Facility is repaid by the new maturity date of 28 February 2013, CBA has incorporated additional covenants into the Facility, including an obligation to repay 50% of all net proceeds received by the Fund upon the disposal of assets (including sale, lease and all other asset-related proceeds.)[/B]
In line with our obligations under the terms of the Facility, a principal repayment of $11 million was made during the Reporting Period. Subsequent to the Reporting Period, aggregate principal repayments of $6.5 million were made in July and September, coupled with a $983,000 repayment in October, reducing the total amount owing to $11.52 million. These repayments are required to ensure the Facility does not exceed 10% of the Fund’s gross mortgage assets and is a direct result of continuing asset devaluations and asset sales. Further repayments will be required from time to time as we continue to adhere to the Fund’s loan covenants until such time as the Facility is discharged." (emphasis added)
http://balmaintrilogy.com.au/pdf/BTI 5125 Asset Review Letter.pdf

There's good reason to go on about LVR - any prudent lender should ensure a low LVR - after all, the lower the LVR, the more the likelihood there will be for full recovery of the loan, especially in volitile market conditions.

(although not verified), I understand that under Citypac, the CBA's LVR for the (then) CPFMF was 15% - under Trilogy it's 10% [nothing to do with Trilogy as manager].  The low LVR discloses the risk the bank sees in the fund and the degree of security it requires to protect its loan to the fund.

Compare the security the bank has over the fund viz-a-viz the security the fund has over its lenders (table "H") on page 11 : http://balmaintrilogy.com.au/pdf/BTI5130_PFMFRG45_OCT12.pdf

Not only does the CBA compel the PFMF to comply with the 10% LVR, it also take half of all inflows as a result of asset sales (and other incomes as disclosed above).  

I'm sure the LMFMIF's present lender is well protected too - it's not just about interest rate, more importantly it's about security.  If we assume LMFMIF's loan has an LVR covenant of 10% - then a loan of about $30m is on the edge of that covenant - I'd feel quite confident that assets sales and further impairments would force a payback of the facility regardless of how long the loan's been approved for.

And members of the LMFMIF will know when the lender barks, because until the lender is satisfied, the doors for capital outflow to investors will be closed - and IMO, that's inevitable.

It would seem to me that a banker looking at the Loans in LVR ranges tables ("H") in the PFMF and FMIF might muse, "They shouldn't be allowed to get away with that".*


----------



## mapc (3 February 2013)

I am not an investor in any LM funds but do feel for those who are.  About a week ago the GC Bulletin reported that Peter Drake was going to take a higher public profile, something he was not keen on doing but realised he must.  To back this up it seems has created a social media platform including his own website, twitter, youtube etc.  If you want to view it you can access all his accounts from his personal web page, peterdrake.com.au.  Not sure if it will make investors feel better or worse but in case you were not aware of it, I thought I would let you know.  It is early days at the moment so not much there you are not already aware of.


----------



## ASICK (3 February 2013)

*Peter Drake - The Site.*



mapc said:


> I am not an investor in any LM funds but do feel for those who are.  About a week ago the GC Bulletin reported that Peter Drake was going to take a higher public profile, something he was not keen on doing but realised he must.  To back this up it seems has created a social media platform including his own website, twitter, youtube etc.  If you want to view it you can access all his accounts from his personal web page, peterdrake.com.au.  Not sure if it will make investors feel better or worse but in case you were not aware of it, I thought I would let you know.  It is early days at the moment so not much there you are not already aware of.




Wow, what an experience to visit www.peterdrake.com.au - stunning.

How would I rate it?

Well, not as interesting as this: http://www.youtube.com/watch?v=w4QQyLQ6kr0

I'm stunned - what would drive a guy to attach his happy pic to a spruik telling investors about his company having lost 41% of investors' money in the LM FMIF?  Darn, he forgot to mention the 100% LVR on every loan, and that every loan is in default.

And the video (Mr. Bottle's spruik) -- I couldn't get past the first few minutes after the spruik that "there's been no recession in Australia" - quite unbelieveable given the state of the LM FMIF and all the other funds that have crashed - maybe, no recession, but, that's a technical term, isn't it?

His site is going to make some good reading/watching - and I'm sure it'll generate some good humour, if nothing else.


----------



## mapc (3 February 2013)

*Re: Peter Drake - The Site.*

.







ASICK said:


> Wow, what an experience to visit www.peterdrake.com.au - stunning.
> 
> How would I rate it?
> 
> ...




Hi Asick.  After reading your post I thought I would watch the whole video on peterdrake.com.au.  If I was a member of one of the closed funds I don't think I would be happy.  I realise it's a sales presentation but to ignore the closed funds and the recession in the property market is pretty poor especially as the information given is so positive.  Having watched it, I am getting a sense of why investors in the frozen funds had become so frustrated in their dealings with LM that they sought to replace them.


----------



## ASICK (3 February 2013)

*Ned Kelly?*

http://www.theage.com.au/business/c...etail-ashes-20130201-2dqi8.html#ixzz2JoXlrsUw

"There'll be a fleet of Bentleys for the boys from Bentleys. Let their creditors from MFS drive Matchbox cars.

We are looking at the document Octaviar Administration Pty Ltd, and the pallets of wads of backsheesh ripped out by the liquidators from Bentleys Queensland and their indispensable lawyers, Henry Davis York.

Lest you were wondering how a gang of accountants could possibly take $17 million in fees out of the corpse of Octaviar, nee MFS, in just two years, wonder no more.

It is because they can. There is nobody stopping them. The sky or the state of Octaviar is the limit, whatever comes first.

Back in the day, if Ned Kelly had known about this lurk, this liquidation racket, there is no way he would have gone into bushrangering.

He would have partnered with the banks, rather than robbing them. Instead of riding a horse he could have owned a stable of the finest, held through a tax-effective offshore trust structure subsidiary of his insolvency practice, Edward Kelly & Partners. Kelly was definitely in the wrong game."


----------



## ASICK (4 February 2013)

*Two Distributons to LMFMIF Members in the Past Month*

http://www.moneymagik.com/gc_com_excerpt.jpg

"Now, however, as the LM First Mortgage fund assets were sold down and LM expanded its operations further, people would start to realise just how successful the company was. Mr. Drake said."

New definition of success: a unit price of $0.59 sustained only by sporting a *100% LVR on every loan with every loan in the fund in default.*  Now, that's success?

New synonyms for performing: default, arrears. [LMFMIF RG45 December 2012]

"First Mortgage Fund investors have been paid two distributions in the past month ..." - well, there you go, FMIF investors were paid two distributions in the past month - no dispute about it now.

"LM successfully renegotiated finance from Deutsche Bank for the fund in December (2012) ..."

Success is now defined (LMFMIF RG45 December 2012, page 2) as renegotiating a loan with the following characterstics:

Interest rate: 15%
Interest rate on default: 18%
Interest rate if default persists for more than 6 months: 20% 
In 2013, Payments of at least $500,000 per month is required until the facility (December 2012: $29.4m) is drawn down to $25m.

Now, that's success?   Without doubt, Deutsche Bank had success, that's for sure. [ps. What's the LVR covenant?]


----------



## ASICK (4 February 2013)

*"Oils Aint Oils"*

http://www.lmaustralia.com/Downloads/FinancialReports/FMIF-financials-30-06-12.pdf




This may be of interest to members of the feeder funds.

"oils aint oils Sol"

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

"CORPORATIONS ACT 2001 - SECT 601FC  - Duties of responsible entity  -  (1)  In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:  ... (d)  treat the members who hold interests of the same class equally and members who hold interests of different classes fairly; and ..."


----------



## ASICK (4 February 2013)

*The Feeder Funds Re-Invested*




Distributions paid to the feeder funds : $16,904,211  (page 21)
Reinvestment paid from the feeder funds : $15,964,355 (page 22)

At a guess, the balance was used for fees and fund expenses.

Give with the one hand - take with the other.


----------



## ASICK (4 February 2013)

*Re: The Feeder Funds Re-Invested*



ASICK said:


> View attachment 50794
> 
> 
> Distributions paid to the feeder funds : $16,904,211  (page 21)
> ...




There are just so many things worth commenting on, like:

"All feeder funds have reinvested back into the scheme during the period. Compliance with the Trust Deed and the Corporations Act in relation to these distributions is a matter of legal interpretation and the Responsible Entity believes it has an arguable position to support the declaration as to these distributions being fair and reasonable to all classes of unitholders."

"Distributions paid and payable (2012)
Class A  - Nil
Class B - $16,904,211
Class C - $120,178"

I, for one, would like to see the "arguable position".

Actually, it'll be interesting if Trilogy takes a shot at LM about the reinvestment of the bulk of the LMWFM's distribution from the LMFMIF - if I were Trilogy, I'd at least be looking at the board's minutes of meetings to see the justification for the reinvestment in the circumstances.

Expenses - taking a good look over the 2012 LMFMIF accounts is like reading numbers out of a telephone book:
(2012) , (2011)

Bank expenses     :   $8,593,798 ,    $14,072,798
Auditor               :      $559,905 ,       $415,880
Other expenses    :      $197,109 ,         $65,650
Legal expenses     :      $523,012 ,       $407,260
Management fees  :   $9,103,864 ,   $10,997,188
LM expenses         :       $28,983 ,       $791,164
More LM expenses :        $38,524 ,               nil
LM (as receiver)    :   $4,817,414 ,    $5,381,516
Custodian            :        $77,904 ,       $112,234
Advisor com.        :    $2,165,236 ,    $2,090,475
Realised FX losses :        $36,203 ,    $1,338,500
Unrealised FX loss :       $167,394 ,              nil
More FX unreal.    :        $145,432 ,              nil
Impairments         :   $99,144,122 , $84,873,703

It was too scary to go back to 2009.   

LM takes its management fee as a reward for failure - and then, on top of that fee, takes yet another fee as "receiver" as icing on the cake.  These "receiver" costs and other costs are unlikely to be recovered given the state of the loans - just "water flowing out of the bath" (so to speak).

LM investors in the LMFMIF now left (as at 31 October 2012) with all loans in default and at 100% LVR.

Look at the legal fees - incredible.
Crikey, the auditor is doing very well indeed.
and those FX losses - why are they being incurred in a mortgage fund?  
even the other expenses are scary. 

IMO the whole thing seems to be a real mish-mash.

I wonder what the manager does for its management fee?   seems to me that it doesn't include chasing up on bad loans, that's a job for a relative .. goody, more fees.


----------



## ASICK (4 February 2013)

*"Oils Aint Oils Sol"*




It took me a little time to get the gist of what's happening here.

About $17m was paid as a distribution from the entire FUND (class A - direct investors in the FMIF, B - the feeder funds, and C - foreign currency direct investors) and paid to the sole benefit of class B unit holders (the feeder funds).  No distributions were paid to Classes A and C (the direct investors).

About $16m of the about $17m was reinvested in favour of Class B unit holders (the feeder funds).

As a result of the transactions, the feeder funds held significantly more equity and seems to have been paid significantly more cash in redemptions (at $1.00 / unit - wow!) and in distributions.

Look at the above excerpt and work it out for yourselves - see how much has gone where.  

Very interesting indeed. (don't forget to take a look at the 2011 figures (above) - just as interesting).


----------



## RODENT69 (4 February 2013)

Just to add further confusion re so called "Distributions"  note this comment to me today from LM when I told them Trilogy advised that they had not received any money for the WFMIF despite LM clearly advising EVERYBODY they had paid out 2 catch up payments

The wholesale fund has not received any capital distributions as yet and nor have any other investors in the FMIF.  All investors are being treated fairly .
It would seem that the facts probably would have got in the way of their response.

This attachment  LM view of Trilogy was attached to Email reply
	

		
			
		

		
	

View attachment trilogy-facts-flyer.pdf


----------



## ASICK (4 February 2013)

*What's In A Name?*



RODENT69 said:


> Just to add further confusion re so called "Distributions"  note this comment to me today from LM when I told them Trilogy advised that they had not received any money for the WFMIF despite LM clearly advising EVERYBODY they had paid out 2 catch up payments
> 
> The wholesale fund has not received any capital distributions as yet and nor have any other investors in the FMIF.  All investors are being treated fairly . It would seem that the facts probably would have got in the way of their response.
> 
> ...




Ah : the distinction - (1) the mooted income distributions, or as I would call them the "distributions", and (2) capital distributions.




"First Mortgage Fund investors have been paid two distributions in the past month" - and LM cites the article as published in the Gold Coast Bulletin on 26 January 2013.  I'd reckon they're referring to income distributions.

I'm perplexed how they'd make such income distributions given the fund is making a massive loss.

Is there an argument that such payments to LMFMIF members are not income, but capital and that members aren't being treated equally?


----------



## Mysteryman (4 February 2013)

*Re: What's In A Name?*



ASICK said:


> Ah : the distinction - (1) the mooted income distributions, or as I would call them the "distributions", and (2) capital distributions.
> 
> View attachment 50813
> 
> ...




My understanding from the information we have had from LM is that the are paying catch up income to the main fund and not making capital distributions at the moment. However they hope to make capital distributions at the end of the third quarter.

However the say of the wholesale fund the following:

"With respect to the LM Wholesale First Mortgage Income Fund, LM is no longer the responsible entity of that fund and all decisions regarding distributions to be made to investors in that fund are a matter for the new responsible entity of that fund.   LM will however be making the appropriate payment to the new responsible entity for distribution to investors and we will notify the market of such payments. "

So what wholesale fund will be getting - who knows whether it will be income distribution plus capital, one or the other or just a popsicle! However in other communication from them to me they stated that it will be paid to the wholesale fund at the end of the third quarter. I hope the popsicle has not melted by then.

Asick, I found your last few comments very interesting. However, to someone like myself who is not an accountant, I'm not sure whether you are trying to say this rinky dink with our money concerning distributions being reinvested is illegal, skating close to the wind or plain unfair to the wholesale fund. Is this something that Trilogy should be looking at very closely or indeed something that should be brought to ASIC's attention. If you feel there are illegilties in play, then maybe something can be done.


----------



## RODENT69 (4 February 2013)

*Re: What's In A Name?*



ASICK said:


> Ah : the distinction - (1) the mooted income distributions, or as I would call them the "distributions", and (2) capital distributions.
> 
> View attachment 50813
> 
> ...




ASICK    the  answer is clearly yes,  more to come on this subject. 

 PS  thanks very much for the time an effort you have expended in pulling the LM performance, or lack of, apart especially in recent days. Sometimes it takes us mere mortals a while to get through it to your level of understanding, but it really is appreciated by this LM investor, and I suspect many others.  

I have escalated the B.S I have been receiving from LM  and Trilogy re so called Distributions to the most Senior Manager in BT asking that person to sort it out and tell this poor little investor who is telling the truth, I strongly suspect neither!!

So far everything I have asked of that Manager has been answered, and right now they are just as confused as me, so got help us all if a miracle happens in March  2013 and LM actually does start to distribute Capital Pro-rata payments to investors, image the mess then.

Clearly the Drake website is all about self promotion of him? and LM,  although as you rightly say he has nothing to crow about re the FMIF and its feeder funds.


----------



## ASICK (4 February 2013)

*Re: What's In A Name?*



RODENT69 said:


> ASICK    the  answer is clearly yes,  more to come on this subject.
> 
> PS  thanks very much for the time an effort you have expended in pulling the LM performance, or lack of, apart especially in recent days. Sometimes it takes us mere mortals a while to get through it to your level of understanding, but it really is appreciated by this LM investor, and I suspect many others.
> 
> ...




Actually, it's my pleasure to do the work - I enjoy it.

Although I really do hate Trilogy, I don't believe Trilogy has any power to get any more information from LM than any other investor in the LMFMIF.  In my view, it's quite the shame that the only two entities you guys have buzzing around your funds are Trilogy and LM.

As I see it, Class B investors (the feeder funds) have had an advantage in equity over the class A and C (the direct investors in aust & foreign currencies).  Of course, that's only my opinion, but it seems to me that it's not difficult to determine merely by looking at the fund's 2012 annual report (see the excerpts in previous postings).

At stated by LM in the fund's 2012 return, LM has formed the view that it's able to present a legal argument that it's entitled to distribute about $17m to the class B investors (feeder funds). Lm then reinvested $16m of the $17m at the very same time no reinvestments are occurring for ordinary members (in 2012). 

There are three issues that raise my eyebrows, (1) the actual distribution of $17m to class B members (feeder funds), (2) the reinvestment of $16m from class B members (feeder funds), and (3) the so-called distributions paid of late.  I'm not forming an opinion about whether anything is legal or not legal because I'm not aware of all the facts.  All I say is that the issues cause me to raise my eyebrows.

It seems to me that since the fund was frozen in 2009, an independent manager of the Wholesale fund would not have permitted the $16m to be reinvested in the frozen LMFMIF (if the manager was able to make the decision) - after all, it wouldn't seem to be working in investors' interests.  Why was the $16m reinvested when no other unitholder in the fund reinvested? (see page 22 of the fund's 2012 annual report).   The feeder funds in fact have received quite a large distribution, but it's been reinvested - I'm sure Trilogy will be looking at all of that very closely.

I think it's all very nice to say that distributions (of profit) were payable or "promised" (as some have put it), but, IMO, the reality is that any payment today is mere capital.  I wouldn't have thought it possible to say "well, I promised you a distribution of profit (as income to the investor) - there's no profit, so here it is from capital".  In fact, the fund's annual return discloses a net loss of $88.6m.

Note: Sometimes I use the term "income distributions", but I mean distributions of profit which are deemed as income in the hands of investors.


----------



## ASICK (4 February 2013)

*Re: What's In A Name?*



Mysteryman said:


> ... Asick, I found your last few comments very interesting. However, to someone like myself who is not an accountant, I'm not sure whether you are trying to say this rinky dink with our money concerning distributions being reinvested is illegal, skating close to the wind or plain unfair to the wholesale fund. Is this something that Trilogy should be looking at very closely or indeed something that should be brought to ASIC's attention. If you feel there are illegilties in play, then maybe something can be done.




To clarify what I mean, I'll say this:  Members of the same class must be treated equally - Members of different classes must be treated fairly.    I'm merely opining about whether a payment is one of profit or capital - sometimes things are not as black/white as members might assume.  I'm also opining about how it's possible to distribute $17m when the fund's made such a massive loss ($88.6m). I'm also opining about how the manager of the LMFMIF is able to reinvest $16m of that when LM didn't cause ordinary investors (class A & C) to reinvest.  

In relation to the $17m distribution to class B but not to class A & C, LM stated that they believe they have a strong legal argument for making a $17m distribution to class B members (feeder funds). LM reinvested $16m of that $17m.  LM have paid catch-up distributions to class A and C members, but not to class B.

The only way to test the strength of that argument is for LM to be challenged - the only ones able to do that are Trilogy and/or ASIC.  If neither challenge then LM's argument must be strong.  

It's been reported that Trilogy has raised certain matters with ASIC - I have no idea what Trilogy has complained to ASIC about.  

However, if a fund member feels there's something worth complaining about, then the right thing to do is to make a complaint to ASIC - if there's no legs in the complaint, then ASIC will let you know.

Do a google search for ASIC's complaint service if you wish to make a complaint.


----------



## Mysteryman (4 February 2013)

*Re: What's In A Name?*



ASICK said:


> To clarify what I mean, I'll say this:  Members of the same class must be treated equally - Members of different classes must be treated fairly.    I'm merely opining about whether a payment is one of profit or capital - sometimes things are not as black/white as members might assume.  I'm also opining about how it's possible to distribute $17m when the fund's made such a massive loss ($88.6m). I'm also opining about how the manager of the LMFMIF is able to reinvest $16m of that when LM didn't cause ordinary investors (class A & C) to reinvest.
> 
> In relation to the $17m distribution to class B but not to class A & C, LM stated that they believe they have a strong legal argument for making a $17m distribution to class B members (feeder funds). LM reinvested $16m of that $17m.  LM have paid catch-up distributions to class A and C members, but not to class B.
> 
> ...




Thank you ASICK for your well reasoned opinions. You have been a great deal of help. I think I may well follow up your advice on all this firstly with Trilogy to see what they are doing about it and also put in a complaint to ASIC. After all we have nothing to lose.


----------



## ASICK (4 February 2013)

*ASIC IS NOT A PRUDENTIAL REGULATOR*

From experience, members really should read the 2012 annual report and the recent RG45. 

You're entitled to raise concerns with ASIC - although it's a complaint form, you're able to raise your concerns (as well as complaints).

The funds are your funds, not LM's.   It's your money invested and it's your money that's been lost.

I've raised the issues that I'd be concerned about if I was an LM investor.

It's up to each of you to work it out for yourself, and if you find issues which concern you, then write to ASIC about them, or alternatively, do nothing: it's your choice.

If you think everything is okay, then good and well.   

Note: ASIC is interested in form (and law), not substance: ASIC is not a prudential regulator. [as many PFMF members have been told by ASIC itself]


----------



## ASICK (5 February 2013)

*LM MPF*

http://www.moneymagik.com/LMFMIF_at_a_glance.jpg

I put this graphic on the website just in case any updating is required.

I did the graphic because it's easier to see the state of the fund.
If there's an errors, please let me know - they will be corrected.


----------



## RODENT69 (5 February 2013)

*Re: What's In A Name?*



Mysteryman said:


> Thank you ASICK for your well reasoned opinions. You have been a great deal of help. I think I may well follow up your advice on all this firstly with Trilogy to see what they are doing about it and also put in a complaint to ASIC. After all we have nothing to lose.




Mysteryman   I too am interested in approaching, ASIC  however remember we still don't have the Audited Statements for our Fund -WFMIF, I would like to read this first

I seem to recall that the issue of paying a distribution and reinvesting was done last year also, I will check
Meanwhile FYI I am invested in the WFMIF   APIR CODE LMI0007AU  which for a laugh is the Flexi Account, so called At Call, another laugh.  You would be aware there are other types of Fixed Term Investments under the WFMIF also.

Also its confusing re Investment class, with Types A,B,C in FMIF and only A&B in the WFMIF

As ASICK says we should be concerned if so called Distributions from the FMIF to the WSFMIF were reinvested in the FMIF just at the whim of LM. I wonder if its allowed under the Constitution of the Fund? I certainly would like to see the justification, especially as ASICK says given the substantial and on going losses for the funds.
And where is the difference in $ out and back in accounted for.

I certainly think we should write to ASIC  asking their views.  I have a ASIC contact, after I see the Audited Statements for the WFMIF and go back and do some other cross checking with earlier reports, and the PDS  I will sound him out, before formalising a complaint.

Interested in your views?


----------



## ASICK (5 February 2013)

This was posted on the Equititrust thread:

http://www.goldcoast.com.au/article/2013/02/01/446521_gold-coast-news.html

"The three-level luxury villas were originally built by Brisbane developer Matthew Thomas and sold last night for between $1.1 million and $1.25 million, a steep drop from the $3.95 million they started at when they first hit the market."

Scary?


----------



## RODENT69 (5 February 2013)

*Re: LM MPF*



ASICK said:


> http://www.moneymagik.com/LMFMIF_at_a_glance.jpg
> 
> I put this graphic on the website just in case any updating is required.
> 
> ...




ASICK    thanks for the Graphic its very easy to understand - as they say a picture speaks a thousand words!! 

FYI   over the last few years, as a person who reads but does not always understand completely the Funds Audited statements, I often find it difficult to identify the real "Income " for a Fund 

To explain  simply   Income - Expences = Profit  or Loss.  So using your considerable  skills can you draw another picture that explains for the FMIF  FY 2012 the Monies IN  and Monies OUT  in simple terms-  I realise some may be funny money but  it may be of value to us Investors

Simple  example $32 mil Income- $120 Expences = $105 Loss

I am sure you will understand were I am coming from  - Helicopter view 

Also see next post


----------



## ASICK (5 February 2013)

*Re: LM MPF*



RODENT69 said:


> ASICK    thanks for the Graphic its very easy to understand - as they say a picture speaks a thousand words!!
> 
> FYI   over the last few years, as a person who reads but does not always understand completely the Funds Audited statements, I often find it difficult to identify the real "Income " for a Fund
> 
> ...




First, I'm not an accountant - my only accounting experience is from high school many years ago, and from operating my own business.  For advice you can rely on, please talk to your accountant.

Actually, I"d say it's impossible to identity the REAL income for the fund because these managers apply the accruals accounting method. I'm sure accruals accounting is useful where certainty is assured, but in these MIS/MIFs, it's a nightmare for investors, and a real bonus for managers.

Managers gain fees on accrued interest - but if those accruals aren't eventually converted into cash, then investors lose out.   Generally, investors in MIS/MIFs lose in two main areas, (1) overvalued assets, (2) written off accrued interest.

An extreme example re: accruals - http://www.understand-accounting.net/Accountingfrauds.html

If you have a look at the first item under heading "Income" (on page 8 of the fund's 2012 return), you'll note:

"Interest Revenue - Mortgage Loans:  2012: $31,608,319   2011: $35,604,341"

The figures represent cash income as well as accrued income - Impressive incomes? 

Nope, I wouldn't think so - given the extensive accruals taking place in the fund, all (or most) of those amounts may very well be accrued interest (NOT cash) - that's why I say a fund is "pumped" with accruals - such accruals build up the value for the manager to make fees, but do not necessarily convert into cash able to be returned to investors.

Accruals are what the manager estimates the fund is able to receive, and it's been my experience that managers seem to be more than optimistic when it comes to making estimates.   Accrued interest is an asset: I'd prefer to call it "Pie in the Sky".

First, one has to be skeptical of the "Income Revenue" figures.  In many accounts its possible to determine the actual cash received in the "Statement of Cash Flows" (page 11 of FMIF's 2012 annual return).

For the FMIF  only $404,955 as a separate amount, and that's probably only bank interest received.  The fund does not disclose how much cash is received from mortgage loans - Trilogy does disclose such information in the PFMF's accounts - and the difference between the accruals and actual cash is a shocker.

I note a figure is disclosed for "receipts for settled mortgage loans", but one would need a complete analysis of that figure to see how much interest (if any) was received in cash on those loans in that year.  If one thinks about the massive loss on the Cairns asset, and given the ongoing losses disclosed recently on auctions, then I'd doubt whether any of the recoveries include cash to make good accruals.

As I see the accounts:

1. The Mortgage Loan Interest Receivables are probably all accruals.
2. The Receipts for Settled Mortgages Loans probably didn't recover much (if any) accrued interest.
3. I'll be pulling $30m off the fund's value for 2012 - and probably for 2011 ($60m in total) 
4. Given the market, good luck with translating assets' valuations in cash without significant loss.

I note also that Note 7 to the accounts (page 23 of the fund's 2012 accounts) does not distinguish between interest receivables (accruals) and loans - so, impairments/write offs to receivables aren't noted separately.  The PFMF's accounts show the distinction between receivables and loans.

I think if LM disclosed how much of the fund is receivables, how much receivables have been impaired, and how much receivables were written-off, I get the impression you guys (and girls) would be shocked.

"Oils Aint Oils Sol" - accrued interest may very well be an asset on which the manager makes a buck, but in your fund, those accruals are unlikely to translate into cash in fund investors' pockets.

The accruals accounting method is completely legal, but IMO, the method should never have been permitted to be applied to MIS/MIFs in Australia, although I'm  very, very sure that managers would argue quite the opposite.


----------



## ASICK (5 February 2013)

*The Overflow of Loss*

On top of the accruals which bloat the fund, there's the overflow that's not deemed recoverable:
LM FMIF 2012 annual return, page 25, "Interest on arrears loans is suspended and not brought to account when the Responsible Entity considered that the accounts are not ultimately recoverable from the sale proceeds of the property. The amount of suspended interest as at 30 June 2012 totalled $119,557,492 (2011: $87,077,591)" - an increase of $32,479,901 from 2011 to 2012 !!!


Read about suspension of interest here:
http://www.wikinvest.com/stock/Lloyds_Banking_Group_(LYG)/Suspended Interest Non-performing Lending

For a personal view from the man from LM, read here:
http://www.peterdrake.com.au

http://www.moneymagik.com/LMFMIF_at_a_glance.jpg
(now updated with direct investor information)


----------



## ASICK (5 February 2013)

*Related Funds Equity in LMFMIF*

I think that ALL the values attributed to the related "feeder" funds are incorrect.

The values have been calculated by reference to $353m (a figure closer to gross assets), not the $288.98m attributable to unitholders.

LM FMIF annual return, page 31, note 10, "unitholder investing activities".

I think the total should be about $143.29m, not $166.34m.

Have I made a mistake?


----------



## ASICK (5 February 2013)

*It Happens*



ASICK said:


> I think that ALL the values attributed to the related "feeder" funds are incorrect.
> 
> The values have been calculated by reference to $353m (a figure closer to gross assets), not the $288.98m attributable to unitholders.
> 
> ...




Assuming the percentages are correct, then I think the apportionments should be about:

LM Currency Protected Australian Income Fund = $71.53m (LM says $87.47m)
LM Institutional Currency Protected Australian Income Fund = $5.49m (LM says $6.7m)
LM Wholesale First Mortgage Income Fund = $59.02m (LM says $72.17m)
Total about $136m, or 47.07% of  $289m. LM says $166.33m - Difference = - $30.3m, or - 18.22%.

I think someone calculated by reference to gross assets rather than net assets (attributable to unitholders).

(all figures rounded for ease of calculation).


----------



## Mysteryman (5 February 2013)

*Re: What's In A Name?*



RODENT69 said:


> Mysteryman   I too am interested in approaching, ASIC  however remember we still don't have the Audited Statements for our Fund -WFMIF, I would like to read this first
> 
> I seem to recall that the issue of paying a distribution and reinvesting was done last year also, I will check
> Meanwhile FYI I am invested in the WFMIF   APIR CODE LMI0007AU  which for a laugh is the Flexi Account, so called At Call, another laugh.  You would be aware there are other types of Fixed Term Investments under the WFMIF also.
> ...




Hi Rodent

Such a lot has been added to this string since I last checked in - load of reading to catch up on. i am invested in LMI0007AU, like you and also the LMI0008AU fund.

I think it is definitely worth waiting on the finalization of the annual report for the wholesale fund 2012. My latest communication with them says it will be a few more weeks before it is signed off. The original promise of early January seems to be stretching out, but maybe they have found plenty to take issue with, themselves. So no point in jumping the gun and complaining to ASIC until we receive that. However, if you have a contact, I would most interested to hear their view. 

Will keep adding as and when I have something new to report.


----------



## ASICK (5 February 2013)

*Punch, Weave, Duck ! (no pun intended)*

Supreme Court NSW Case Number 201200395190

_Peter Charles Drake v. Fairfax Media Limited_


----------



## RODENT69 (6 February 2013)

ASICK     I  am reliably informed this morning, that Trilogy is looking very closely at the issue of this Distribution reinvestment, or whatever it really was.  

This action was taken by LM  as an in house decision, and it was before Trilogy became RE. 

Question could it happen again this Year now that Trilogy is RE of the WFMIF   Answer  I cant see why not-  what is your view. I am looking at all the PDS  info and Constitution re payment of Distributions.  I seem to remember seeing something that said Distributions must be paid, and nothing about Reinvestment, or what they call their 'arguable position"  and I think something similar happened last FY?  will check that also


----------



## ASICK (6 February 2013)

*The Numbers Simply Don't Crunch*

http://www.moneymagik.com/LMFMIF_at_a_glance.jpg

I've now amended the graphic to include both LM's disclosed figures and what I think they should be.

My reasoning:

Class B (feeder funds) total interests on page 22 was 224.86m units.

There were a total of 488.79m units on issue as at 30 June 2012 with $288.98m total equity.

Unit price is therefore ($288.98m / 488.79m) = $0.59

So, the total equity for the feeder funds would be 224.86 m * $0.59 = $132.66m

but that didn't reconcile with the fund total equity (page 31) of $166.33m

I wondered what was happening, so when I worked back each of the values from page 31, I noticed that 100% was about $353m (eg. the total, $166.33m is about 47.07% of $353m, not the $288.98m as disclosed as the 100% (net assets attributable to unit holders)).

If a feeder fund manager mulitplied the number of units invested by the fund into the LMFMIF, the result would not align with the value as disclosed on page 31.  That might lead the fund manager to conclude there's a problem with the number of unit held by its fund - especially if that fund manager was a new manager of that fund and the registry was confusing.

I'm quite sure that LM"s annual return for 2012 is defective with regard to the disclosed equity for the feeder funds on page 31 of the return.   I don't know how LM will correct this, or whether it's necessary to make any corrections, but I would have thought it should be corrected.

Just my opinion.


----------



## ASICK (6 February 2013)

*Distributions & Reinvestments*



RODENT69 said:


> ASICK     I  am reliably informed this morning, that Trilogy is looking very closely at the issue of this Distribution reinvestment, or whatever it really was.
> 
> This action was taken by LM  as an in house decision, and it was before Trilogy became RE.
> 
> Question could it happen again this Year now that Trilogy is RE of the WFMIF   Answer  I cant see why not-  what is your view. I am looking at all the PDS  info and Constitution re payment of Distributions.  I seem to remember seeing something that said Distributions must be paid, and nothing about Reinvestment, or what they call their 'arguable position"  and I think something similar happened last FY?  will check that also




If I was Trilogy, I'd be doing likewise.  Yes, the decisions were made prior to Trilogy: it's all disclosed in the 30 June 2012 return.

But the arguable position was not about reinvesting the money, it was about making the distribution in the first place, and it's a matter that class A and class C investors should get some advice on - after all, Class B (the feeder funds) seem to have got a leg up on that one (as I see it).

However, if the arguable position LM has in regard to the $17m distribution to Class B members is not tested by Trilogy (or Class A & C members, or indeed by LM itself), then Trilogy is free to test the reinvestment.

*By way of argument only* : even if the $17m distribution was found to be illegal (I'm not suggesting it is, in fact, illegal), it still might be the case that the distribution might not be able to be reversed.  Then Class A & C members could seek to recover any losses from LM itself for beach of Corporations Act s. 601FC(1).

These are cases that ASIC should test, after all, it's unlikely investors would have the resources to do so.

What raised my eyelid about the Class B reinvestment was the fact that LM ceased doing likewise for members in Classes A & C - that's something I'm sure Trilogy is looking into.

In the end, it's the ones with the resources that'll get into a stouch if they need too: "Punch, Weave, Duck"


----------



## ASICK (6 February 2013)

*Distiribution / Reinvestment*



RODENT69 said:


> ASICK     I  am reliably informed this morning, that Trilogy is looking very closely at the issue of this Distribution reinvestment, or whatever it really was.
> 
> This action was taken by LM  as an in house decision, and it was before Trilogy became RE.
> 
> Question could it happen again this Year now that Trilogy is RE of the WFMIF   Answer  I cant see why not-  what is your view. I am looking at all the PDS  info and Constitution re payment of Distributions.  I seem to remember seeing something that said Distributions must be paid, and nothing about Reinvestment, or what they call their 'arguable position"  and I think something similar happened last FY?  will check that also




I think they won't be able to make such distributions because the fund is effectively in wind-up.  If they did make such a distribution then it would never be reinvested.

As I see it, the payment was made to ensure the feeder funds could pay their way, but it also shifted a sway of equity away from Class A & C members (direct investors in AUD & NZ currencies) to Class B members (feeder funds).  IMO, the state of the feeder funds is not the responsibilty of the FMIF and such payments should not be made to the feeder funds on any other basis that pro-rata with all other unit holders (according to their respective unitholdings).

[keeping in mind that the $17m distribution and $16m reivestment relates to ALL feeder funds, not just the Wholesale fund]


----------



## ASICK (6 February 2013)

*Unreliable Crystal Balls?*

http://www.lmaustralia.com/Investme...trategies-Avoid-Fire-Sale-of-Fund-Assets.aspx
(published 24 November 2012)

"GOLD Coast based LM Investment Management expects debts of its LM Mortgage Fund to fall to $17 million within days and has forecast that capital distributions will occur soon.

 The company told the stock exchange yesterday asset sales had already reduced the debt and the fund's current $29 million facility balance is forecast to further reduce to $17 million by month end."

Seems LM is struggling to forecast even one week ahead - five weeks later the facility still  wasn't paid down:-

"As at December 2012 the amount owing to DB has been reduced to the drawn amount of approximately $29.4m." (LM FMIF RG45 December 2012)

"The funds manager said the sale of assets of the fund, which closed in 2009, was continuing and the price of units had been revised to 59 as at November 16.", yep, and all LM had to do was push LVRs to 100%.


----------



## ASICK (7 February 2013)

*"Theme Park Ride"*

www.moneymagik.com/ was down until this morning due to admin changes.

I've updated the front page in relation to Trilogy's latest efforts re: PFMF asset at Martha Cove.

You guys are just stepping on your "theme park ride", I get the impression our horrifying ride is about to come to a griding halt  - with SFA back to investors.  So far from $630m, only $0.0875/unit with only $0.0075/unit in the last seven months.

Listen to what both BT and Trilogy said about how they'd manage the assets, see the reality.

Take a read of the Equititrust thread on ASF -  the EIF's forecast is down to as low at $0.11/unit (down from $0.15/unit last november).

Read the EIF receiver's reports at http://www.equititrust.com.au


----------



## ASICK (8 February 2013)

*A Bloody Disaster*

My, what a difference a few months makes:-

15 November 2012 - Trilogy's and Balmain Trilogy's "Fund Update & Asset Schedule"
http://www.balmaintrilogy.com.au/pdf/BTI 5125 Asset Review Letter.pdf

"As such, we have embarked on a targeted realisation program focusing on the various precincts. This approach aims to avoid saturating the local market by undertaking a staggered asset release. We will keep you informed of this process as it unfolds in the coming months."

Rodger Bacon (of Trilogy Funds Management Limited and Balmain Trilogy Investment Management Pty. Ltd.) told an investor: http://www.moneymagik.com/bacon_mc_wak_1.mp3

and then, just one month into 2013:

"MUST BE SOLD"
http://www.moneymagik.com/martha_cove_must_be_sold.jpg

It's worthwhile to recall what Andrew Griffin said at the investor meetings:

"Andrew Griffin, "So I guess we now come to the final part which is the future of your fund. There are only limited strategies available in relation to the assets of your fund. Leaving aside Martha Cove for a moment, in respect of the other remaining assets of the fund, they can either be sold as is, which is akin to a fire sale, which we've undertaken not to, or they can be improved in value, by us, to the maximum extent possible prior to a sale to an investor or a developer. I've already discussed the types of work we do to maximize value, but let me summarise again by saying that we will improve these assets right up to the point where an investor or developer will pay the maximum possible price for each asset which returns the greatest capital value to you, the investor. Specifically, we will procure valuable rezoning or development approvals prior to the sale of vacant unimproved vacant land. We will complete developments to enable the sale of completed product rather than selling assets to developers for them to make their development profits from your fund. And finally, once complete, we will sell the finished stock to individual owners occupiers and investors to try and maximize returns to unitholders. Perhaps this slide will explain a little better what we're doing. We are taking the current assets of the fund and trying to improve them to the greatest extent possible before development would commence on the site. We are not taking them beyond that level, but as soon as we've managed to increase the value from .. rezoning or development consent. Once we've maximized the value, we will then sell the site to the open market. We are of the firm view that this is the best strategy in respect of these assets to recover the greatest value for you while minimizing additional expenses""

Now, Martha Cove, a fund asset that's lost about $109m (or 70% of its value when Trilogy took over the fund) *"MUST BE SOLD" *- down from about $156m to about $47m - Trilogy made about $7.5m in management fees (up to 31 December 2012) on this one asset alone, BDO (as receiver) also did well - but punters, nope .. a bloody disaster.

http://www.moneymagik.com/

I'll bet you guys are hoping that your "Maddison" is not your version of our "Martha Cove", right?


----------



## Mysteryman (10 February 2013)

*Re: A Bloody Disaster*

Oh ASICK, I feel so sorry for the pain you are going through with your fund. I hope things will pick up for you this year, but you know what they say about life - 'What goes around, comes around', so hopefully Trilogy will reap their just reward eventually!! Why does no one else from your fund add to this thread? Have they all given up and put it in the too hard basket?

I have been looking at your latest emails concerning the payment of $17m in distribution to the wholesale fund and then reinvesting $16m back in the main fund for financial year 2012. Having no real accounting skills, I fail to see the purpose of them taking this step. If the wholesale fund needed finance to pay expenses, why not transfer only the $1m. What, in your opinion, would be the purpose of making these large transfers? I note the audit by Ernst and Young states 'This area is of significant judgement and accordingly, we bring it to your attention'. Obviously, as you have said yourself, this is a very grey area and one can only hope Trilogy is taking it up with ASIC.


----------



## ASICK (10 February 2013)

*Re: A Bloody Disaster*

"Oh ASICK, I feel so sorry for the pain you are going through with your fund. I hope things will pick up for you this year, but you know what they say about life - 'What goes around, comes around', so hopefully Trilogy will reap their just reward eventually!! Why does no one else from your fund add to this thread? Have they all given up and put it in the too hard basket?"

I'm actually trying to help you guys - but you're welcome to make your own mistakes - there's no skin off my nose if  you knock yourselves out blundering from pillar to post.

I can't answer for other PFMF members, but at a guess, it could be that they care less about your fund than they do their own - as you'll doubtlessly find out that LM investors won't do too much caring either -If I were you, I wouldn't worry too much about my "pain" (as you put it), I'd be more concerned about your investment's future.

"I have been looking at your latest emails concerning the payment of $17m in distribution to the wholesale fund and then reinvesting $16m back in the main fund for financial year 2012. Having no real accounting skills, I fail to see the purpose of them taking this step. If the wholesale fund needed finance to pay expenses, why not transfer only the $1m. What, in your opinion, would be the purpose of making these large transfers? I note the audit by Ernst and Young states 'This area is of significant judgement and accordingly, we bring it to your attention'. Obviously, as you have said yourself, this is a very grey area and one can only hope Trilogy is taking it up with ASIC."

Well, back to your investment, and the $17m out / $16m in.  

Class B (feeder funds) had a rise in equity at the expense of Class A & C (direct investors).

Let's assume you take $17m from the whole fund and then give it to half the fund (actually, Class B is less than 50% of the fund, but let's assume it's 50%).  then Class A & C equity is reduced by $8.5m and Class B equity is increased by $8.5m.  Is that a fair transaction?

The question is "Is taking $8.5m from Class A & C and giving it to Class B treating Class A & C fairly" (Corporations Act 601FC(1) requires that a manager treat members of different classes fairly (not equally)).

So, if the answer is that it's okay to take $8.5m from group of investors and give it to another, then the second question arises "Is it acting in the best interests of Class B investors by reinvesting $16m in a non-liquid fund (LMFMIF)?"

If I was a Class A or Class C investor, then I'd be asking ASIC to have a look at the transaction - that's only my opinion - Why should  Class A & C investors give up $8.5m in favour of Class B investors?

If I was a Class B investor, I'd be asking ASIC to look into the reinvestment of the $16m. Why should the manager put the $16m at risk?

Trilogy is the manager of a feeder fund, so I couldn't see Trilogy arguing that the $17m distribution wasn't proper - who's going to query the $17m distribution, LM? 

The good Lord only helps those who help themselves - as it would go for direct investors in the LMFMIF.

Again, the legal argument held by LM  related to the distribution, not to the reinvestment.  My guess is that the legal basis was necessary because, as it seems to me, there is an inequity in the transaction - as stated above, a question would arise as to whether that inequity is fair (s. 601FC(1)).  The manager is permitted to treat members of different classes unequally providing they are treated fairly.

Remember: members of the same class must be treated equally.  members of the different classes must be treated fairly.

To directly answer your question - IMO, as well as covering the feeder funds' ongoing costs, it's also increased the equity in the feeder funds at the expense of direct investors.


----------



## ASICK (10 February 2013)

*External Input*

Mysterman,

I feel comfort in your concern for me, but really, while I did a bag of dough in the PFMF, financially I'm probably better off than most good folk caught up in these messes. 

You might find it difficult to believe, but many of these funds follow a similar path to failure.  For example, Equititrust started to fail a long time after the PFMF did, yet the outcome for those investors is dire.

IMO, LM has only maintained the unit price in the LMFMIF by progressively "pumping" the loans with accrued interest and permitting progressively higher LVRs to permit the increased accruals.  Most investors have no idea of what's happening - so, it seems the right thing to do to try to disclose this information to them.

At a guess, the facility lender probably has a 10% LVR over the assets of the FMIF - yet the FMIF is lending out at 100% - even a loan to an entity to which Mr. Drake is guarantor is at 100% LVR and in default by 90 days or more.   

Trilogy has been become more relevant on this thread because (1) it is now a manager of one of the feeder funds and (2) Trilogy's spruiked an intention to take over the FMIF - what Trilogy says and does elsewhere has become very important to LM investors - I think it's just as relevant as what LM says and does.

When Trilogy ran for the PFMF, fund members weren't told about Trilogy's failures - I think that if fund members knew, and given the slim margin with which  Trilogy took over the fund, Trilogy's run would have failed.

I think you guys should be grateful for external input - but then that's only what I think.  

Thinking "inside the box" may  lead to intellectual hypoxia.


----------



## RODENT69 (10 February 2013)

Mystery Man  -ASICK   and others reading this

I have made several direct representations to both BT/Asgard  and to Trilogy on the subjects of 
2012 FMIF Audited Return, the RG45   and the issue of Distribution and Reinvestment of Funds.

I have also again asked Trilogy where is the WFMIF Audited Return

I do not expect to be able to write in this forum about these matters for at least a week, HOWEVER I do expect I will receive some specific answers to the questions I have raised. I am aware that both BT/Asgard  and Trilogy are exerting pressure  a lot of pressure on LM for answers.

MysteryMan  I am advised that as investors the best way for us to raise and issue may be with the FOS - Financial Ombudsman Service. 

More later re all this.


----------



## ASICK (10 February 2013)

RODENT69 said:


> Mystery Man  -ASICK   and others reading this
> 
> I have made several direct representations to both BT/Asgard  and to Trilogy on the subjects of
> 2012 FMIF Audited Return, the RG45   and the issue of Distribution and Reinvestment of Funds.
> ...




Hi Rodent,

Are you able to give particulars of the issues raised?

Be assured that a complaint to the FOS cannot relate to the management of a MIS/MIF - I know that from experience - such complaints must be directed to ASIC - if you're dissatisifed with ASIC's response, then I believe you're entitled to appeal to the Commonwealth Ombudsman.

Apart from a claim not relating to fund management, the entity complained about must be a member of the FOS.  Please take a look at this link:-

http://www.fos.org.au/centric/home_page/members/participating_financial_services_providers.jsp


----------



## RODENT69 (11 February 2013)

ASICK said:


> Hi Rodent,
> 
> Are you able to give particulars of the issues raised?
> 
> ...




ASICK      I am not at liberty to expand on the points raised at this stage, however nothing I have written,or provided would be of a surprise to readers of this forum, remember LM, Trilogy, and other "interested parties" read these comments.

While your comments about FOS  may be correct?  later this week I will pursue the company that indicated to me FOS was the way to go. 

At this stage I have had no reply to my initial sounding out Email to ASIC


----------



## ASICK (11 February 2013)

*FOS*



RODENT69 said:


> ASICK      I am not at liberty to expand on the points raised at this stage, however nothing I have written,or provided would be of a surprise to readers of this forum, remember LM, Trilogy, and other "interested parties" read these comments.
> 
> While your comments about FOS  may be correct?  later this week I will pursue the company that indicated to me FOS was the way to go.
> 
> At this stage I have had no reply to my initial sounding out Email to ASIC




My comments about the FOS are correct - but you should check everything out.  Don't believe me, and don't believe the company that indicated the FOS is the way to go, phone/email/write the FOS.  I've had the experience of two claims failing because the claims related to the management of a fund.  

Get the info from the "horse's mouth" (so to speak).


----------



## ASICK (16 February 2013)

*To Keep the Thread Alive*

http://www.bransgroves.com.au/banking-and-finance/the-trust-company-v-perry-2012-nswsc-604.html

another gallant effort from Trilogy - more costs for the fund.

See, suing a dead guy isn't all Trilogy's capable of ..


----------



## ASICK (19 February 2013)

*Re: To Keep the Thread Alive*



ASICK said:


> http://www.bransgroves.com.au/banking-and-finance/the-trust-company-v-perry-2012-nswsc-604.html
> 
> another gallant effort from Trilogy - more costs for the fund.
> 
> See, suing a dead guy isn't all Trilogy's capable of ..




Some updates members might like to read about in the absence of anything else being posted on this forum:

http://moneymagik.com/


----------



## RODENT69 (20 February 2013)

ASICK    for your info-  not LM related   In todays Melb Age -Business sect  is an Ad for Martha Cove , lots S22 to  S24

For  sale   to be sold in one line  -expressions of interest  -Under instructions from Korda/Mentha


----------



## ASICK (20 February 2013)

*Trilogy Offers PFMF Property For Sale  "IN ONE LINE" (yet again)*



RODENT69 said:


> ASICK    for your info-  not LM related   In todays Melb Age -Business sect  is an Ad for Martha Cove , lots S22 to  S24
> 
> For  sale   to be sold in one line  -expressions of interest  -Under instructions from Korda/Mentha




Thanks Rodent, that's very kind of you. 
Are you able to take copy of the ad and post it here (or email it to me)? 
What's the selling agents name?

BT's Andrew Griffin defined a fire sale (April 2011):
http://www.moneymagik.com/fire_sale_defined.mp3

Seems BT didn't have much luck selling the whole shooting match, so they're knocking it off one precinct at a time .. late last year Roger Bacon (of Rojacan Pty. Ltd. fame) said Trilogy'd be developing one precinct at a time !
http://www.moneymagik.com/bacon_mc_wak_1.mp3
Oh.. he said they'd be developing "Woodgrove" at Wakerley too .. but Trilogy didn't - it too was sold off, yes, you guessed it, IN ONE LINE !

I get the impression the PFMF"s run out of money - just going on sales of about (at least) $4m, it all seems to have gone on expenses - also, the debt seems to have only been paid down by about $2.5m since September 2012 (until last week).  Given the pressure from the bank, I'd say there's a big squeeze going on within the PFMF right now. That's extradionary for a fund which supposedly had assets valued at over $100m as at 30 June 2012.

Still only $0.0075/unit in near seven months - despite this spruik from April 2011:
http://www.moneymagik.com/keep_on_turning_in.mp3

and despite this spruik from November 2010 about the litigation:
http://www.moneymagik.com/litigation.mp3

Contrary to the spruik, we now find that the fund has already outlaid about $500k out of an expected $1m -- all with IMF well and truly gone from the scene.

*Good luck with believing anything Trilogy's got to say.*

A real good idea from the get-go is to ask Trilogy to define "fire sale" - perhaps it's worthwhile to ask Trilogy if they agree with Andrew Griffin's definition (April 2011):
http://www.moneymagik.com/fire_sale_defined.mp3


----------



## RODENT69 (21 February 2013)

*Re: Trilogy Offers PFMF Property For Sale  "IN ONE LINE" (yet again)*



ASICK said:


> Thanks Rodent, that's very kind of you.
> Are you able to take copy of the ad and post it here (or email it to me)?
> What's the selling agents name?
> 
> ...





ASICK   best I can do is this -  on ad it says Scott Gray-Spencer    0400 222 226, 
Level 32 Rialto Tower 525 Collins st Melb   - Scott Callow - Mobile 0418153606    the add is under a heading , with other property's   CBRE  is the Estate Agent -their web site is  -  cbre.com.au       EOI  close  13 March 2013


----------



## ASICK (21 February 2013)

*We Can Help Each Other*



RODENT69 said:


> ASICK   best I can do is this -  on ad it says Scott Gray-Spencer    0400 222 226,
> Level 32 Rialto Tower 525 Collins st Melb   - Scott Callow - Mobile 0418153606    the add is under a heading , with other property's   CBRE  is the Estate Agent -their web site is  -  cbre.com.au       EOI  close  13 March 2013




Thank you very much Rodent - a great example of inter-fund co-operation. I found the ad on CBRE's website and linked it here:
http://www.moneymagik.com/


----------



## ASICK (21 February 2013)

*Re: We Can Help Each Other*



ASICK said:


> Thank you very much Rodent - a great example of inter-fund co-operation. I found the ad on CBRE's website and linked it here:
> http://www.moneymagik.com/




That land may be a security for the CBA (re: City Pacific Limited JV with Indigo Pacific secured by Westpac) --- not sure yet.  At this time it seems the land doesn't belong to the fund.  I'll post any updates.


----------



## Londoner (21 February 2013)

*Re: LM - I've come in late hear*



ASICK said:


> That land may be a security for the CBA (re: City Pacific Limited JV with Indigo Pacific secured by Westpac) --- not sure yet.  At this time it seems the land doesn't belong to the fund.  I'll post any updates.






ASICK said:


> Thank you very much Rodent - a great example of inter-fund co-operation. I found the ad on CBRE's website and linked it here:
> http://www.moneymagik.com/




Sorry to proably bring up subjects that you guys may well have previously discussed but here goe
1. whats happened to the BIS shrapnel report promised in Sept - then Oct then Jan. Last I have been told is that they await a deliquent consulatnt supporting doc. seems strange.
2. with each loan secured not only by the development asset but also guarrantees from lendercompany and perhaps directors. Has LM sought legal redress against anyone on outstanding loan +interest?

Any guidance here would be appreciated


----------



## ASICK (25 February 2013)

*Re: LM - I've come in late hear*



Londoner said:


> Sorry to proably bring up subjects that you guys may well have previously discussed but here goe
> 1. whats happened to the BIS shrapnel report promised in Sept - then Oct then Jan. Last I have been told is that they await a deliquent consulatnt supporting doc. seems strange.
> 2. with each loan secured not only by the development asset but also guarrantees from lendercompany and perhaps directors. Has LM sought legal redress against anyone on outstanding loan +interest?
> 
> Any guidance here would be appreciated




Hi Londoner, I have no idea of what's happened to the BIS Shrapnel report - keep in mind, I'm not an investor in your fund.  I understood the report was to be released some time ago.  I'm sure that any of the fund members on this forum would get you up to date if they had more information.

It seems LM has been quite generous with the lenders from the LMFMIF - loans in default at or beyond 90 days, and all pumped up to 100% LVR with accrued interest.   

Peter Drake (himself) is a guarantor to one of the loans in default at or beyond 90 days and loaded to the hilt with acrrued interest - but I'd guess the security asset would have to be sold and a shortfall recorded before LM looks to Mr. Drake to make up the difference - ho hum.

Nevertheless, LM is a generous lender with other people's money.

I guess it won't be too long before the "bubble" necessarily has to burst.

[post made to make Londoner feel comfortable]

Good afternoon Rodent - must be well over the week you said you'd report back to the forum with some news - any news?


----------



## ASICK (25 February 2013)

*Trilogy - stay clear of them ...*

http://moneymagik.com/Martha Cove Portfolio - IM 2013-4.pdf

after millions in fees, the PFMF's most extensive asset is on the chopping block.

Some more info about Martha Cove losses on page 7:

http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


----------



## RODENT69 (26 February 2013)

*Re: LM - I've come in late hear*



ASICK said:


> Hi Londoner, I have no idea of what's happened to the BIS Shrapnel report - keep in mind, I'm not an investor in your fund.  I understood the report was to be released some time ago.  I'm sure that any of the fund members on this forum would get you up to date if they had more information.
> 
> It seems LM has been quite generous with the lenders from the LMFMIF - loans in default at or beyond 90 days, and all pumped up to 100% LVR with accrued interest.
> 
> ...




ASICK   I am still waiting for a reply from  BT  re all the questions that were lodged by them to LM and  I am also still chasing Trilogy re the WFMIF audited statement for 2012.

In regard to the BIS Shrapnel report, despite many promises by LM  the actual report(if it actually exists) has not been made available, the only info that was made available was the two page Asset picture summary which was posted in this forum


----------



## RODENT69 (27 February 2013)

The attached link (I hope) is a letter from Trilogy to investors info.
	

		
			
		

		
	

View attachment 51135

	

		
			
		

		
	
  its dated 26 Feb

There is also an LM Doc -  
	

		
			
		

		
	

View attachment bond-wsale-WFMIF-closed-fund-update.pdf

	

		
			
		

		
	
  large file 1.83MB

I have some other info from BT to go through, and will post what I can later


----------



## ASICK (27 February 2013)

RODENT69 said:


> The attached link (I hope) is a letter from Trilogy to investors info.
> 
> 
> 
> ...




Hi Rodent,
The first attachment (Trilogy) seems to have a bad link.


----------



## RODENT69 (28 February 2013)

ASICK said:


> Hi Rodent,
> The first attachment (Trilogy) seems to have a bad link.




Trying again
	

		
			
		

		
	

View attachment 51142


----------



## RODENT69 (28 February 2013)

View attachment LM letter to all funds_Feb 2013_FINAL.pdf


RODENT69 said:


> Trying again
> 
> 
> 
> ...


----------



## ASICK (28 February 2013)

RODENT69 said:


> Trying again
> 
> 
> 
> ...




At least for me, the same problem:




It might be easier to copy and paste the letter to a posting.


----------



## RODENT69 (28 February 2013)

ASICK   I can access the Trilogy Letter via my recent Posting, so I assume you should be able to ?  Just checked its not yet on their website


----------



## RODENT69 (28 February 2013)

Dear all

As I have indicated in earlier posts I had written to ASIC, BT, and Trilogy about a number of issues relating to the RG45 and the Distributions that were reinvested,

In the case of BT they sent to LM detailed questions about the RG45.   Although LM eventually replied there was little value or new learnings  in the reply. However I suspect ASIC is still looking into some aspects. ASIC advised me that if any action is taken against LM then it will be published on the ASIC Website.

A recent comment from Trilogy relating to the distributions is very interesting  QUOTE -

"The latest from LM regarding the distributions (not paid) to the LM Wholesale Fund is as follows:

When LM was RE of the Wholesale Fund they, as RE of the fund, implemented a default option that diverted all distributions paid to the Wholesale Fund to be re-invested back into the LM First Mortgage Income Fund...and this default option is still in place...hence this is why the Wholesale Fund has not received any distributions
 Obviously we are not happy with this answer and are still pushing them on this issue. UNQUOTE".

As far as I know there is no default option?- however I may be wrong,  I dont have access to a PDS or constitution for the FMIF, I only have all the WFMIF PDS etc .  I have asked Trilogy to follow up further

In relation to the missing WFMIF Audited FY report Trilogy said this--

QUOTE  "In regard to the accounts...they will be out in the next month or so....we have basically had to adopt the unit price valuation of 59 cents (even though LM have conducted a rigorous valuation of the fund assets)....I acknowledge they are long overdue but don't shoot the messenger....it is our directors that have to sign off and they are nervous about a few issues. UNQUOTE"

*My views *- Regarding the promised Capital Distribution payment , scheduled for first week of March 2103
Its clear from the LM doc that this initial distribution will be approx A$8.4Mil and the component that will go to the WFMIF should be approx A$1.7Mil.  I dont have Current number of Units Held for the WFMIF,  but  based on last years data is about 95.8Mill Units  

Also based on last year the $ waiting redemption for WFMIF was $64.13Mil

I wrote to Trilogy re this Process and this was a reply I received QUOTE "I take on board your comments re the impending distribution...we will pay it our asap (net of our management fee) and will also include a detailed distribution statement.UNQUOTE"

For Investors in both the WFMIF  and other Feeder fund/s they should be able to see and compare the amounts paid per unit invested, (likely to be around only *One Cent per unit*, this should help to  highlight the actual fee take by Trilogy for the WFMIF


----------



## ASICK (28 February 2013)

RODENT69 said:


> ASICK   I can access the Trilogy Letter via my recent Posting, so I assume you should be able to ?  Just checked its not yet on their website




Hi Rodent, 
I just realised that the document in this new link is a Trilogy document. I thought it was an LM document.
As soon as I opened it, I then realised it was the Trilogy letter I couldn't open before.
Thanks.


----------



## ASICK (28 February 2013)

*Surrealism*

Rodent, 

Reading Trilogy's latest production reminds me of that scene in "Apocalypse Now" when the patrol comes alongside an arena into which helicopters bring dancing girls.



"We are writing to you in our capacity as the second largest unitholder in the LM First Mortgage Income Fund ..."  .. whoaaa there Mr. Bacon - Trilogy's the manager, not the investor!  "As a 20% unitholder in the Income Fund, ..." .. hey, once isn't good, but twice? yipes .. 

I think Trilogy missed out a couple of words after "our capacity as", and they are "THE RESPONSIBLE ENTITY OF ..".

Of course, it is Trilogy beating the war drums -- the pusche is clearly on.

After disclosing that it's written to various entities, including ASIC, Trilogy says, "Unfortunately we have not yet received a satisfactory response to our queries." - well, deary me ! no "satisfactory response".  Seems like Trilogy's had as much luck with ASIC as they did when APGF wouldn't hand over a fund's registry to Trilogy - oh boy .. didn't Trilogy groans about going to expense of having to place ads in various newspapers - it didn't help them though.

http://www.investordaily.com.au/cps/rde/xchg/id/style/14734.htm?rdeCOQ=SID-0A3D9633-74BF0A70

On corporate governance, there seems to have been some changes down at Trilogy too:

https://connectonline.asic.gov.au/R...nds management limited&searchType=OrgAndBusNm

Trilogy says, "Lack of independent asset valuations - We are concerned as to the true financial state of our investment. Unitholders have had to rely on asset valuations determined by LM directors, each of whom is also a company executive. How can we as unitholders have confidence in the stated value of the Fund’s underlying security assets when there has been no external oversight by independent directors and little or no input from expert independent valuers? This brings into question not only the determination of unit value made by these directors, but also LM’s reasoning for handling the asset valuations in this fashion."

Darn, there he goes again "... our investment ..." and "... we as unitholders ..."

Speaking of expert valuations, Trilogy knows all about them - like the one/s which valued Martha Cove:

"Martha Cove 30 June 2009: $155,951,001
Martha Cove 30 June 2010: $141,060,782 (- $14.902m, or - 09.6%)
Martha Cove 30 June 2011: $117,657,495 (- $23.403m, or - 16.6%)
Martha Cove 30 June 2012: $47,000,000 (- $70.658m, or - 60.0%)"

Yep, Trilogy's on the pulse with Martha Cove - estimated fee to Trilogy on Martha Cove alone til 31 December 2012 based on 1.62% of 1 July values = $7.49m!

and all this leads nicely on to the Cairns asset:

"One of the assets held by the Fund (a Cairns student accommodation), which we believe was previously valued by the directors at more than $12 million, was sold for $3.85 million, resulting in a significant loss to the Fund." - yes, a woeful loss - about $8m - but that's nothing like the loss the PFMF suffered down at Martha Cove: over $100m !!!!!

It's surreal to read spruiks from Trilogy about LM - I mean, if it was any other entity other than Trilogy, it'd make sense, but from Trilogy it just seems it's an entity "in a glass house throwing stones" - it's weird.  True, I agree the LM funds are in big trouble, but, let's face it, Trilogy's track record isn't one of overall success.

http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/litigation.php

Trilogy says, "We have reason to believe that another asset held by the Fund (Bellambie in Wollongong) was sold during the course of 2012 and that approximately half of the proceeds from the sale (approximately $20 million) were paid to the LM Managed Performance Fund." - "reason to believe"? - oh dear, shocking !!! but then ASIC didn't care did it? so, what's Trilogy's gripe?  Oh ! that's right, it's on the "high seas" again looking for "booty"!

Trilogy adds, "LM has not satisfactorily explained this transaction ...", and why should it? In my experience Trilogy hasn't even bothered to respond to letters of concern - so, is LM any different? I wouldn't expect so.  LM investors don't see it, but PFMF investors do.

and, "... and our concern is that all of the proceeds from this sale should have been paid to the Fund for the benefit of unitholders." - well, LM is entitled to legally apportion money as it sees fit - it is certainly not for LM to be concerned about Trilogy's views - the proper place for Trilogy to have a groan is ASIC - but since ASIC is more concerned about form than substance, and since ASIC isn't a prudential regulator, if LM is not breaking the law, then ASIC won't give a hoot.

I look forward to LM's response to Trilogy - However, if you're looking for an entity capable of selling assets way way under valuation, you've found that entity in Trilogy Funds Management Limited - and as proof, look no further than the value of PFMF assets sold.  Ask Trilogy to disclose a list of PFMF assets sales and the value of each asset sold at the end of all financial years prior to each sale  (2009, 2010, 2011, 2011 - as applicable) - just see how responsive Trilogy is to disclosing information - ho ho. [don't forget to ask to have the auditors sign off on it]

Here's some light reading about the PFMF:
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


----------



## ASICK (1 March 2013)

*They Didn't Know Too Much At All.*

Sure, it's only a little fund, but punters lost BIG time.

http://moneymagik.com/analysis_REIT.php

Rojacan Pty. Ltd., a company associated with Rodger Bacon (you know, the guy who signs the letters you receive), put some seed money into Trilogy's Healthcare REIT.   All was disclosed in the PDS.

http://www.moneymagik.com/REITpds.pdf

On PDS page 11, "The Manager (in conjunction with Rojacan Pty Limited, a company associated with Rodger Bacon) has put in place finance and support facilities such that the proportion (if any) of equity not already subscribed by investors by the Acquisition Date will be contributed from these Loan facilities in order for the Trust to begin operations at that time."

The seed money was the necessary deposit to get the bank involved - in this case, the good ol' ANZ.

On PDS page 30, Trilogy discloses "Fund Raising" costs of $64,000.

Of course, the figures are heavilty disclaimed on PDS page 29.

But how much did it cost to protect Rodger's associate and the ANZ? Well, not $64,000, but *$491,389 *in fundraising!  It's not hard to imagine that impact on a fund of about $9,200,000.  

The 2008 return discloses part of the "fund raising":
http://moneymagik.com/Trilogy_Healthcare_REIT_2008.pdf

The 2009 return discloses the other part:
http://moneymagik.com/Trilogy_Healthcare_REIT_2009.pdf

Note this excerpt from the 2009 return (on page 2), "The total carrying value of the Fund’s assets as at the end of the financial year was $7,545,100 (2008: $8,606,265) and net assets attributable to unitholders were $3,955,542 (2008:$1,891,956) equating to $0.60 per unit (2008: $0.63)."

Okay, so the fund enters fiscal year 2009 with an NTA of $0.63, but in 2009, Trilogy (this entity that's so concerned about LM), happily accepts $1.00 each for 3,555,000 units worth only $0.63 each .  You can work out the losses these investors suffered immediately they handed over the money to Trilogy - *IMMEDIATE LOSS *= 3,555,000 * $0.37 !

See 2009 return, page 8, applications for units 3,555,000 units at $3,555,000 (or $1.00 per unit).

In fact, the unit price only dropped by $0.03 in 2009, but that's only because the new investors suffered their massive loss which limited the loss to pre-existing investors.

And guess what? in 2010, Trilogy did one better, it took $129,600 (129,600 units at $1.00 per unit) for units with a current value of only $0.60 each.  That's an *IMMEDIATE LOSS * to the newbies of 129,600 * .4 !  Page 8 also disclosed that all investors had lost 50% of their respective investments by 30 June 2010.  This is Trilogy in action !  

http://moneymagik.com/Trilogy_Healthcare_REIT_2010.pdf

Trilogy might say, "oh! that's a small fund", but for every one of the battlers' investments in that fund, his/her investment is probably just as much (and just as important) as any battlers' investors in any other fund.  It is probably the case that those investors were just as impacted as many of you are.

I look forward to seeing the fund outcome for the FAILED Trilogy Healthcare REIT as soon as I'm able to purchase a copy of it's mid-term (31 December 2012) return [some time after 15 March 2013]

A number of years ago, Trilogy disclosed its Healthcare REIT's accounts on its website - but after attention was placed on the accounts, all the fund's accounts were taken off its website.  It doesn't matter what Trilogy's motivation was for removing it's Healthcare REIT's information, the result was that Trilogy discontinued disclosing its failure, so investors visiting Trilogy's website saw nothing more than a sanitized version of Trilogy.

Of course its failed PMMMF never made it to its website:
http://moneymagik.com/more_on_Trilogy_PMMMF.php

In its latest spiel, Trilogy says (in part), "We have been approached by former LM employees, lenders and unitholders who have serious misgivings about how the Income Fund and the assets in the Fund have been and are being managed."

I just wonder how much these former LM employees, lenders and unitholders "who have serious misgivings" know about Trilogy and the negative affect its had on the lives of thousands upon thousands of investors in the Trilogy PMMMF, Trilogy Healtchare REIT, and Trilogy Pacific First Mortgage Funds?

I'm guessing they didn't know too much at all.

..


----------



## ASICK (1 March 2013)

*You Can Dream*

I just know that investors in the LM funds want to know Trilogy keeps investors in the PFMF up to date.  Well, it's nearly FOUR MONTHS since we've last heard from them:  http://www.balmaintrilogy.com.au/

and I just know that you're all thinking an ICC is just the thing to keep investors abreast of the goings-on in the fund - so, have a little read of this:  http://moneymagik.com/bt_icc_duh.php

it was way back there before the PFMF's meeting of 1 September 2010:
http://www.smh.com.au/business/bonus-racket-twice-paid-for-a-single-job-20100830-1431p.html

when one of BT's ICC members abruptly left the ICC and had his super fund buy up $7m dollars worth of PFMF units at $0.30/unit - and boy, wasn't that a mistake .. to date, millions lost in capital, not to speak about lost income.

after that buy up by an ex-ICC member, BT amended the terms of membership of the ICC so that, among other things, members could no longer resign and then go and lose money by following Trilogy's advice about the prospects for the fund. (yes, I know what you're thinking, it should be to prohibit someone taking an advantage of the information spruked at ICC meetings - but, let's face it, the buy up was a failure)

you see, all the members had signed a non-disclosure agreement, so if they got the good oil (before the amendment), they couldn't share that good oil with ordinary members, so only ICC members had the opportunity to take advantage of that good oil - I really don't think BT was thinking about ICC members actually going out and losing millions.

So, what can you expect from an ICC? well, I think you should expect nothing, unless the ICC is not bound by non-disclosure and is free to communicate openly, and bound to communicate promptly with members.

As I understand it, the Premium Income Fund's investors committee isn't even approachable by members of the fund. 

Of course you can dream that an ICC is an advantage, but in my opinion history is telling me that your dream will not translate into a reality


----------



## ASICK (1 March 2013)

*BT'S ICC INDEPENDENT CHAIRMAN*

Darn, I forgot to mention the independent chairman of BT's ICC - it's none other than Ken Atchinson of Atchison Consultants:

http://www.balmaintrilogy.com.au/investor.aspx

"Introducing your Committee Chairman (Mr Ken Atchison)

Mr Ken Atchison has been appointed the independent chairman of the Investor Committee. Ken has been involved in financial markets since the early 1970s. After gaining significant experience in the management of investment portfolios, he moved to providing investment advice to superannuation funds. In the years prior to establishing Atchison Consultants in 2001, he was a senior asset consultant with the global firm Towers Perrin (now part of the Russell Group).

Ken's experience covers a broad range of areas within investment portfolio and business management. This includes advice on the setting up of investment management businesses, the choice of in-house or outsourced investment management arrangements, the setting of investment policy and structures for investment strategy, capital market analysis and investment manager research and selection."

No mention of Ken Atchison being the managing director of Atchison Consultants:

http://www.atchison.com.au/consultants.htm

And of course, no mention of Atchison Consultants and Trilogy:

http://moneymagik.com/crap_file.php

Gee, you guys might be lucky and have Ken as the independent chairman of your own little ICC!

Wouldn't that be a hoot?

By the way, controversy came early for Mr. Atchison:

http://www.smh.com.au/business/pepper-rumoured-to-be-on-the-table-20100309-pvrd.html?skin=text-only

As an afterthought - it really would be worthwhile to ask both Trilogy and LM to (in detail) set out the terms and conditions of membership of their respective proposed committees - importantly, members should ask how the members will be chosen - will they be elected by popular vote, or selected (as Trilogy/BT did in the PFMF)?


----------



## Irishdan (1 March 2013)

Hi All,

Have been off air for a while but have caught up with all that is going on on here. It seems that ABC are doing a 4 corners report on Managed investment schemes on Monday night called  "betrayal of trust" Might be worth a look
http://www.abc.net.au/4corners/


----------



## ASICK (2 March 2013)

*"Believe it or not"*



Irishdan said:


> Hi All,
> 
> Have been off air for a while but have caught up with all that is going on on here. It seems that ABC are doing a 4 corners report on Managed investment schemes on Monday night called  "betrayal of trust" Might be worth a look
> http://www.abc.net.au/4corners/




An excerpt from the "4 Corners" promo:

"In one case, Four Corners found a company that accepted investment funds, promising competitive returns, in a business that seemed like a winner."

I'd guess that's what the investors who invested $3,555,000 at $1.00 per unit into Trilogy's Healthcare REIT thought - after all, Trilogy spent nearly $500k in fundraising.  That's quite a lot of advertising.  Yes, those new investors in Trilogy's Healthcare REIT in 2009 must have thought they were winners too.

I'd take a punt and guess they never knew that they'd lost $1,315,350 ($3,555,000 * .37) the VERY moment they transferred the money to Trilogy's account.  I wonder if they even really understood that they'd lost their money when they received their first fund financial statement, be it the mid-term or end of financial period - after all, the financial statements are issued quite a number of months after the actual reporting periods.

Does anyone seriously think that investors would knowingly invest $1.00 for a $0.63 unit? (in 2009)

Does anyone seriously think that investors would knowingly invest $1.00 for a $0.60 unit? (in 2010)

That's the Trilogy Healthcare REIT : http://moneymagik.com/analysis_REIT.php

What do members say about these sorts of transactions? Dumb investors? or.. what?

Then there's Trilogy's PMMFF. (I've called this one the PMMMF - too many "M"s and "F"s - but I'll correct that)

The investor thought he'd hit a winning streak. He attended a Henry Kaye "Wealth Seminar" for free (family connections) - he registered his personal details at the seminar.  Some time after the seminar he received an offer in the mail:

http://moneymagik.com/pmmmf_letter_3_october_2003.jpg

The date of the letter was 3 October 2003 - the letter offered 18% but the punter had to reply by 10 October 2003.  The offer related to a mezzanine loan.  Now, this punter had been primed at the "Wealth Seminar", the chances that he's take up the offer was much higher than from a cold call.

[note: MDRN Investments Limited was renamed Trilogy Funds Management Limited]

Note this excerpt from Trilogy's letter of offer dated 3 October 2003:

"Please note that you need to complete this application form with the same detail that you have already completed on the Principal Mortgages Mezzanine Finance Cash Management registration form" 

What Trilogy didn't tell the punter was that the PMMFF's 2003 financials as at 30 June 2003 disclosed a subsquent event: on 29 August 2003 a receiver had been appointed to a $1m loan from the PMMFF.

http://moneymagik.com/pmmmf_subsequent_events.jpg

Trilogy was "not able to determine if the carrying amount of the loan is greater than the recoverable amount of the loan" - I'm sure you all realise that means Trilogy didn't know whether the loan was completely lost, or not.

Trilogy signed off on the PMMFF's 2003 financials on 29 September 2003.

http://moneymagik.com/pmmmf_mccarthy_29_september_2003.jpg

Remember, the punter was required to make his decision about the 18% just 11 days later.  He could not have known about the return (and the subsequent event) from ASIC before he mortgaged his home and invested with Trilogy at 18% in its Principal Mortgages Mezzanine Finance Fund. The subsequent event was not disclosed in the PDS and it was not disclosed in the letter of offer.

The punter had no previous knowledge of Trilogy - he's only known Henry Kaye.

Trilogy had a relationship with Laton Corporate Finance Pty. Ltd.

http://moneymagik.com/dee_why_2.jpg

Remember Henry Kaye and his seminars?

http://www.asic.gov.au/asic/asic.ns...+involved+in+Henry+Kaye+seminars?openDocument

"Batho was a director of Laton Corporate Finance Pty. Ltd. until January 2004"

Trilogy had a relationship with Laton Capital Group.

http://moneymagik.com/dee_why_laton.jpg

http://www.jenman.com.au/news_item.php?id=328

"Paul Batho was the general manager of Laton Capital Group"

I guess you've all got the gist of it now - what the punter thought had been a lucky day when he'd be able to able to attend the Henry Kaye spruik for free turned out to be the worst day of his life.  He'd received the letter of offer, mortgaged his home, and sent the $$$$ off to Trilogy.

What was the outcome?

http://moneymagik.com/dee_why_1.jpg

Now, I'll bet you won't find any of that on Trilogy's website.

and for reasons unknown, you'll never hear it from the SMH either.

"Believe it or not"


----------



## RODENT69 (2 March 2013)

Irishdan said:


> Hi All,
> 
> Have been off air for a while but have caught up with all that is going on on here. It seems that ABC are doing a 4 corners report on Managed investment schemes on Monday night called  "betrayal of trust" Might be worth a look
> http://www.abc.net.au/4corners/




Irishdan    on the ball, I have it on good authority that LM gets a mention in this 4 Corners program, so its certainly worth a look


----------



## ASICK (3 March 2013)

*On Being Out of Date*

http://www.peterdrake.com.au/news/l...carlet-pimpernel-of-funds-management-article/

I was struck by the feeling that there's something weird and out of touch with Drake's spruik. Especially when he defends what has proven to be the indefensible (the "hold 'em, or fold 'em" plan).

It seems to me that Peter  Drake would have been better off if he'd have let the matter rest.  It also seems to me that the "Scarlet Pimpernel" article didn't have the legs to change perceptions, rather it probably acted to reinforce them.

Actually I thought the article was more funny than serious - but then, I'm not an investor with him, oppps... in the fund which is managed by the company which he owns (as if that's not obvious).

Who else thinks he might be better served if he hit the "DELETE" button on the spruik?


----------



## ASICK (3 March 2013)

RODENT69 said:


> Irishdan    on the ball, I have it on good authority that LM gets a mention in this 4 Corners program, so its certainly worth a look




ah, you're taking some of the fun out of it Rodent.


----------



## mapc (3 March 2013)

*Re: On Being Out of Date*



ASICK said:


> http://www.peterdrake.com.au/news/l...carlet-pimpernel-of-funds-management-article/
> 
> I was struck by the feeling that there's something weird and out of touch with Drake's spruik. Especially when he defends what has proven to be the indefensible (the "hold 'em, or fold 'em" plan).
> 
> ...




I agree, I would even suggest that he hit the delete button on his website if it is not going to follow the title, his personal view on finance.  It seems to me to be just another avenue for posting LM news.  I am not sure who is advising him, but as a brand building exercise for Peter Drake the site doesn't seem to make sense.  All it has done for me is question the intregity of LM with a story about closed funds and then a video, not even presented by Peter, talking about how successful their funds have been with no mention of the closed funds.


----------



## ASICK (3 March 2013)

Mapc, you raise an interesting point, who is advising him? Is he following his own advice?  Yipes !!   As I see it, he's not doing himself any favours.  I don't know what happens to many of these managers, but they really do seem to be living in a world of their own.

I wanted to comment on the spruik but I pressed the wrong button - and the whole spruik was posted - Yipes !! (again)

I'll comment in another post.


----------



## ASICK (3 March 2013)

ASICK said:


> Mapc, you raise an interesting point, who is advising him? Is he following his own advice?  Yipes !!   As I see it, he's not doing himself any favours.  I don't know what happens to many of these managers, but they really do seem to be living in a world of their own.
> 
> I wanted to comment on the spruik but I pressed the wrong button - and the whole spruik was posted - Yipes !! (again)
> 
> I'll comment in another post.




An extraordinary spruik – really extraordinary.

$0.73/unit is passe – the unit price is $0.58/unit and that's only achieved with 100% LVRs on ALL loans, with ALL loans in default for 90 days or more.  Notably he refers to 4 June 2012, a time before the big drop to $0.59/unit as at 30 June 2012.

I'm really not sure why the word “conservative” was used in respect of the fund's impairments – at least to me, it makes no sense at all – does it mean that LM didn't impair the fund as much as they could have?

For the life of me, I just can't even see the point about bothering about his home and the number of bathrooms -  who cares? Maybe he just likes a “dip (in one), dip (in another), dip ...”?

He says that the LMFMIF has performed well relative to its peers, but apart from Trilogy's FMF, I don't know of any fund reporting LVR even near the 100% in the most recent LMFMIF RG45.  So, if we're to compare “apples with apples”, which funds are peers to the LMFMIF?

I'm not sure about this “moral” responsibility he speaks to? I looked, but couldn't find it in the Corporations Act.

I'm a little puzzled about the word, “client” and “client confidentiality” - who is the client of whom? Is he getting a tad confused with investors in the fund being “clients”, and financial advisors being “clients”, but I ask, “clients of whom?”? -  I can't see any “client” relationships between any entities mentioned and LM. Of course, if I'm wrong, then I'm pleased (as always) to stand corrected.

I'm sure investors would like to see the “policy of continuous improvement” of the “appropriate corporate governance” - and I wonder if there's anything in there that means anything of value to investors?

He says that he and the directors have “always” been visible and available to investors, but just not at the meeting in Sydney – a bit like the Captain of the HMS “Pinafore”, perhaps it's “mostly always”.

I'm not sure about “ASIC's strict criteria for Responsible Entities to ensure that LM policies meet industry best practice” - I'm curious about ASIC's strict criteria – does anyone know where one might find them?

Oh boy – that  constitutional amendment about the “innovative and unique liquidity mechanism” - it's not often that a vote's carried, a constitutional amendment is made (?), and then, the  whole shooting match is disregarded – but, it happened in the LMFMIF.

There's not much point to make comment to the rest of it. The whole spruik seems to be directed to the court case, and because many of the facts relate to a time well and truly past, it all makes no sense at all.

I agree with Mapc,  pressing the “DELETE” key on his whole site might be doing himself a big favour – if he keeps on posting like that, members might really start to have concerns.


----------



## prawn_86 (4 March 2013)

Info appearing on Four Corners tonight:

http://www.abc.net.au/news/2013-03-...-for-potentially-misleading-investors/4550414


----------



## ASICK (4 March 2013)

*Too Much of the Bottle?*



prawn_86 said:


> Info appearing on Four Corners tonight:
> 
> http://www.abc.net.au/news/2013-03-...-for-potentially-misleading-investors/4550414




Maybe I'm wrong, and after all, this is only my opinion, but if I was to sue someone, say, like the SMH, I don't really think that I'd put a video online that'd have the potential to cause me the slightest amount of problems.

And then if I put the video online, I don't really think that I'd go out and promote it.

OH! by the way, it seems the Peter Drake's taken off Mr. Bottle's video - poor ol' Mr. Bottle.

ABC reports, (in part), "At a recent seminar in Israel, the European development manager for LM Investment, former Goldman Sachs banker Simon Bottle, told investors and financial planners: "We are highly regulated in Australia. We are regulated twice. We are regulated as a private bank, and regulated as a fund manager.""

http://www.peterdrake.com.au/ (geez, have I missed it?)

Is this a case of too much of the bottle?

I confess that I'm perplexed, actually totally perplexed as to why Peter Drake decided to open a website in the first place.

One has to shake one's head in absolute disbelief.


----------



## ASICK (4 March 2013)

*Trilogy's Free Ride From the SMH*

Here we go again - Trilogy gets a free ride.

http://www.smh.com.au/business/watchdog-eyes-mystery-man-drakes-funds-firm-20130304-2ffuo.html

The battle has certainly become personal - and who's surprised? Michael West's smiling face on a zoomed-up image of the "Scarlet Pimpernel" - to me, it's mocking, to say the least.  A red flag to a bull? (so to speak)

Michael West says, "Property funds management group, Trilogy Capital, is seeking to remove LM as manager of its flagship fund, the frozen LM First Mortgage Income Fund.", and even though he knows perfectly well about Trilogy's past (and present) failures, he gives them a free ride.

If Mr. West was so concerned about members of the LMFMIF, one would have thought that, as well as bringing issues in relation to LM to investors' attention, he'd also bring Trilogy's failures to members' attention - but no, he doesn't seem to want to report anything negative about Trilogy.

Even the ABC gives Trilogy a free ride - ah! the ABC probably doesn't know any better.

Oh well, let's wait - it might just turn out to be a "Four Part Trilogy Tragedy":
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


----------



## mapc (4 March 2013)

prawn_86 said:


> Info appearing on Four Corners tonight:
> 
> http://www.abc.net.au/news/2013-03-...-for-potentially-misleading-investors/4550414




Wow could things get any worse...... one good bit of news in today's Gold Caost Bulletin is confirmation that capital repayments will start this week and according to the article LM has been able to sell down assests at a faster rate as the market had improved. Lets hope for those trusting investors, at a better price as well. I am not sure if the article is online I saw it in the printed version of the paper.


----------



## Tyler Durden (4 March 2013)

Great episode.
If half of Australia watched it I'd be happy.


----------



## banco (4 March 2013)

After watching four corners I think some of the retirees affected need to watch Harry Brown. 

http://www.youtube.com/watch?v=I2S3SraFmI0


----------



## ASICK (4 March 2013)

*Media Bias*



ASICK said:


> Here we go again - Trilogy gets a free ride.
> 
> http://www.smh.com.au/business/watchdog-eyes-mystery-man-drakes-funds-firm-20130304-2ffuo.html
> 
> ...




I didn't think much of the program - sure, it pointed to the impact on investors, but it didn't do anything to expose the mechanisms that allow these failures to affect investors so badly.  I was wondering if the head of ASIC was going to burst into a smile, he was half-way there.

Peter Drake's performance wasn't too bad - he did well not to return for a further interview, and even at the end of the LM segment, the report more or less said that "Madison" could be a winner.  wow!

It's quite the shame that these reporters strike for superficial heart-rendering reports, rather than getting to know the substance of what the real problems are - the mechanisms that allow the impact on investors.

I think that Michael West has an axe to grind and seems perfectly happy to gratiutously throw in a line about Trilogy in his SMH article without warning LM investors about Trilogy's failures.    Michael West is clearly biased - there's no other word for it - as far as this matter goes, he's a lop-sided storyteller slamming Drake and LM, while letting Trilogy off with a free pass.

I think LM will fare quite well out of the episode.


----------



## ASICK (5 March 2013)

*"4 Corners"*

If you're disappointed with last night's "4 Corners", why don't you let the ABC know how you feel?

http://www.abc.net.au/4corners/contact.htm


----------



## Edgen (5 March 2013)

Does anyone have a link to the 4 corners program as i live overseas and did not get to see it , tried to get it up on there wesite but says they only show it in Australia . Much apreciated if someone could post a link .


----------



## ASICK (5 March 2013)

Edgen said:


> Does anyone have a link to the 4 corners program as i live overseas and did not get to see it , tried to get it up on there wesite but says they only show it in Australia . Much apreciated if someone could post a link .




I think the only way you'll be able to do it is to get/buy yourself a reliable (and fast) Australian proxy server.


----------



## ASICK (5 March 2013)

*THE INVESTIGATIVE JOURNALIST*

A PFMF unitholder phoned Michael West (SMH) and asked him a very simple question:

"Why haven't you done an article on the performance of Trilogy in the City Pacific fund?"

Interestingly, Mr. West responds, "I'm assuming you're coming from the Sullivan (camp)" (Phil Sullivan is the ex-CEO of City Pacific Limited, the original responsible entity for the fund)

Michael West couldn't take on face value that the unitholder was simply concerned about his losses in the PFMF under Trilogy's management,  rather he assumed the unitholder was associated with Sullivan merely because he was questioning Trilogy's management !

Oh, and yes, Sullivan is suing three Fairfax entities in defamation.


----------



## ASICK (6 March 2013)

*Media Bias*

http://www.moneymagik.com/

In so many cases, there's two sides to a story - we're in trouble when the media purposefully and self-interestedly only reports one.


----------



## seamisty (6 March 2013)

Edgen said:


> Does anyone have a link to the 4 corners program as i live overseas and did not get to see it , tried to get it up on there wesite but says they only show it in Australia . Much apreciated if someone could post a link .




http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm


----------



## No Trust (6 March 2013)

*Re: On Being Out of Date*

Very odd indeed, when a bunker mentality starts to set in. Look at Equititrust and McIvor and you start to see a pattern emerge.
Given the failure of mortgage funds on the Gold Coast and the fact that LM's funds have been frozen did they expect not to be scrutinised by the media ?? The *more scrutiny the better *as far as I am concerned...




ASICK said:


> http://www.peterdrake.com.au/news/l...carlet-pimpernel-of-funds-management-article/
> 
> I was struck by the feeling that there's something weird and out of touch with Drake's spruik. Especially when he defends what has proven to be the indefensible (the "hold 'em, or fold 'em" plan).
> 
> ...


----------



## Loiner (6 March 2013)

mapc said:


> Wow could things get any worse...... one good bit of news in today's Gold Caost Bulletin is confirmation that capital repayments will start this week and according to the article LM has been able to sell down assests at a faster rate as the market had improved. Lets hope for those trusting investors, at a better price as well. I am not sure if the article is online I saw it in the printed version of the paper.




It's been a while since we've had any good news in this whole debacle, however small, but still welcome. I've had a look at the Bulletin website but couldn't find any reference to the article you mentioned. Sure it wasn't another LM spruik inserted by LM as an advert? I'm just getting so cynical about it all these days.

So the market is alleged to have improved - at least that provides some hope to us investors. I am still highly sceptical about how much the market values had collapsed anyway. My IFA told me that the funds were a safe investment, all secured by Aussie mortgages, so that must be true! Sure, and GFC apart, real values are never what the experts assert, but what can be actually realised from a sale. But if there are no buyers for a period, so no sales, that cannot mean the value is zero! How much could LM Investment have been manipulating the fund under management values for their own ends? Is it possible that we have seen high fund values maintained for deducting management fees; which are then rapidly reduced for disposal of assets to a bunch of their Gold Coast property mates; and which recover when the real property purchasers return to the market? I was just wondering, but I think there must be some smart analysts out there who could ask some very probing questions of all LM's advisors, consultants, agents, accountants and auditors.

I was always very suspicious about the "hold 'em or fold 'em" mechanism proposed by LM. There never seemed to be any indication of which assets would be sold and which retained, or how those decisions would be made. Quickly dispose of the poorer assests (akin to a fire sale, promised as would never happen) to clear out the selling investors, then keep the better assets for longer term and those management fees again. I'm glad it never got to that.

Lets's see what comes out of LM next.


----------



## ASICK (6 March 2013)

*Re: On Being Out of Date*



No Trust said:


> Very odd indeed, when a bunker mentality starts to set in. Look at Equititrust and McIvor and you start to see a pattern emerge. Given the failure of mortgage funds on the Gold Coast and the fact that LM's funds have been frozen did they expect not to be scrutinised by the media ?? The *more scrutiny the better *as far as I am concerned...




Agreed.


----------



## Loiner (6 March 2013)

*Re: LM Investment Management  -  No Trust*



Tyler Durden said:


> Great episode.
> If half of Australia watched it I'd be happy.




As an overseas investor, I'd be happy if half of the world watched it. 
Having fleeced too many home market retirees, LM turned its' attentions to the international market, initially regional expats but more lately to European and even the Islamic markets. I hope that the rest of the world does more research than I did and first has a good look around the web for LM Investment Management before endangering their life savings.

The 4 corners programme and a short ABC News item has been picked up by many Aus newspapers. If you google 'LM Investment Investigation' today there are pages and pages of local newspapers running the story. SMH and the like bring much needed (bad) publicity to these dodgy Gold Coast managers and in particular some the dealings of LM Investments and their broken funds. It may be too late for us current investors, but may save some others out there who are about to be conned. Eventually it may even have ASIC sort out their mechanisms which allow all this to happen again and again.


Just how do they get away with it? _"Aw yeah, no but, well mate those funds fell over but our other ones are real good."_ 
The world needs to know that the Gold Coast has more sharks on dry land than it does in the bloody sea!


----------



## ASICK (6 March 2013)

*Re: LM Investment Management  -  No Trust*



Loiner said:


> As an overseas investor, I'd be happy if half of the world watched it.
> Having fleeced too many home market retirees, LM turned its' attentions to the international market, initially regional expats but more lately to European and even the Islamic markets. I hope that the rest of the world does more research than I did and first has a good look around the web for LM Investment Management before endangering their life savings.
> 
> The 4 corners programme and a short ABC News item has been picked up by many Aus newspapers. If you google 'LM Investment Investigation' today there are pages and pages of local newspapers running the story. SMH and the like bring much needed (bad) publicity to these dodgy Gold Coast managers and in particular some the dealings of LM Investments and their broken funds. It may be too late for us current investors, but may save some others out there who are about to be conned. Eventually it may even have ASIC sort out their mechanisms which allow all this to happen again and again.
> ...




I have it on reasonable authority that the very trigger for the "4 Corners" episode was the fact that the link to Peter Drake's webpage was posted on this very thread - otherwise no one would have been the wiser about the video -  one would have though he'd watch the video before posting it - I guess he didn't.  

These forums have much more effect on the "powers that be" than many imagine.


----------



## mapc (6 March 2013)

Loiner said:


> It's been a while since we've had any good news in this whole debacle, however small, but still welcome. I've had a look at the Bulletin website but couldn't find any reference to the article you mentioned. Sure it wasn't another LM spruik inserted by LM as an advert? I'm just getting so cynical about it all these days.
> 
> So the market is alleged to have improved - at least that provides some hope to us investors. I am still highly sceptical about how much the market values had collapsed anyway. My IFA told me that the funds were a safe investment, all secured by Aussie mortgages, so that must be true! Sure, and GFC apart, real values are never what the experts assert, but what can be actually realised from a sale. But if there are no buyers for a period, so no sales, that cannot mean the value is zero! How much could LM Investment have been manipulating the fund under management values for their own ends? Is it possible that we have seen high fund values maintained for deducting management fees; which are then rapidly reduced for disposal of assets to a bunch of their Gold Coast property mates; and which recover when the real property purchasers return to the market? I was just wondering, but I think there must be some smart analysts out there who could ask some very probing questions of all LM's advisors, consultants, agents, accountants and auditors.
> 
> ...




Hi Loiner.  Yes the article was genuine, from memory it was the start of the Business Section and quite prominent.  Unfortunately not all the paper is online.


----------



## mapc (6 March 2013)

*Re: LM Investment Management  -  No Trust*



ASICK said:


> I have it on reasonable authority that the very trigger for the "4 Corners" episode was the fact that the link to Peter Drake's webpage was posted on this very thread - otherwise no one would have been the wiser about the video -  one would have though he'd watch the video before posting it - I guess he didn't.
> 
> These forums have much more effect on the "powers that be" than many imagine.




One would also think that LM would get presentations of the nature of that video checked by their lawyers and not just trust salespeople to get it right.  Maybe Peter is a little too trusting of his staff.


----------



## No Trust (6 March 2013)

*Re: LM Investment Management  -  No Trust*

The Equititrust Thread has been *extremely effective *in getting to the bottom of various issues. "*King Con*" being one of them. Equititrust tried to deny and hide its lending to him, however all was revealed on the thread much to the chagrin of McIvor and Equititrust... 

ASIC, the banks, *National Media *and many others were tuned into the Equititrust Thread which proved effective in getting the truth out on a daily basis...

McIvor wrote about the Media etc in his idiotic Novella, "Strange Animals Come Down to Drink" but did not mention Aussie Stock Forums once... I guess that was to painful to bear...

Read the story in the Courier Mail its quite amusing  

http://www.couriermail.com.au/busin...-words-escalates/story-e6freqmx-1226013111852



ASICK said:


> I have it on reasonable authority that the very trigger for the "4 Corners" episode was the fact that the link to Peter Drake's webpage was posted on this very thread - otherwise no one would have been the wiser about the video -  one would have though he'd watch the video before posting it - I guess he didn't.
> 
> These forums have much more effect on the "powers that be" than many imagine.


----------



## No Trust (7 March 2013)

Drake now has an issue with ASIC and rightly so... Given the 4 Corners episode and ASIC's toothless tiger approach to date, this fund will be *properly scrutinised from now on* by both the regulator and the media, which is *about time*... Give me a break, but how many funds from the dodgy Gold Coast have to go broke before something is done about it. The time to act is *now* and if LM is clean, make them prove it in a very public way, if not bear the consequences as did Equititrust, simple as that...


----------



## RODENT69 (7 March 2013)

Dear  all    Trilogy just sent this out by Email


I note below that Roger Bacon is still referring to Trilogy as a significant Unit Holder - despite that fact that I have written to him about his earlier document -as we no its us investors that are the unit holders NOT Trilogy!!!!

I don't know if this is of help to overseas investors who can view the Four Corners program, maybe there is a link here?

 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Unitholders in the LM First Mortgage Income Fund (and its feeder funds) and the LM Managed Performance Fund may be interested in the latest episode of ABC’s Four Corners program ‘A Betrayal of Trust’, which aired on Monday 4 March 2013 on ABC1.
The 45 minute program focuses on the money lost by investors in managed investment schemes and debenture issues and the way in which these are managed and regulated.
In particular we draw your attention to the part of the program that focuses on the LM First Mortgage Income Fund and the current financial position of the LM Managed Performance Fund (beginning at 23.27 minutes and ending at 37.36 minutes).
Please note - Four Corners is an independent current affairs program broadcasted by the ABC, a statutory authority constituted and operating under the provisions of the Australian Broadcasting Corporation Act 1983.

 	View the program	 

 	View online	abc.net.au/4corners 

ABC iview


 	Watch replay	Saturday 9 March 8.00pm ABC News 24	 


Key findings of the investigation:
•	In marketing its funds to offshore investors and advisers, the Trustee and Manager of the LM Managed Performance Fund, LM Investment Management Limited (LM) promotes itself as a ‘conservative and highly-rated private bank’ that is ‘regulated twice’ - as a private bank and as a fund manager. Australian Securities and Investments Commission (ASIC) Chairman Greg Medcraft claims to have no prior knowledge of these assertions and indicates that ASIC will be having ‘a closer look’.

•	Maddison Estate, a 118 hectare bushland site located at Pimpama on the Gold Coast (and the flagship asset of the LM Managed Performance Fund) was purchased for $89 million at the top of the market. Loans against the asset now total $250 million with a small first mortgage to Suncorp and a very large second mortgage loan of more than $240 million from the LM Managed Performance Fund, via companies controlled by LM CEO and Chairman Peter Drake.

•	Notwithstanding this, the LM Managed Performance Fund is still raising capital from overseas investors. With Maddison Estate in its infancy and no land having been sold, Four Corners questions how distributions to investors in the LM Managed Performance Fund are being paid. LM confirmed to Four Corners that capital from new investors in LM Managed Performance Fund along with cash and income from other assets in the fund is being used to pay returns to existing investors.

The program also explores the collapse of Banksia Securities and Prime Trust.
Further information
Unitholders may be also interested in watching extended interviews with either ASIC Chairman Mr Greg Medcraft or former ASIC special investigator Niall Coburn, which are also available from the Four Corners website abc.net.au/4corners
As a significant unitholder in the LM First Mortgage Income Fund, we remain committed to gathering information that allows us to critically assess the management and performance of our Fund and the alternate management option. We will continue to update you in relation to our findings. Please email us at updates@trilogyfunds.com.au
with your name and Account ID to register your interest in receiving further updates. If you have any queries please feel free to contact Client Services on 1800 176 559 or for New Zealand, David Jansen on +64 21 675 244 or jansendw@gmail.com

Yours sincerley

Rodger Bacon
Executive Deputy Chairman 
Trilogy Funds Management


----------



## ASICK (7 March 2013)

*A Warm & Fuzzy Feeling About LM*

The only tinsy bit of teeny weeny info that Bacon left out was at the end of the LM segment when "4 Corners" says, "... if the Gold Coast economy booms then Maddison could be a winner - but it's not without risk".

Now, that's not all bad, is it? A media event that intended to be a real expose ending like that?  I guess "4 Corners" might be protecting its "butt"?

I think Bacon might be making a mistake in directing investors to the video, it might leave investors with a warm and fuzzy feeling about LM.

Wouldn't that be ironic?


----------



## sht4branes (8 March 2013)

You can't change an animal's nature and investing in Gold Coast property funds is like giving swine access to pavlovas: it will just be real messy. I invested in the currency protectd fund as a low risk investment. LM is just what it is expected: BS artists fleecing investors with ill considered investments and high fees.

If you have sht4branes and invest in this company, you get what you deserve. I have no bitterness towards LM as they are what they are and the outcome is highly predictable. If any one had really researched the product and looked at the potential fee structures etc it would be most unlikely that most of us would have invested with them. But we don't get commissions for investing with them, we get fees.

However,my view towards the independent financial advisor who I was referred to by the Medical Assurance Society is another matter. I would have never heard of LM if my IFA had not advised me to invest in them.

How bad does an IFA need to be before you are likely to successfully litigate against them, has anyone else gone down this route and how did you go?


----------



## ASICK (11 March 2013)

*"Useful Idiots"*



sht4branes said:


> ... LM is just what it is expected: BS artists fleecing investors with ill considered investments and high fees. If you have sht4branes and invest in this company, you get what you deserve. I have no bitterness towards LM as they are what they are and the outcome is highly predictable. ...




It's the "wolf in sheep's clothing" that I'd be more concerned about.  

Pushing aside the pavlovas Sht4branes, I for one am pleased to see that you're not bitter.  Investors are nothing more than "useful idiots" if they react to anger.  We all got into these funds thru ignorance (and perhaps greed), but we should be mildful that there's worse out there if we make decisions based on anger and/or revenge.


----------



## mapc (12 March 2013)

ASICK said:


> Mapc, you raise an interesting point, who is advising him? Is he following his own advice?  Yipes !!   As I see it, he's not doing himself any favours.  I don't know what happens to many of these managers, but they really do seem to be living in a world of their own.
> 
> I wanted to comment on the spruik but I pressed the wrong button - and the whole spruik was posted - Yipes !! (again)
> 
> I'll comment in another post.




Hi Asick  According to to Ben Butler in today's SMH CBD it seems "Drake hired so called mayor maker - Graham Staerk as a lobbyist in November...to help with its stoush with Trilogy...".  According to the article it seems Graham has been wining and dining journalists all over the country.  Maybe something is yet to surface but it seems LM may have wasted their money, especially if Peter's new social platform was his idea.  

Unfortunately for those without access to SMH hard copy I can't find the article online.


----------



## ASICK (12 March 2013)

*The "Social Platform"*



mapc said:


> Hi Asick  According to to Ben Butler in today's SMH CBD it seems "Drake hired so called mayor maker - Graham Staerk as a lobbyist in November...to help with its stoush with Trilogy...".  According to the article it seems Graham has been wining and dining journalists all over the country.  Maybe something is yet to surface but it seems LM may have wasted their money, especially if Peter's new social platform was his idea.
> 
> Unfortunately for those without access to SMH hard copy I can't find the article online.




Ah ! Mapc, were you just too shy to publish it? 

http://www.smh.com.au/business/supa-centre-sale-an-offtrack-win-20130311-2fwcm.html?skin=text-only

We should keep in mind that the SMH has an axe to grind, after all, Peter Drake has them down at the NSW Supreme Court in Sydney.   [remember Michael West's recent one-eyed report about LM]

And that "social platform" (as you call it) ... whose ever idea it was, it  wasn't a good one.

oh dear .. the things some folks do.

as to the comments about "pirates" - it depends on one's perspective.


----------



## mapc (12 March 2013)

*Re: The "Social Platform"*



ASICK said:


> Ah ! Mapc, were you just too shy to publish it?
> 
> http://www.smh.com.au/business/supa-centre-sale-an-offtrack-win-20130311-2fwcm.html?skin=text-only
> 
> ...




Hi Asick. Not too shy, just not so good at finding things, it would seem. 

Pleased you looked for those who wish to read it.


----------



## ASICK (12 March 2013)

*Raiders*

http://en.wikipedia.org/wiki/German_auxiliary_cruiser_Kormoran

"The conversion work included installation of camouflaged weapons,"

"The raider was fitted with six 15-centimetre (5.9 in) SK L/45 guns as primary armament: two each within the forecastle ("1" and "2") and quarterdeck ("5" and "6"), and one each fore and aft ("3" and "4" respectively) on the centreline.[13] These guns were World War I-vintage; gun "3" had been removed from the battlecruiser SMS Seydlitz in 1916.[13] The forecastle and quarterdeck guns were hidden behind counter-weighted false hull plates, while each centreline gun was concealed by fake cargo hatch walls.[13]

The secondary armament consisted of five 2-centimetre (0.79 in) anti-aircraft guns.[13] Two were located on the forecastle, two on the after funnel deck, and the fifth in the quarterdeck.[13] All five were hidden by the structure of the ship until they were raised clear on hydraulic platforms.[13] There were plans to fit four 3.7-centimetre (1.5 in) anti-aircraft guns, but only two ex-army anti-tank guns could be scrounged; these were installed on Kormoran's superstructure, hidden by sheet metal panels.[13][14] Kormoran was also equipped with six torpedo tubes: two dual launchers on the upper deck, and a single underwater tube on each side.[13] The underwater tubes were amidships, angled at 135 ° from the bow, and could only be fired if the raider was travelling at less than 3 knots (5.6 km/h; 3.5 mph).[13] Kormoran carried a payload of mines, with an LS-3 fast boat carried inside[clarification needed] No. 6 cargo hatch for minelaying.[5]

The raider carried two Arado Ar 196 floatplanes for reconnaissance.[5][15] Although Detmers wanted a catapult, such equipment would have spoiled any merchant ship disguise used by Kormoran; instead, the planes were stored inside No. 5 cargo hatch, and were launched and recovered from the water with the assistance of hoists.[5][16] Mechanical problems, difficulties in moving the aircraft from hatch to water and back, and a lack of opportunities meant that only seven flights were made during the ship's operational deployment.[15]"

And, so will come the raider "Trilogy", hidden in its "hull" will be:

http://moneymagik.com/
http://moneymagik.com/trilogy_more_on_ryan.php
http://moneymagik.com/analysis_REIT.php
http://moneymagik.com/more_on_Trilogy_PMMFF.php
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf
http://moneymagik.com/yardy_yardy_yah.php
http://moneymagik.com/litigation.php
http://moneymagik.com/

and if it gets thru members' "defences", then you'll all soon see just what the raider "Trilogy" is really capable of.


----------



## RODENT69 (12 March 2013)

For LMFMIF investors- re "Capital Distribution"

I am advised by LM and confirmed by Trilogy that approx $1.7m was paid by LM to Trilogy on last Friday for Unit Holders in the LMWFMIF.

I am further advised that a net distribution will be made to Unit holders by Trilogy ASAP.

As I have said before don't expect to much, maybe only around 1c/unit.  It would be helpful if we all had the WFMIF Audited Statement  so we could confirm the actual numbers of unit holders in the WFMIF


----------



## ASICK (13 March 2013)

RODENT69 said:


> ... I am further advised that a net distribution will be made to Unit holders by Trilogy ASAP ...




Given the uncertainty of capital repayments from LM, I wouldn't be surprised if more than 10% is withheld for fund operating expenses (which includes Trilogy's fee).  The more spread out repayments of capital are, the bigger percentage of each repayment such expenses will be.


----------



## ASICK (13 March 2013)

*Trilogy  -  Lack of  confidence*

http://www.financialobserver.com.au/articles/unitholders-cry-foul-over-trilogy-s-management

Kate Kachor gives PFMF investors the voice to respond to Trilogy's nonsense about an investor letter which was sent to a selection of PFMF investors.

What a breath of fresh air when compared to Michael West's biased reporting.

Thank you Ms. Kachor.


----------



## ASICK (13 March 2013)

"This is from Trilogy's latest spruik to investors, "• Notwithstanding this, the LM Managed Performance Fund is still raising capital from overseas investors. With Maddison Estate in its infancy and no land having been sold, Four Corners questions how distributions to investors in the LM Managed Performance Fund are being paid. LM confirmed to Four Corners that capital from new investors in LM Managed Performance Fund along with cash and income from other assets in the fund is being used to pay returns to existing investors." (emphasis added)

Now, before we all get carried away, read this excerpt from the recent SQM independent assessment of Trilogy's Monthly Income Trust:




"distribution income will be sourced from a variety of different sources" ---> "application monies", that's NEW investment, "Cash holdings", and "Loans repaid by borrowers" - geez, can anyone pick the difference between LM and Trilogy in regard to these matters?

What's all that about "fund managers in glass houses"?"


----------



## ASICK (13 March 2013)

*Perspective*

http://moneymagik.com/analysis_REIT.php

What really is remarkable is that an entity such as Trilogy is taken even a tad seriously - the fact that it is is a sad indictment of the managed fund business.

Cast your minds back to 2009 (when Trilogy was running for the PFMF) - Trilogy needs money for its Healthcare fund.  The fund's PDS discloses that Trilogy'll spend about $64k on fundraising.  And let's be clear, fundraising was the mechanism by which Trilogy would spend the fund's resources (money) in order to lure new investment into the fund in order to (among other things) allow Rojacan Pty. Ltd. (a company associated with Rodger Bacon) to extract its loan (seed money) out of the fund (after earning its quite healthy return at investors' expense).

In actual fact, instead of $64k, Trilogy spent *nearly $500k *of investors' money and as a result, Rojacan was free and away.

$3,555,000 of application monies flowed into the fund - and 3,555,000 more units were issued.  Sad thing for the investors was that those $1.00 units were only worth $0.63/unit (current value 30 June 2008).

There is only ONE single reason why 2009 was a relatively good year for Trilogy's Healthcare REIT (unit price as at 30 June 2009, $0.60/unit), and that's because those new investors took the majority of the hit by losing 0.37 * $3,555,000 the moment they invested: That's an instantenous loss of $1,315,350, or $0.37 lost for EVERY $1.00 invested in 2009 (not accounting for the further $0.03/unit suffered as at 30 June 2009).

It's quite easy to see that Rojacan Pty. Ltd (the company associated with Rodger Bacon) did well - it made its "pretty penny" and escaped, but not so the punters.

After all that fundraising, keen-to-invest punters sent their hard-earned to Trilogy - Trilogy issues a $1.00 unit for EVERY $1.00 of those hard-earned dollars [each unit is only worth $0.63].  Visualize the investor sending the money - visualize Trilogy issuing the units - visualize the current value of the units - paint the mental picture in your mind.- *visualise the immediate loss.*

Now, if you've got that mental image - bring that image to mind EVERY time you read something from Trilogy.

Perspective really does make a difference.


----------



## RODENT69 (13 March 2013)

For the specific attention of Mysteryman and other LM WFMIF investors- ASICK  your views are sought also please

I wrote here recently that LM has paid Trilogy approx $1.7m for WFMIF investors as a Capital Distribution.  

When asking Trilogy some questions about this distribution I  was advised this by Trilogy -QUOTE  ...if it is to be treated as income it will affect certain classes of unit holders (i.e. the overseas bond holders...who have their income capitalised into the unit price of their bond as opposed to receiving a cash distribution)....whereas if it is a return of capital we can distribute the payment to all unit holders (i.e. both bond holders and normal unit holders)....UNQUOTE

I later Questioned Trilogy re what was meant by Bond Holders they said QUOTE  --There are a number of international investors who have invested in the LM Wholesale Fund via a bond (refer to the URL which provides a unit price update and includes a large number of bond holders (http://www.trilogyfunds.com.au/site/assets/files/LMWF Unit Price_Final.pdf)  UNQUOTE  I think this chart is posted here at  Number 412   

Maybe I am confused, or just don't understand? but it was my understanding that only two  investment options existed, one for the Flexi Acct, and other for Fixed Term Investments ie 12m, 2y,3y 4y and more  I don't remember anything re bonds?
Can anyone explain this.  

Trilogy knows full well this is a Capital Distribution 

Of more interest also in the Chart/Table note the different Unit Prices for Investment Types -Bond   0.89c to 0.97c  verses others at 0.59c   what does this mean?

In checking the WFMIF PDS I cannot find any reference to investing in Bonds at all. Maybe its just me but why would there be a Unit Price for Bonds significantly greater than the Unit price for other investors ,say in the Flexi Account, considering the WFMIF only invests in the FMIF

Any views welcomed


----------



## ASICK (13 March 2013)

*Trilogy at the Helm*



RODENT69 said:


> For LMFMIF investors- re "Capital Distribution"
> 
> I am advised by LM and confirmed by Trilogy that approx $1.7m was paid by LM to Trilogy on last Friday for Unit Holders in the LMWFMIF.




There's a problem for you here.  I don't believe LM is entitled to tell investors in the LM WFMIF anything unless authorised to do so by Trilogy.  Therefore neither Trilogy nor LM are obligated to disclose the document which accompanied (or explained) the payment of $1.7m to the LM WFMIF.



RODENT69 said:


> ... Trilogy knows full well this is a Capital Distribution ...




With respect, nobody (but Trilogy) knows what's in its corporate "mind", and if the aforesaid letter isn't disclosed, then you'll all be in the dark about this matter.   I think that the problem is arising out of these so-called "distributions" that LM has been spruiking about (in my view, the Clayton's Distributions). 

I don't think Trilogy's clearly stated that it's winding down the LM WFMIF (Crikey, shouldn't it be called the Trilogy WFMIF?). 

It seems to me, that in the end, whether the monies are distributions (or income) or capital repayments, money should be repaid to investors and that a clear declaration should be made by Trilogy that the Trilogy WFMIF is being wound up at a rate mostly determined by the capital repayments from the LM FMIF.

I wonder how long Trilogy's been musing over this matter?


----------



## ASICK (13 March 2013)

*"The Snake That Bites All"*

Some excerpts from the "4 Corners" episode "Betrayal of Trust":
http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm

"KERRY O'BRIEN: A billion dollar betrayal of trust. How safe are your investments? Welcome to Four Corners. And welcome to the sometimes treacherous world of management investment funds. Australians are getting better at saving for the future because with a rapidly aging population, they know they have to if they want any guarantee of a vaguely comfortable and dignified retirement.

What many of them didn't know and have discovered to their cost is just how little protection their money has in some parts of the investment community. Australian banks are amongst the most tightly regulated in the world. Managed investment schemes attracting many billions of dollars of ordinary peoples' savings are not.

One estimate puts the money lost through these schemes in the past five years at up to $15 billion - that's billion. Tonight's program will shock you at the ways a person's hard earned savings can be legally lost. The story will also ask if governments are failing in their duty to provide adequate regulatory protection."

"NIALL COBURN, FORMER ASIC SPECIAL INVESTIGATOR: The estimate is easily between ten to fifteen billion since the GFC. That's- that's my estimate. It might even be higher than that. The reality is that ordinary Australians have lost their money in these managed investment schemes so the law is not good law.

I don't know why the law has not changed. Maybe it's not in the interests of the chosen few, I don't know."

"TONY MCGRATH, BANKSIA RECEIVER: Mm. And its name Banksia probably implies some form of strength that simply is not there. Look the reality is, this sector - which takes deposits from individuals and pays interest rate on them - they're not banks. They are mortgage funds. They take money from the public, they on-lend it.

They're operating in a zone which is slightly riskier than a bank and there's many good reasons as to why this sector exists as it does. But the problem is that they are not regulated by APRA, they don't have the same capital requirements and so when there is a continued economic downturn these sorts of businesses come under increased pressure."

"NIALL COBURN: If you were driving a fast car through any city doing a 150 k, you would be immediately stopped by the police, and there's not a police force in Australia that would let that driver drive that car in the morning.

Why is it different when you come to managed investment schemes where people have lost billions of dollars and yet these directors can walk away unscathed - and some of them go around the corner and start their own shop again? It has got to be wrong."

Could it be the case that the "4 Corners" espisode had an impact on those who have deposits with funds like Trilogy's Monthly Income Trust?   It woudln't surprise me if it did.  If existing investors began to get nervous, and if the pool of punters eager to get into such funds dries up, then funds such as Trilogy's Monthly Income Trust could freeze (become non-liquid), even if they were otherwise sound.   To my mind, it's clear that investor sentiment is deeply swayed by the media.

Of course, while the episode was of interest to investors in frozen funds, I think it would have had more of an impact of those already investing in the sector.

Interestingly, after sending out spruiks in the mail to investors in the PFMF, since the airing of "Betrayal of Trust", Trilogy has now resorted to emailing members of the PFMF.  After all, as disclosed in the SQM independent assessment of the fund discloses that the loans in Trilogy's fund are capitalized (with accrued interest) - that is, no cash inflow from the loans.  If there's no alternative source for CASH, such as new investment, then how does Trilogy pay income distributions to members? and if there's a demand by investors for return of capital, that's a recipe for disaster.

Are the letters and (now) emails to PFMF investors a sign of "Betrayal of Trust" impacting on Trilogy?

Could this be a sign of media impact: "The Snake That Bites All"


----------



## Mysteryman (13 March 2013)

Hi Rodent, Asick et al. I received something similar from Trilogy:

'There is a slight technical issue which needs to be resolved....the balance sheet for the LM Wholesale Fund includes a liability for unpaid income distributions...however the distribution just received appears to be a return of capital......we need to obtain advice from the Ernst & Young audit partner as to wether the distribution is income or capital in the hands of unit holders....(a meeting is scheduled for this week)

...if it is to be treated as income it will affect certain classes of unit holders (i.e. the overseas bond holders...who have their income capitalised into the unit price of their bond as opposed to receiving a cash distribution)....whereas if it is a return of capital we can distribute the payment to all unit holders (i.e. both bond holders and normal unit holders)....'

I'm not offering excuses for Trilogy, but maybe the balance sheet from LM (as mentioned) is cause for confusion over what the payment represents. Unsurprisingly, LM may not be going overboard to ease things for Trilogy.

On your second point concerning the 'Global Portfolio Bond', I am at a complete loss to offer any explanation. Like you, I can find no mention of it anywhere, but feel it is worth pursuing with Trilogy and possibly LM. Will see what I can find out. Of course, if the annual financial report for the wholesale fund were available, there might be some mention made, but there is no mention in the 2008 pds.


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## ASICK (13 March 2013)

Mysteryman said:


> ... I'm not offering excuses for Trilogy, but maybe the balance sheet from LM (as mentioned) is cause for confusion over what the payment represents. Unsurprisingly, LM may not be going overboard to ease things for Trilogy. ...




Hi Mysteryman, 

I'm curious as to why you add, "Unsurprisingly, LM may not be going overboard to ease things for Trilogy."? 

Aren't you, by way of your comment, doing just as you say you're not, that is, "offering excuses for Trilogy"?

I think a fair reading of Trilogy's letter would lead one to conclude that the problem relates to accounting matters, not to an act of obfuscation by LM.

"There is a slight technical issue which needs to be resolved....the balance sheet for the LM Wholesale Fund includes a liability for unpaid income distributions...however the distribution just received appears to be a return of capital......we need to obtain advice from the Ernst & Young audit partner as to wether the distribution is income or capital in the hands of unit holders....(a meeting is scheduled for this week)"


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## RODENT69 (14 March 2013)

Mysteryman   you and I have the exact same doc from Trilogy, I just did not  include all the text 

FYI  I am glad another investor is confused by this Bond Reference, I have asked BT to investigate, their initial reply last night says they are also confused as I am/we are. More re this later

BT has some additional material I provided re the Unit Price differences in the Trilogy Table, which they are investigating. I also have the 2008 PDS and all Supplementary PDS's and cant find anything relating to so called Bonds?

In relation to Unit Price differences I offer this --- I ask myself why do these Bond Investments Options in the chart have a Unit Price significantly greater than my investment@ 0.59c per unit given that the WFMIF only invests in the FMIF, maybe I am just dumb.

Even if “Bond Investors” had their Income Capitalised  as Trilogy says , given investors have not received income for several years how could their Unit Price (as per the Chart/Table be much greater than mine in the Flexi Account?


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## ASICK (14 March 2013)

*WF unit price / interst*

By reference to the LMFMIF, the $ attributable to unitholders is $288,980,628.
The unit price is $0.59
Therefore the number of units on issue is ($288,980,628 / $0.59) = 489,797,675

By reference to page 31 of the return, the WF held an investment of $87,470,115
The unit price is $0.59
Therefore the number of units held by the WF in the FMIF is ($87,470,115 / $0.59) = 148,254,432
(30.27% of the total fund)

If interest was reinvested in the WF, then more units would have been issued by the WF.

Trilogy will decide how the $1.7m is dealt with in the fund.  My guess is that it'll be dealt with as a return as capital and distributed to all investors on a pro-rata basis (according to each member's unitholding), and as a consequence, any unpaid interest (capitalized) will be lost - or alternatively, paid out in priority to the pro-rata capital repayment.

http://www.trilogyfunds.com.au/site/assets/files/LMWF Unit Price_Final.pdf

Let's see ..


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## RODENT69 (14 March 2013)

ASICK    I refer to your Posting #468

I qualify these comments firstly by saying none of us has access so far to the LMWFMIF 2012 Audited return, so we are a bit in the dark. I am not sure all your figures in posting #468 are correct because

Firstly Trilogy thinks in their doc's that the WFMIF represents about 20% of the FMIF, I tend to agree with this % not 30.27% as you say

Irrespective of the division of Assets in $ by Units = 0.59c  the Units attributable to Investors for the WFMIF as at 30 June 2011 were approx  95,851,492. 

I dont know what may have changed for 2012, but I suspect the Units numbers will be approx the same, therefore 95.851m units  divided by your 489,797,675 units figure for the FMIF (2012) would make the Units for WFMIF = about 19.5% 

At the time LM said that 95,851,492 units were attributable to unit holders in the WFMIF (2011) it said the Asset value was $73,472,020


----------



## ASICK (14 March 2013)

*LMFMIF Financial Report dated 30 June 2012*

[you're right... I looked at the wrong fund .. yipes.. sorry]


----------



## ASICK (14 March 2013)

*Correction*

Corrected Posting

By reference to the LMFMIF, the $ attributable to unitholders is $288,980,628.
The unit price is $0.59
Therefore the number of units on issue is ($288,980,628 / $0.59) = 489,797,675

By reference to page 31 of the return, the WF held an investment of $72,164,922
The unit price is $0.59
Therefore the number of units held by the WF in the FMIF is ($72,164,922 / $0.59) = 122,313,427
(25% of the total fund)

I've maintained for some time that there's an error in either the % or the $ for the feeder funds - and I still maintain that view.  That's why I say "By reference to" because I really don't know which figure is correct. In my view, the return is defective.

If interest was reinvested in the WF, then more units would have been issued by the WF.

Trilogy will decide how the $1.7m is dealt with in the fund.  My guess is that it'll be dealt with as a return as capital and distributed to all investors on a pro-rata basis (according to each member's unitholding), and as a consequence, any unpaid interest (capitalized) will be lost - or alternatively, paid out in priority to the pro-rata capital repayment.

http://www.trilogyfunds.com.au/site/assets/files/LMWF Unit Price_Final.pdf

For an example of what you might receiver per unit, say 12% is deducted for expenses, that'd leave $1.5m, or $0.01227 per unit. If you've 100k units, then you'd receive $1,227 (or whatever your calculator tells you). [that's if there's no payout of interest to those holding bonds in priority to capital repayments to all]

[just an estimate]

please see the graphic on my post # 372 and note the amended graphic on the link:
http://www.moneymagik.com/LMFMIF_at_a_glance.jpg


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## Mysteryman (14 March 2013)

Rodent, perhaps you didn't know, but it is possible to receive and send private messages on this forum. Try looking at your inbox.


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## ASICK (15 March 2013)

*LMFMIF - Financial Return as at 30 June 2012*

http://www.moneymagik.com/LMFMIF_at_a_glance.jpg

Gross assets: $343.97m
Net Assets (attributable to unitholders) = $288.98m [item 6 on page 9]
http://moneymagik.com/FMIF-financials-30-06-12.pdf

The Feeder Funds [page 31]

LM Currency Protected Australian Income Fund:  $87.47m  -  24.75% of scheme
LM Institutional Currency Protected Australian Income Fund: $6.70m - 1.9% of scheme
LM Wholesale First Mortgage Income Fund: $72.16m - 20.42% of scheme
Total:  $166.33m - 47.07% of scheme

If $166.33m = 47.07% of the scheme, then x (more) = 100% of the scheme.
So, the scheme's value (working from 47.07% of the scheme as disclosed) = $166.33m * 100 / 47.07 = $353.37m

Remember, Gross Assets = $343.97m, and Net Assets = $288.98m
So, $166.33m in NOT 47.07% of either of gross assets, or net assets (although it is closer to Gross assets).

47.07% of the scheme (net assets) = $136.02m, NOT $166.33m

It seems clear (at least to me) that the framers of the return worked off the wrong scheme value ($353.37) instead of net assets (attributable to unitholders, $288.98m)

Therefore, it's reasonable to assume that with regard to the Feeder fund values on page 31 of the return, the % values are correct, while the $ values are erroneous (see the first link on this post).

That being the case, if the wholesale fund holds 20.42% of the scheme, then it holds .2042 * $288.98m, or $59.01m in equity, or ($59.01m / $0.59) = about 100m units.

If the full $1.7m was returned to investors on a pro-rata basis (according to unitholding), then each unit would receive about $0.017.  A $100k unitholding would receive $1700.  So, it should be easy to estimate how much doesn't end up in investors' pockets.

[disclaimer - we shouldn't rule out that given the $$ values on page 31 are erroneous, so might be the % values]


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## ASICK (17 March 2013)

*Re: LMFMIF - Financial Return as at 30 June 2012*

[ignoring the Darcy holding of 169 units]

Total class B unit = 224.86m (2012 financials, page 22)

Total units on issue = $288.98m / $0.59 = 489.8m units (by reference to page 22, total units = 487.29m) 

If the % are correct, then Feeder Fund Total should equal Class B holdings.

24.75% of scheme = 121.23m
1.9% of scheme = 9.31m
20.42% of scheme = 100.02m
Total (47.07% of scheme) = 230.36m

47.07% of scheme =  230.54m
Class B holdings = 224.86m

Overall Error = about 2.5%

So, the % seems to be a tad erroneous also, but a lot closer than the $ figures ($136.02 v. $166.33, or 18.2% error (not accounting for % error)).


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## ASICK (18 March 2013)

*LMFMIF - as at 30 June 2012*

The 47.07% of the fund.

http://moneymagik.com/FMIF-financials-30-06-12.pdf

Page 21:

Class B = 224.862m

Total units on issue = 198.32m  + 288.98m = 487.3m

so, the total for the feeder funds (class b) cannot exceed 46.14% of the net assets attributable to unitholders;

and the total $ of the feeder funds (class b) cannot exceed .4614 * $288.98m, $133.35m.

I'm really surprised that the 2012 financials for the LMFMIF stand today.

How did these errors get past the auditor?

Why hasn't LM rectified these accounts?

ASIC doesn't give a hoot - does anyone?

What else about the return is defective?

Note: the table of page 21 might be a tad confusing to some - it's actually a table of unitholdings (at $1.00) and then the impairment ($192.32m) is subtracted to give the net assets attributed to unitholders ($288.98m) - the $288.98m is the value which represents .59% of the fund (that equates to about $0.593/unit).

It's really a table which finally discloses equity, but equity for the total of the sub-totals of the various unitholdings for the three classes (a, b, and c), each expressed at $1.00 units held.

I'm a little confused because $1.00 units seem to have been issued (and redeemed), but the value of the unit when the issuance/redemption took place doesn't seem to have been $1.00 - something else to think about?  How does one issue $1.00 units when the current value is less than $1.00 - is that fair?


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## ASICK (18 March 2013)

*LMFMIF - as at 30 June 2012*

The reference in my previous posting to page 21, should be to page 22.


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## ASICK (18 March 2013)

This is how they say unit price is calculated ("the formula") - (net assets atttributable to unitholders / total units on issue): Excerpt from page 19 of the 2012 accounts:
http://moneymagik.com/FMIF-financials-30-06-12.pdf




Unit price as at 1 July 2011 - $0.806/unit 

Unit price as at 1 January 2012 - $0.72 (?)




I'm curious about the table on page 22 of the financials.  It appears to be a table of contributed equity for each class with a resultant unitholder net equity figure obtained by subtracting/adding the movement in unitholder equity from/to the sum of the sub-totals of each class.

What I find troubling is that, say for Class B, there is no separate table for units redeemed and/or issued at current value (by use of the formula).

If unit price was $0.806/unit, then for each $1.00 paid, $1.00/$0.806 units, or 1.24 units must be redeemed (1.39 units at $0.72/unit): not a $1 = 1 unit relationship.

Likewise, for issuance of units, for every $1.00 invested, 1.24 units must be issued (1.39 units at $0.72/unit): not a $1 = 1 unit relationship. 

When the formula is applied, the lower the unit price, the greater the number of units redeemed/issued per $1.00 paid out/paid in.

Yet, the table reflects an equality - a one dollar per one unit relationship.  no variance is disclosed for the net (about) 14.6m * $1.00 units issued at $0.806/unit or $0.72/unit in class B.  

It seems to me that the table is one of convenience, rather than one of exactness.

To make the table exact, equity contributions based on current value (by applying the formula) instead of $1.00 would have to be disclosed, which they are not.

It's a neat table, but I'm not convinced it's an accurate one.


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## No Trust (20 March 2013)

LM appoints Administrators... Surprise surprise... Usual modus operandi of this breed of Gold Coast Funds... 

Look out for some cheap Gold Coast Beachfront Property... 

These ego maniacs look like they are finally being brought to account... 

Another one on the scrap heap of the spivy Gold Coast... 

Adios amigos


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## ASICK (20 March 2013)

*LM FMIF as at 30 June 2012*

http://moneymagik.com/FMIF-financials-30-06-12.pdf

The table on P.22 shows whole units per $1.00 - it doesn't show that a number of those units were transacted at the current value. In other words, the units redeemed and issued during 2012 were transacted at prices below the unit price (on balance, 14.559m were issued).   The prices at which these transactions took place are:

(if there were more than one transaction within each group, then the unit price is an average of those transactions).

*Redemptions:*
P. 11 - Payment for Redemption of Units: $3,600,345
P. 22 - Units issued: 4,497,306
Unit price = $3,600,345 / 4,497,306 = $0.806/unit
Units redeemed per $1.00 paid  = 1 / 0.806 = 1.241 units per $1.00 paid.

*New units Issued on Reinvestment:*
P. 21 - Distributions paid/reinvested: $12,218,354
P. 22 - Units issued for reinvestments: 16,052,233 (Class B & C)
Unit price = $12,218,354 / 16,052,233 = $0.7611/unit
Units issued per $1.00 reinvested = 1 / 0.7611 = 1.314 units per $1.00 reinvested.

*New units issued (no-reinvestment):*
P. 11 - Receipts for issue of units: $2,312,382
P. 22 - Units issued: 3,004,385
Unit price = $2,312,382 / 3,004,385 = $0.7697/unit
Units issued per $1.00 received = 1 / 0.7697 = 1.299 units per $1.00 received.

This is what I meant by saying that the table on P. 22 doesn't truly reflect what happened within the fund.  The table has to be read in conjunction with PP. 11 and 21. 

While the number of units in the fund increased, these new units were issued at a sub-par value.


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## ASICK (20 March 2013)

No Trust said:


> LM appoints Administrators... Surprise surprise... Usual modus operandi of this breed of Gold Coast Funds...
> 
> Look out for some cheap Gold Coast Beachfront Property...
> 
> ...




Good morning No Trust.   

Is there a link to go with what you've posted?

Typically, LM does not appoint administrators, rather it does the work itself for all those extra $$$$.

See page 5:
http://moneymagik.com/FMIF-financials-30-06-12.pdf

$4,817,414 - "Loan management fees paid to the responsible entity for loan management and receivership services provided by the responsible entity on behalf of the scheme in replacement of appointing external receivers.  These fees are charged directly to the borrower to facilitate futher possible recovery."

Of course, if the loans are already impaired then recovery of these monies will be impossible.  The $4,817,414 is gone - and the only winner is LM - making money from bad loans that LM itself made.* And on top of that, LM made $9,103,864 in management fees.*

A frozen fund is surely a "Manager's Delight".


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## No Trust (20 March 2013)

ASICK, LM have appointed administrators to themselves due to concerns of solvency... Reported this morning in the Gold Coast Bulletin. No link yet, however is in the main paper and iPad Edition...

Very similar to Equititrust, I suspect to try and restructure and buy some time... 



ASICK said:


> Good morning No Trust.
> 
> Is there a link to go with what you've posted?
> 
> ...


----------



## No Trust (20 March 2013)

http://www.stuff.co.nz/business/ind...-campaign-blamed-for-voluntary-administration

Reported in the Financial Review as well... This cannot be good for investors... Another one bites the dust...


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## ASICK (20 March 2013)

*The Clayton's Change of Manager*



No Trust said:


> ASICK, LM have appointed administrators to themselves due to concerns of solvency... Reported this morning in the Gold Coast Bulletin. No link yet, however is in the main paper and iPad Edition...
> 
> Very similar to Equititrust, I suspect to try and restructure and buy some time...




http://www.stuff.co.nz/business/ind...-campaign-blamed-for-voluntary-administration

The Clayton's Change of Manager: The change of manager you have when you don't have a change of manager.

Well, no - in my view, not at all like Equititrust.  I think it's a move to push Peter Drake (and LM) out of the picture.  I've been of the view for some time that the whole LM thing's got very personal, especially the law suit against SMH, and that talk about bathrooms. LM hasn't fared well, and the only option on the horizon is Trilogy: not a good situation for investors.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

If LM didn't have the $$$$ (NTA), it would have to relinquish its managership of the remaining LM funds.  Clearly from the BIG $$$ its earned these past years, I don't think its suffering a lack of $$$$s.

Now the voluntary administrators will make decisions about fund assets, and that's a good thing.  Decisions will be made "outside the box" (so to speak), and at arm's length to LM's directors.

From my perspective, I think investors might see this as a "sea change", and a much better option than either of Trilogy or LM (as it was).

This willl be especially important when it comes to dealing with second mortgages and first mortgages behind which LM's related parties have second mortgages.  The voluntary adminstrator should take away any perception that LM is self-interested.

I think it will be a good thing, and the really best possible outcome for investors since it should put the Trilogy matter to rest.

I would have thought that LM would have passed any potential voluntary administrator past other interested parties, say, the ANZ bank.


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## No Trust (20 March 2013)

ASICK, lets agree to disagree on this one... This *has all the hallmarks of Equititrust *in LM appointing their own "Administrator"... Call me a skeptic, however I believe the strategy between LM and its administrator has already been formulated and it has *nothing to do with any benefit for investors*... This is all about saving the founder and his precious beachfront bolt holes, and adjoining Skateboard park...

Drake may complain about a smear campaign, however the *performance of the funds *and the *greed* in terms of fees *speaks volumes*. Its a tough world out there and if you don't perform *you don't survive*...

In situations like this, there is usually *a lot more going on in the background *which hasn't been fully disclosed "as yet"...






ASICK said:


> http://www.stuff.co.nz/business/ind...-campaign-blamed-for-voluntary-administration
> 
> Well, no - in my view, not at all like Equititrust.  I think it's a move to push Peter Drake (and LM) out of the picture.  I've been of the view for some time that the whole LM thing's got very personal, especially the law suit against SMH, and that talk about bathrooms. LM hasn't fared well, and the only option on the horizon is Trilogy: not a good situation for investors.
> 
> ...


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## ASICK (20 March 2013)

No Trust said:


> ASICK, lets agree to disagree on this one... This *has all the hallmarks of Equititrust *in LM appointing their own "Administrator"... Call me a skeptic, however I believe the strategy between LM and its administrator has already been formulated and it has *nothing to do with any benefit for investors*... This is all about saving the founder and his precious beachfront bolt holes, and adjoining Skateboard park...
> 
> Drake may complain about a smear campaign, however the *performance of the funds *and the *greed* in terms of fees *speaks volumes*. Its a tough world out there and if you don't perform *you don't survive*...
> 
> In situations like this, there is usually *a lot more going on in the background *which hasn't been fully disclosed "as yet"...




Here's LM's release:
http://www.international-adviser.com/ia/media/Media/LM-Investment-Management-statement.pdf

Well, No Trust, we have to agree on the facts, which are:

*Equititrust Limited (EL):*

Voluntary administrator appointed.
No external criticism - no need to please/perform.
EL is NOT managing the fund.
EL has little to no $$$ in the bank.
EL has NO income stream.
EL's Income fund is being wound up by a court appointed receiver.

*LM Investment Management Limited (LMIML):*

Voluntary adminstrator appointed.
External crticism - need to please/perform - needs to please investors in the funds.
LMIML IS managing funds.
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream.
LMIML funds are not being wound up externally.

Appointing a voluntary adminstrator does not protect Peter Drake from anything - it merely takes the control away from the board of LM and places it in the hands of an adminstrator.  Let's face it, if investors aren't satisfied with the outcome, then LM is out, administrator or not.  The administrator makes no difference.

Yes, and as you correctly say, "Its a tough world out there and if you don't perform *you don't survive*", so when you comparre and contrast the facts (above), you'll note that the voluntary administrator appointed to LM has to perform, or LM will suffer - the same cannot be said for the administrator appointed to EL.

Clearly the purpose of appointing an administrator is to take control of both LM and LM's funds away from LM's board and place it in the hands of an independent entity - one which will have to perform to the best of its ability.

Although I'm not an investor in any of LM's funds, I see this as positive and a much much better option to a takeover by Trilogy.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

By the way No Trust, Trilogy's fees from the Pacific First Mortgage Fund are at about $20m, and they returned a whole $0.0875/unit back to investors in nearly FOUR YEARS - and the only option for LM investors was Trilogy!  Yipes !!!!!

I think the voluntary adminstrator is a great option for investors, much better than either of LM or Trilogy.

PS.  I wouldn't be surprised to see some legal action in the near future - "Whilst the creditor issues rest with LMIM and are quarantined from the Funds, *the Funds need to be shielded from any ensuing reputational damage.*"(emphasis added)

http://www.international-adviser.com/ia/media/Media/LM-Investment-Management-statement.pdf


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## ASICK (20 March 2013)

*LM - Voluntary Administrator*

I'm told the procedure is that the adminstrators will take over complete control.  The directors will work with the adminstrators until the administrators have a 'handle on things', and then all the directors, including Peter Drake will stand down.


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## ASICK (20 March 2013)

*MW in fine form*

http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html


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## No Trust (20 March 2013)

*Re: MW in fine form*

I agree, however he did predict all of this some time ago, read the article below, he was absolutely right:

THE GOLD COAST TRAIN WRECK

http://www.smh.com.au/business/the-gold-coast-train-wreck-20080912-4f4n.html




ASICK said:


> http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html


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## ASICK (20 March 2013)

*Re: MW in fine form*



ASICK said:


> http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html




"Now that administrators have been appointed to the RE of this fund – and investors should bear in mind that these voluntary administrators have been appointed by the directors of LM – the true value of the units is unlikely to be so high."(emphasis added)

I'm curious about the emphasised portion of this excerpt.  I mean, does it really matter what the value spruiked is? All that really matters is just how much comes back to investors' pockets.  We investors in other damaged funds have learnt that lesson - the value of units is the basis of a manager's fees, but from experience, it's got nothing to do with what's left for investors.

What do other members think? Everyone seems to be so quiet of late.


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## No Trust (20 March 2013)

Well that's the Gold Coast cleaned up now, lets hope that these spiv's like McIvor never resurface...


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## ASICK (20 March 2013)

*Re: MW in fine form*



No Trust said:


> I agree, however he did predict all of this some time ago, read the article below, he was absolutely right:
> 
> THE GOLD COAST TRAIN WRECK
> 
> http://www.smh.com.au/business/the-gold-coast-train-wreck-20080912-4f4n.html




I don't think anyone was surprised: it was an accident waiting to happen, but the first "wreck" is not necessarily the last, it might only be the first of two "wrecks".

The PFMF lost 52% under City Pacific's management, and then lost a further 56% of what was left under Trilogy's management.

I think this fund is lucky that an administrator has been appointed - but, then only time will tell.

If Trilogy gets the fund, I'm predicting a "Four Part Trilogy Tragedy"

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


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## Irishdan (20 March 2013)

No Trust said:


> Well that's the Gold Coast cleaned up now, lets hope that these spiv's like McIvor never resurface...




Unfortunately can't agree. They are like weeds in fertile soil, they will just keep reappearing


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## No Trust (20 March 2013)

ABC News coverage and mooted Class Actions which will stymie any hope of LM coming back from the dead. As with Equititrust as soon as the class action was mooted no insurer would touch them... Looks like Drake has entered the *perfect storm*... This is where reality sets in and the beachfront mansions must go...

Edifices to huge egos and nothing more... 

http://www.abc.net.au/news/2013-03-...administration-after-4-corners-expose/4583470


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## ASICK (20 March 2013)

*BS - There More of it Than You Think!*



No Trust said:


> ABC News coverage and mooted Class Actions which will stymie any hope of LM coming back from the dead. As with Equititrust as soon as the class action was mooted no insurer would touch them... Looks like Drake has entered the *perfect storm*... This is where reality sets in and the beachfront mansions must go...
> 
> Edifices to huge egos and nothing more...
> 
> http://www.abc.net.au/news/2013-03-...administration-after-4-corners-expose/4583470




and such is not limited to managers of managed investment schemes, as is not BS and spruiks:

I note the "ambulance chasers" (Piper Alderman) last at Equititrust, have appeared on the scene - all full of what? hope?

It's so easy to spruik about litigation to recover losses in managed funds, but it's altogether another thing to pull it off.

Look at the MFS legal action, seemingly going nowhere - in fact, IMF have given up chasing the directors.

What's happening down at Equititrust No Trust?

Look at the PFMF litigation:
http://www.moneymagik.com/litgation.php 

After spending $2m on the supreme court public examination, IMF walked away.  Trilogy sues four individuals for $60m after spruiking years before that the insurance was only worth $20m.  Does anyone think that IMF would have walked away even if there was a small chance of a successful $20m claim?

The ABC likes to gloat, but I think "A Current Affair" did a better job last night - I especially liked the car park confrontation.

If anyone thinks the BS is limited to the PDS you all signed up on, then you've got a lot to learn.

It all sounds so easy, but it's not.


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## Garpal Gumnut (20 March 2013)

From the SMH a damning indictment.

http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html



> It is estimated that up to $15 billion in savings has been blown up in mortgage funds in Australia, much of it by Gold Coast entrepreneurs such as Drake.
> Advertisement
> The spiel was simple: invest with us in property. Look at our 8 per cent returns. Can’t go wrong with property – we are talking ‘bricks-and-mortar’. Drake’s salesmen even used words such as ‘bank-like’.
> But it was never property that his clients were really buying. As the global financial crisis loomed, they were buying loans to property developers – often associates of Drake and even Drake’s own companies – loans in highly leveraged funds.
> ...




Lessons

1. It is very unwise to invest in mortgage funds.

2. Financial advisers are not to be trusted unless paid on an hourly basis, if at all.

gg


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## ASICK (21 March 2013)

*"Beverly Hillbillies"*

http://www.lmaustralia.com/Download...lting-Appointed-Voluntary-Administrators.aspx

All of a sudden, it's Trilogy v. FTI Consulting.

All of a sudden, Trilogy looks more like the "Beverly Hillbillies"


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## bigheadache (21 March 2013)

ASICK said:


> LMIML IS managing funds.
> LMIML IS $$$ healthy (it has to be to keep its lincence)
> LMIML has a really good income stream.
> LMIML funds are not being wound up externally.
> ...




I'm not sure why you think LMIML is $$$ healthy with a good income stream. I thought have thought it would be pretty obvious that a business that actually was $$$ healthy with a good income stream would not be calling in an administrator. Sounds more like having heaps of BDMs and offices around the world was quite an extravagance. 

Also.. I'm not sure if you quite understand the role of an administrator. The administrator is there to look after the interests of the creditors of LM, not the unitholders of the fund.  Administrators are never long term REs. They'll look to either fix up the business and return LM to RE duties, or if they feel the business is not fixable, they will move to appoint a new RE.


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## ASICK (21 March 2013)

bigheadache said:


> I'm not sure why you think LMIML is $$$ healthy with a good income stream. I thought have thought it would be pretty obvious that a business that actually was $$$ healthy with a good income stream would not be calling in an administrator. Sounds more like having heaps of BDMs and offices around the world was quite an extravagance.
> 
> Also.. I'm not sure if you quite understand the role of an administrator. The administrator is there to look after the interests of the creditors of LM, not the unitholders of the fund.  Administrators are never long term REs. They'll look to either fix up the business and return LM to RE duties, or if they feel the business is not fixable, they will move to appoint a new RE.




Hi, nice to see you bigheadache.  

About the $$$:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"All licence conditions of the Responsible Entity have been and continue to be met, and there has been no breach in this regard. The financial requirements (Net Tangible Assets) of the Responsible Entity licence remain in order. The Funds are unit trusts, the assets of which are separate and segregated from those of LMIM."

And of course, there's the (quite considerabale) cash flow generated by (1) management fees, and (2) receiver fees.  

As to the role:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"The Voluntary Administrators will be working with senior LM investment personnel to optimise investor outcomes."

http://www.lmaustralia.com/Download...lting-Appointed-Voluntary-Administrators.aspx

In relation to the role of the administrator:
"The Board of LMIM advised that the appointment of FTI Consulting was made after full consideration of its obligations as a company and its duties to ensure it acts in the best interests of investors in the LM Funds."

Yes, the administrator will have to make a lot of decisions - who knows what the future is? I certainly don't.

However, given the choice of LM (as it was), and Trilogy (as it is), the outcome (as I see it) is the best in the circumstances.

I think the real problem was with Peter Drake's LM - that was the LM that was struggling, but if I can differentiate LM (the company) from Peter Drake's LM, then the company (LM) is in good order and needs management from someone from "outside the box" to resolve the issues that had clearly become too personal.


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## bigheadache (21 March 2013)

ASICK said:


> Hi, nice to see you bigheadache.
> 
> About the $$$:
> 
> ...




Rather than quoting press releases from LM verbatim, I'd suggest you think about it critically instead of buying into the LM spin. 

Again, if everything is hunky dory, why would you call in an administrator? How many healthy businesses do you know have all of a sudden decided to call in an administrator? You only call it in if there is a question of solvency. Directors become personally liable and criminally liable for insolvent trading. Any inkling of such, they've got to call in an administrator. The implications can be extreme. Knowing how most debt covenants work, I imagine all of LM's debts fall due now as an implication. You'd have to also wonder what the debt covenant on Deutsche's facility says now that the RE is under administration. 

As for the role of the voluntary administrator, of course LM will say as such. Here is what the role of an administrator actually is
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Voluntary_administration_guide_for_creditors.pdf/$file/Voluntary_administration_guide_for_creditors.pdf

Clearly the role of the administrator is to act in the interests of the creditors. It's no different for administration of any other company. 

Also, I don't quite understand your assertion that there are effectively 2 LMs. How can there be 2 LMs, if LM has only 1 effective shareholder?


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## RODENT69 (21 March 2013)

It doesn't  pay to have a few days of at golf, what a lot to catch up on going through all the postings and Newspaper articles.


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## ASICK (21 March 2013)

"Rather than quoting press releases from LM verbatim, I'd suggest you think about it critically instead of buying into the LM spin."

You suggest what you need to suggest - but, for what it's worth, I try, to the best of my ability to think critically about every issue I put my mind to. I most certainly do not buy into anybody's spin. You might note that one of the quotes comes from FTI consulting.

Perhaps what's been said isn't to your liking, but it's no more than one should expect to be reasonably said in the circumstances.  I'm sure that ASIC would have LMIM under a microscope at the moment, and if the company wasn't able to carry out its duties are RE of the various funds, then I'm sure ASIC would be the first to let us know.

"Again, if everything is hunky dory, why would you call in an administrator? How many healthy businesses do you know have all of a sudden decided to call in an administrator? You only call it in if there is a question of solvency."

Well, LM stated (in part), "Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

I can't anything being avoided about the reasoning for the calling of the administrator.  I mean, where's the suggestion everything is "hunky dory"?

"Directors become personally liable and criminally liable for insolvent trading. Any inkling of such, they've got to call in an administrator. The implications can be extreme."

Yes, of course.

"You'd have to also wonder what the debt covenant on Deutsche's facility says now that the RE is under administration."

The fund, not LM, provides security for the Deutsche facility, and LM is in the capable hands of an experienced administrator.  Perhaps there's no problem at all.  To date, none has been disclosed.  

"As for the role of the voluntary administrator, of course LM will say as such. Here is what the role of an administrator actually is
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Voluntary_administration_guide_for_creditors.pdf/$file/Voluntary_administration_guide_for_creditors.pdf"

Thanks.

"Clearly the role of the administrator is to act in the interests of the creditors."

Yes.

"It's no different for administration of any other company."

ah! but it is, the administrator is also caught up with Corporations Act s. 601FC, in particular subsection (1)(c):
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

In relation to $$$, and your suggestion that debts may now fall due, the income stream from the LMFMIF alone was $9,103,864 (Management Fees) and $4,817,414 (receiver fees) - I couldn't imagine any creditor wanting to see the end of the continuous flow of "gold" into LMIM. 

 LM also mentioned the LMFMIF itself, and I'm not surprised, 100% LVR for every loan, each loan being 90 days (or more) in default.

Doubtlessly, there are problems to work out, but with the $$$s coming in from the fund (providing it remains RE), it seems to me that LM is bound to get creditor support.

"Also, I don't quite understand your assertion that there are effectively 2 LMs. How can there be 2 LMs, if LM has only 1 effective shareholder?"

I'm surprised, but I'll have to live with that.


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## bigheadache (21 March 2013)

ASICK said:


> I can't anything being avoided about the reasoning for the calling of the administrator.  I mean, where's the suggestion everything is "hunky dory"?




You made the insinuation that everything was going great when you said 



ASICK said:


> LMIML IS $$$ healthy (it has to be to keep its lincence)
> LMIML has a really good income stream.




I'm just suggesting that clearly things are so sweet.



ASICK said:


> The fund, not LM, provides security for the Deutsche facility, and LM is in the capable hands of an experienced administrator.  Perhaps there's no problem at all.  To date, none has been disclosed.




LM is the RE and is responsible for managing the fund. it's not uncommon for business loans to fall due immediately in the case of default of a separate loan or administration/receivership of the company, even if payments are up to date. I'm only asking the question as I wouldn't have the foggiest what the debt covenant of the deutsche facility is like, but it wouldn't be a surprise if one of the covenants is that the loan falls due immediately should the RE go under liquidation/receivership/administration.    



ASICK said:


> ah! but it is, the administrator is also caught up with Corporations Act s. 601FC, in particular subsection (1)(c):
> http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html




I've already covered this. Administrators are not long term REs. They are usually accountants, not investment people. They will either fix up LM and hand back RE duty to LM or if they can't fix it, move to appoint a new RE. They won't be managing the funds themselves for any meaningful time. Actually, if the experience of timbercorp and Great Southern is anything to go by, someone else will call a meeting to replace the RE if this administration runs for too long. 



ASICK said:


> In relation to $$$, and your suggestion that debts may now fall due, the income stream from the LMFMIF alone was $9,103,864 (Management Fees) and $4,817,414 (receiver fees) - I couldn't imagine any creditor wanting to see the end of the continuous flow of "gold" into LMIM.
> 
> LM also mentioned the LMFMIF itself, and I'm not surprised, 100% LVR for every loan, each loan being 90 days (or more) in default.
> 
> Doubtlessly, there are problems to work out, but with the $$$s coming in from the fund (providing it remains RE), it seems to me that LM is bound to get creditor support.




It's pretty normal for debts to fall due immediately if you go under liquidation/administration. Who knows if the creditors will support.. that's for the administrators to work out.


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## ASICK (21 March 2013)

"You made the insinuation that everything was going great when you said:
Originally Posted by ASICK  
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream."

Actually, I was comparing LM and EL.  Both statements are true.  I make no reference to its potential difficulties which are disclosed here: http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

Those facts need to be taken in context before drawing broader conclusions.

"I've already covered this. Administrators are not long term REs. They are usually accountants, not investment people. They will either fix up LM and hand back RE duty to LM or if they can't fix it, move to appoint a new RE. They won't be managing the funds themselves for any meaningful time. Actually, if the experience of timbercorp and Great Southern is anything to go by, someone else will call a meeting to replace the RE if this administration runs for too long."

Well, with respect, you said it was like any other company in administration, and it is clearly not like any other company in administration.  The administrators have to comply with 601FC(1)(c) in addition to its concern for creditors (and the company itself).

I agree, (as I've posted previously on this thread), in absence of run for the fund's management, the administrators will either "make" or "break" LM - whichever outcome will depend on just how investors (especially the platforms) perceive the administrators' performance.

"It's pretty normal for debts to fall due immediately if you go under liquidation/administration. Who knows if the creditors will support.. that's for the administrators to work out."

Of course it is, but there's a lot of cash flow into LMIM, and LMIM had already discloses that it has the NTA required to maintain its licence (read in context with LM's recent media release).

My reference to the "two" LMs was made about the perception of LM (the company) as being "Peter Drake's LM" -  MW's articles such as the "Scarlet Pimpernel" ridiculed Drake and by implication, LM.  I think there was a need to separate the "two", that is, separate Peter Drake from LM in order to leave an LM in the game which was serious about the outcome for investors.

In short, I think there was a need to put an entity in control of the fund which would (1) satisfy creditors, and (2) satisfy investors, especially since only Trilogy's come courting investors.


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## bigheadache (21 March 2013)

ASICK said:


> "You made the insinuation that everything was going great when you said:
> Originally Posted by ASICK
> LMIML IS $$$ healthy (it has to be to keep its lincence)
> LMIML has a really good income stream."
> ...




I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator. 




ASICK said:


> Well, with respect, you said it was like any other company in administration, and it is clearly not like any other company in administration.  The administrators have to comply with 601FC(1)(c) in addition to its concern for creditors (and the company itself).




The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue. 



ASICK said:


> Of course it is, but there's a lot of cash flow into LMIM, and LMIM had already discloses that it has the NTA required to maintain its licence (read in context with LM's recent media release).




I've discussed above about the NTA.



ASICK said:


> My reference to the "two" LMs was made about the perception of LM (the company) as being "Peter Drake's LM" -  MW's articles such as the "Scarlet Pimpernel" ridiculed Drake and by implication, LM.  I think there was a need to separate the "two", that is, separate Peter Drake from LM in order to leave an LM in the game which was serious about the outcome for investors.




I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO.



ASICK said:


> In short, I think there was a need to put an entity in control of the fund which would (1) satisfy creditors, and (2) satisfy investors, especially since only Trilogy's come courting investors.





Understandable.  However an administrator is not a long term solution. If you look at Timbercorp and Great Southern, investors moved to replace the administrator with an RE that has a clue. The problem in this example I guess is finding someone acceptable.


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## ASICK (21 March 2013)

*Administrators*

Bigheadache, for the record, are you an investor in an LM fund? and do you have an interest in either of Trilogy or LM?

You say, "I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator."

I think you're grasping at straws. You want to present an argument, but you seem to be failing.  I'm sorry that you can't accept that the licence NTA condition has been met, but that's simply a reality.  

Have you ever tried to get a bank guarantee? Do you have any idea of the amount of assets you'd need to encumber to secure, say, $1m?  

Why do you speak in riddles? You say, "LM is a private company" - so what?  You seem to have a lot of experience about loans, then why speak about LM being a private company. You know as well as I do that it doesn't matter a hoot: it's cash or assets supporting a guarantee that matter, and if it was a bank guarantee then we wouldn't be looking at an LVR as high as 60% for such a guarantee, would we?   Banks are a lot more prudent that managers of funds like LM and the like.

And there you go again, "I can only surmise that things are bad if they called in the administrator" - and here I go again, " Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

You say, "The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue."

Personally, I think that if the administrator does a good job, then (in my view) that'd be the best that's possible.  I don't believe there's a "white knight" out there. I'm sure No Trust (as an Equititrust investor) would agree that the receiver of Equititrust's fund (BDO) is a far better option than any manager. 

Unless a prospective manager has a track record of success, then the fund is better off with an administrated manager or receiver rather than a manager with a poor track record (yes, such as Trilogy).  After, the fund is being wound up - investment manager? Like Balmain Trilogy for example? 
http://www.moneymagik.com/yardy_yardy_yah.php

Experience tells me that damaged funds are really better off being run by real estate agents, not fund managers: To my mind, an administrator or receiver is much closer to an estate agent than a fund manager is.

You say, "I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO." 

But the appointment of an administrator has done just that.  Yes, Drake is there, and yes, he's the owner, but he most certainly doesn't have control. In this case, ownership does not equal control.  And it might be that administration might be extended to ensure a sound windup of the funds - I think that's what LM investors should hope for (subject to the administrators' performance).

You say, "Understandable.  However an administrator is not a long term solution. If you look at Timbercorp and Great Southern, investors moved to replace the administrator with an RE that has a clue. The problem in this example I guess is finding someone acceptable."

Yes, and that being difficult, a receiver or administrated manager is a grand option.  These funds have the capacity to tarnish managers so I'd  be suprised if any manager with a good reputation would want to touch it with a ten-foot pole.


----------



## bigheadache (21 March 2013)

*Re: Administrators*



ASICK said:


> Bigheadache, for the record, are you an investor in an LM fund? and do you have an interest in either of Trilogy or LM?




None of the above. I'm not old enough to put money in a mortgage fund.  



ASICK said:


> You say, "I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator."
> 
> I think you're grasping at straws. You want to present an argument, but you seem to be failing.  I'm sorry that you can't accept that the licence NTA condition has been met, but that's simply a reality.
> 
> Have you ever tried to get a bank guarantee? Do you have any idea of the amount of assets you'd need to encumber to secure, say, $1m?




I have actually. Although back when I did it in the 90s, from memory you only needed $50k for an AFSL so that's all we arranged for. Now its like $5m. And I'm not sure what's so hard to believe. You're the one saying that they must have heaps of $$$ since they fulfil their NTA requirements. I'm just here to point out the completely obvious, which is they can't be going great if they are under administration and fulfilling NTA isn't a good measuring stick. Heck I'm sure timbercorp and great southern met their AFSL NTA requirements when they went into administration.




ASICK said:


> Why do you speak in riddles? You say, "LM is a private company" - so what?  You seem to have a lot of experience about loans, then why speak about LM being a private company. You know as well as I do that it doesn't matter a hoot: it's cash or assets supporting a guarantee that matter, and if it was a bank guarantee then we wouldn't be looking at an LVR as high as 60% for such a guarantee, would we?   Banks are a lot more prudent that managers of funds like LM and the like.




You're asserting they have heaps of cash because they somehow fulfil their NTA requirements (which from experience might only be a bank guarantee). All I'm saying is that its hard to know if you can't get regular  financial reports as they are a private company. I think they only have to file once a year instead of having quarterly/6 monthly reporting like a normal listed company. 

You're also just relying on an LM press release. What do you think they are going to say? You really think they're going to turn around and say "guess what folks - we're broke". Read between the lines. Directors don't appoint administrators to look after unitholders. They appoint them because solvency and going concern is at issue. 




ASICK said:


> And there you go again, "I can only surmise that things are bad if they called in the administrator" - and here I go again, " Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
> http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx




My point exactly. Things must be going bad if they call in an administrator. 



ASICK said:


> You say, "The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue."
> 
> Personally, I think that if the administrator does a good job, then (in my view) that'd be the best that's possible.  I don't believe there's a "white knight" out there. I'm sure No Trust (as an Equititrust investor) would agree that the receiver of Equititrust's fund (BDO) is a far better option than any manager.
> 
> ...




What qualifications does an administrator have to run a fund? they're accountants. Have they ever managed a fund? Have any property experience? And why would a real estate agent be better?  They only want to sell the asset and earn a commission. You're assuming that disposal of assets is the only solution. That could be correct, but its a broad assumption you are making. What happens if the best strategy is to just rent property out? What if the best deal is actually to try and sell the entire mortgage book? (for example the Banksia book is currently for sale). A real estate agent is probably not going to know that. 

Maybe some administrators have skills in running a mortgage fund (as opposed to simply winding one up). As a group, I'd say they probably don't. And as I said, in the case of failed MIS managers like great Southern and Timbercorp, investors have moved to replace the administrator in recognition that are not good long term REs. 




ASICK said:


> You say, "I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO."
> 
> But the appointment of an administrator has done just that.  Yes, Drake is there, and yes, he's the owner, but he most certainly doesn't have control. In this case, ownership does not equal control.  And it might be that administration might be extended to ensure a sound windup of the funds - I think that's what LM investors should hope for (subject to the administrators' performance).




I think you misunderstand the role of the administrator again. As I've said several times, the administrator is called in because solvency is at issue. He's not there to appease the unitholders. 

Let me give you a dilemma. 

If the choices are 
A) wind up the fund - best interest of the unitholders but bad for creditors and end of LM as a going concern.
B) Keep carrying on as per usual for the fund - good for creditors as keeps the mgt fees coming (they might need to restructure debt) and good for LM as a going concern, but no better or worse for unitholders (they're still frozen).

What do you think the administrator is going to choose?  I'm no administrator but I'm thinking B sounds more likely than A.




ASICK said:


> Yes, and that being difficult, a receiver or administrated manager is a grand option.  These funds have the capacity to tarnish managers so I'd  be suprised if any manager with a good reputation would want to touch it with a ten-foot pole.




Unfortunately you are probably right. I can tell you there are mortgage books transacting at the moment. As I mentioned, for example the Banksia book is for sale. Read the AFR, every so often someone is selling a mortgage trust or book. There must be people in the industry who are good at managing mortgage funds and buying this stuff at the right price. Unfortunately getting one of them to want to be the RE seems a challenge.


----------



## ASICK (22 March 2013)

*Re: Administrators*

Good morning Bigheadache, 

You say, "None of the above. I'm not old enough to put money in a mortgage fund.".

Many would say, from the lessons learnt from early 2008 onwards, that one is never old enough to put money in a mortgage fund.  

You say, "I have actually. Although back when I did it in the 90s, from memory you only needed $50k for an AFSL so that's all we arranged for."

Methinks you're getting NTA mixed up with a fee for the licence itself:
The Fee:  http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes
http://www.flyingsolo.com.au/forums/starting-business/10388-obtaining-afsl.html

You say, "Now its like $5m. And I'm not sure what's so hard to believe. You're the one saying that they must have heaps of $$$ since they fulfil their NTA requirements. I'm just here to point out the completely obvious, which is they can't be going great if they are under administration and fulfilling NTA isn't a good measuring stick. Heck I'm sure timbercorp and great southern met their AFSL NTA requirements when they went into administration."

It's probably the case that neither manager of great southern and timbercorp were required to meet the new NTA requirements. As I understand it, those funds collapsed prior to the new NTA capital requirements:

NTA: http://www.asic.gov.au/asic/asic.ns...rements+for+responsible+entities?openDocument
"To meet the new net tangible asset (NTA) capital requirements, REs must hold the greater of:
$150,000 
0.5% of the average value of scheme property (capped at $5 million), or 
10% of the average RE revenue (uncapped)."
I guess that'd mean that the NTA requirements of managing the LM funds would be well over $1.5m.

"You're asserting they have heaps of cash because they somehow fulfil their NTA requirements (which from experience might only be a bank guarantee). All I'm saying is that its hard to know if you can't get regular  financial reports as they are a private company. I think they only have to file once a year instead of having quarterly/6 monthly reporting like a normal listed company."

Geez, "only a bank guarantee"? ONLY?  Oh boy!!   The NTA is regulated by ASIC.  ASIC will ensure that LMIML antes up with the NTA, there's no need for punters to worry about such high falutin concepts.  Some managers are private companies, others are public. It's really nothing to do with anything, and you know it. 

NTA cannot be ulitized to pay accounts, otherwise, there's no NTA. Make sense?  

you say, "You're also just relying on an LM press release. What do you think they are going to say? You really think they're going to turn around and say "guess what folks - we're broke". Read between the lines. Directors don't appoint administrators to look after unitholders. They appoint them because solvency and going concern is at issue."

Ok, I'll read between the lines: "It was a beautiful day so I decided to take my boat and do some fishing" - are you surpised I didn't pick up the same story line as you did?  I guess everyone to their own on that one.  Reading between the lines can be anything one wants it to be - what ever suits one's agenda.

and off you go again, "My point exactly. Things must be going bad if they call in an administrator.", and here I go again, "Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"your point"? it was LM's!  You're merely restating the obvious.

You say, "What qualifications does an administrator have to run a fund? they're accountants. Have they ever managed a fund?"

What experience does it require to hold an AFSL to manage a managed investment scheme? To be a lawyer? an accountant?
http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes

You say, "Have any property experience?"
Is that even necessary for the holding of a licence?
http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes

You say, "And why would a real estate agent be better?"

Because the LMFMIF is being sold down - it's all about the best return for investors: knowledge of the property market is essential.

You say, "They only want to sell the asset and earn a commission."
Please - put my comment in context - I was speaking about a real estate agent running the fund, and as such would entitled to remuneration as manager.

You say, "You're assuming that disposal of assets is the only solution. That could be correct, but its a broad assumption you are making. What happens if the best strategy is to just rent property out? What if the best deal is actually to try and sell the entire mortgage book? (for example the Banksia book is currently for sale)."

Hahaha, oh dear!
http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/general_information.php

An example of a fund manager (Trilogy with Balmain Trilogy) holding onto assets only to see losses in asset values of FIFTY SIX PERCENT, returning only EIGHT & THREE QUARTER CENTS PER UNIT to investors and earning near TWENTY MILLION for themselves !!! 

Who would have thought it possible on a fee of just 1.5%? (plus .12% fund expenses fee)

You say, "A real estate agent is probably not going to know that."

With respect, I suspect a real estate entity would know as well as, if not better, than a mere fund manager. You speak to a RE agent making a commission, well, there's one hell of an incentive for managers to hold onto value within the fund (FUM - funds under management) in order to make management fees.  There's no incentive for any manager to wind down a fund - and I applaud LM for at last seeing the good sense to wind down its funds - good sense that the administrator will hopefully follow. 

You say, "Maybe some administrators have skills in running a mortgage fund (as opposed to simply winding one up)."

Investors want the funds wound up - they want their money back.  To my mind, an administrator is much more suited to the task than the manager who is conflicted with prolonging fees.

You say, "As a group, I'd say they probably don't. And as I said, in the case of failed MIS managers like great Southern and Timbercorp, investors have moved to replace the administrator in recognition that are not good long term REs."

and the return to the groups has been?  I suspect SFA.  You speak about replacement of administrators but you don't offer proof of benefits, and in any event, managers are not all the same.  Some are much more capable than others.  Investors always look to a change of managers when the $$$s dry up, but change doesn't always bring results: City pacific lost 52% of the PFMF, change to Trilogy, Trilogy lost 56% of the remainder.

You say, "I think you misunderstand the role of the administrator again. As I've said several times, the administrator is called in because solvency is at issue. He's not there to appease the unitholders."

I'm afraid to say that it is YOU who misses the point.  The administrator of LMIML (as RE for LM funds) MUST comply with s. 601FC(1)(c) of the Corporation Act, that is, "to act in the best interests of investors".
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

You say, "Let me give you a dilemma. 

If the choices are 
A) wind up the fund - best interest of the unitholders but bad for creditors and end of LM as a going concern.
B) Keep carrying on as per usual for the fund - good for creditors as keeps the mgt fees coming (they might need to restructure debt) and good for LM as a going concern, but no better or worse for unitholders (they're still frozen)."

Let me give you some results after holding on for three years: Trilogy in the PFMF, 56% of value lost over THREE years, SIXTEEN MILLION IN FEES (to 30 June 2012), and $0.08/unit repaid to investors.  As time passes, investors losses have also compounded by loss of interest income.

The clear winners: The Bank, The Manager, The Lawyers, The Receivers.

The clear losers: Investors in the PFMF.

You say, "What do you think the administrator is going to choose?  I'm no administrator but I'm thinking B sounds more likely than A."

Well, I'd agree with part of you A, that is, the administrators will proceed along with the wind up of the fund. As I get the feel for it, that's what investors want too.  However, that's not going to be done overnight, so there's a future income stream which should please creditors.

You say, "Unfortunately you are probably right. I can tell you there are mortgage books transacting at the moment. As I mentioned, for example the Banksia book is for sale. Read the AFR, every so often someone is selling a mortgage trust or book. There must be people in the industry who are good at managing mortgage funds and buying this stuff at the right price. Unfortunately getting one of them to want to be the RE seems a challenge."

"selling the book", now that'd be a fire sale, right?  Knocking off all the assets in one hit, that's gotta be the mother of all fire sales.

In my view, in the circumstances, investors in LMs funds are lucky they're getting an administrator overseeing LM - I'm sure there are many in Trilogy's PFMF (Pacific First Mortgage Fund) who wish that'd happen to Trilogy.

Still, in the end, what will be, will be.


----------



## Mysteryman (22 March 2013)

This has all been very interesting, then amusing and now monotonous. Please could you both agree to differ and move on. Thank you.


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## ASICK (22 March 2013)

Mysteryman said:


> This has all been very interesting, then amusing and now monotonous. Please could you both agree to differ and move on. Thank you.




Why don't you care to comment?  (at least on the interesting and amusing parts)

If others post, then perhaps it would broaden the subject matter.


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## ASICK (22 March 2013)

LM's document has been taken off line, here's a link to google's cache:
http://webcache.googleusercontent.c...s/documents/inv-LM-announcement-20-03-13.aspx

Here's the text (from the cache) in case readers don't have access to an original document, a .pdf version, or a .pdf version isn't posted in the future:

"20 March 2013Dear Investor,The information contained within this letter is all that is currently available and able to be provided by LMInvestment Management Ltd (LMIM). All queries for additional information should be directed to yourfinancial intermediary. Further information will be forthcoming, and we will send it to you as soon as itbecomes available.AnnouncementThe Board of LM Investment Management Ltd (Administrator Appointed) (LMIM, the company)advises that after full consideration of its obligations as a company and its duties to ensure it acts inthe best interests of investors in the LM Funds, it is placing the Responsible Entity, LMIM, intovoluntary administration. This is not liquidation or receivership, and neither LMIM nor any of the Funds is in liquidation orreceivership. Events over the past couple of weeks, however, have meant that the Company and the funds are inimminent jeopardy of being unable to meet creditor obligations, and hence the appointment. Voluntary Administration is as a proactive approach by the Board to officially bring in independentfinancial advice across the company and the Funds. This step is believed to be in the best interests ofprotecting the Funds and maximising returns for investors, and prevent LMIM company cash flowissues going forward. Voluntary Administration has no effect on the structure of the Funds. The VoluntaryAdministrator assumes the responsibility for the decision making in the Responsible Entity role,however the funds will continue to be managed in accordance with their governing documents and theapplicable Corporations Act and Trustee Law. The Voluntary Administrators will be working withsenior LM investment personnel to optimise investor outcomes. In addition, the VoluntaryAdministrator must comply fully with its own requirements under the Corporations Act, in itsadministration role. All licence conditions of the Responsible Entity have been and continue to bemet, and there has been no breach in this regard. The financial requirements (Net Tangible Assets)of the Responsible Entity licence remain in order. The Funds are unit trusts, the assets of which areseparate and segregated from those of LMIM.The process Within the next couple of days you will receive a separate communication from the VoluntaryAdministrator. It will provide more detail around the process of the Voluntary Administration. Theultimate aim of the Voluntary Administrator is to manage and resolve a solution over a period of time,yet to be worked out and about which you will receive communication. 
--------------------------------------------------------------------------------
Page 2 
   Why make this appointment?Whilst the creditor issues rest with LMIM and are quarantined from the Funds, the Funds need to beshielded from any ensuing reputational damage. The Board considers that the appointment of aspecialist bringing with it, as it does, expertise and independence will afford the best protection for theFunds in this regard.What to expect over the next couple of weeksThere is an enormous amount of work to be undertaken this week to ensure the optimal results fromthis appointment for all the investors in all of the LM Funds. Many of you will have questions andthose questions will be answered. Please bear with us though, as our response may not be asprompt as usual, due to the expected initial high volume of queries. The Board is earnest in this appointment as the best means of providing arms-length, commercialityand financial analysis to the solutionsFurther information will be provided, as stated above and below. All LM Funds are now closed pending a full independent analysis by the Voluntary AdministratorRegular Fund updates will continue to be provided via the LM website, www.LMaustralia.com.LM Australian Structured Product FundIt will be business as usual for this fund with no financial impact expected as a result of the VoluntaryAdministrator. LM and the Voluntary Administrator will communicate directly with Deutsche Bank, theholder and underwriter of the notes in each of the closed end products within the Fund. Communication to investors and advisors as required will continue. Any income distributions and thematurity dates of each of the offers within the Fund continue uninterrupted. A full report will beprovided to you following the Voluntary Administrator’s analysis.LM First Mortgage Income Fund, LM Currency Protected Australian Income Fund and LMInstitutional Currency Protected Australian Income FundWe do not expect any change for investors in these Funds. The manager will continue with theorderly sale of all assets for eventual wind up of the Fund. Regular periodic capital distributions forinvestors have commenced, and will continue. Regular communication will continue. The appointment of the Voluntary Administrator brings with it independent, arms-length, specialistfinancial expertise.LM Australian Income Fund We expect this Fund will continue to be managed as it has been, according to its main documents.The Voluntary Administrator is conducting a full analysis in conjunction with senior investmentpersonnel from LM and on its completion a report will be provided for you.LM Managed Performance FundWe expect this Fund will continue to be managed as it has been, according to its main documents. The Voluntary Administrator is conducting a full analysis in conjunction with senior investmentpersonnel from LM, and on its completion a report will be provided for you. 
--------------------------------------------------------------------------------
Page 3 
   The appointment of the Voluntary Administrator brings with it independent, arms-length, specialistfinancial expertise. LM Cash Performance FundWe expect this Fund will continue to be managed as it has been, according to its main documents. The Voluntary Administrator will release a report on the Fund as soon as possible.In ConclusionThis decision has been well considered in consultation with independent specialist accounting andsolvency practitioners and with independent legal counsel. LMIM cannot run a risk of being unable topay its creditors, and this is the process being established to work out the issues. LM is acting tomaximise outcomes for all investors.  Yours sincerely,The DirectorsLM Investment Management LtdThe LM products are solely for distribution via financial advisers and intermediaries. LM requests investors consult afinancial adviser and read and consider the relevant disclosure document before making any decisions on theirinvestment. The LM Funds are not bank deposits. Investors may lose some or all of their investment. Thiscommunication is general information on the LM funds issued by LM Investment Management Ltd (AdministratorAppointed)."


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## k.smith (22 March 2013)

First meeting is on the 02 April 2013

https://insolvencynotices.asic.gov....77208461/b485da8d-6097-4e25-82de-028bfc27de92


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## mapc (23 March 2013)

http://www.smh.com.au/business/allstar-cast-likely-to-include-the-fat-lady-20130322-2glba.html

I guess Michael West believes he is helping people with his articles, but for me they are very personal and as the receivers are now appointed I feel he could be further harming LM investors and they are sufferring enough. Maybe its time for a truce on both sides.  Peter if by chance you are reading this and you haven't already, drop your lawsuit, you have enough on your plate.


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## ASICK (23 March 2013)

*MW - Just Another Spruiker*



mapc said:


> http://www.smh.com.au/business/allstar-cast-likely-to-include-the-fat-lady-20130322-2glba.html
> 
> I guess Michael West believes he is helping people with his articles, but for me they are very personal and as the receivers are now appointed I feel he could be further harming LM investors and they are sufferring enough. Maybe its time for a truce on both sides.  Peter if by chance you are reading this and you haven't already, drop your lawsuit, you have enough on your plate.




I agree Mapc, on all points.  Is MW deluded? I know he's biased, but is he deluded about helping people?  He acts this way for members of the PFMF.  He told a PFMF investor (who kept a contemporaneous note) that he won't say anything negative about Trilogy because that would aid Phil Sullivan (ex-CEO director) - helpful fellow (to Trilogy) that MW.

The PFMF member asked MW why he wouldn't print anything about these things:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

The audio is really worth listening to, maybe I'll disclose it one day - the abrupt tone of MW's response was quite surprising.  As far as I'm (now) concerned, he's a jerk.  Every article he goes on and on about the defamation claim against Fairfax - and he's peeved about Sullivan's claim for defamation against Fairfax too.  MW is becoming passe, he just don't know it yet.  These defamation claims by Sullivan and Drake seem to have sent MW into a biased bs spin. What a shame.

For example, "However, anybody who signed up for a bit of dirt in the Maddison Estate may be interested to know Maddison is part of Peter Drake's $3 billion mortgage fund empire, which fell into the warm embrace of insolvency practitioners this week."

Now, what would it matter for anyone "who signed up for a bit of dirt in the Maddison Estate" to know what it was part of?  Is MW trying to force the value of Maddison down, and thereby affect the return to investors?

Sometimes MW isn't the "sharpest tool in the toolbox", "... now they confront the haunting spectre of management by some of the hardest fee-chargers in the insolvency racket. FTI Consulting is the old Korda Mentha Queensland." - FTI charges the company, NOT the fund. It seems MW won't let the facts get in the way in order to rile investors against LM.

"Unless investors can appoint an alternative manager to the LM suite of mortgage funds quick smart, it may be a case of ''out of the frying pan, and into the fire''." - maybe he's referring to Trilogy, the entity MW won't say a word against in case it helps Phil Sullivan (ex-CEO of Citypac) - good ol' biased MW.

Drake's gone, but MW can't let go - what a shame for everyone, but MW (himself).


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## ASICK (23 March 2013)

*Fairfax*

http://pbxmastragics.com/2012/12/29/the-waters-are-lapping-at-the-feet-of-fairfax/comment-page-6/

There's a lot to be said about Fairfax - here's an example.

It woeful to see biased reporting but, it's even worse when you hear a reporter admit that he's biased.

MW is biased - perhaps an apt name for a new column for MW, "Cyclops Reports"?


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## mapc (23 March 2013)

*Re: MW - Just Another Spruiker*



ASICK said:


> I agree Mapc, on all points.  Is MW deluded? I know he's biased, but is he deluded about helping people?  He acts this way for members of the PFMF.  He told a PFMF investor (who kept a contemporaneous note) that he won't say anything negative about Trilogy because that would aid Phil Sullivan (ex-CEO director) - helpful fellow (to Trilogy) that MW.
> 
> The PFMF member asked MW why he wouldn't print anything about these things:
> http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
> ...




Thanks for your comment Asick. I feel one of the appeals to the general reader of Michael West's articles is that regardless of whatever bias he may have, he is an entertaining writer and he uses those "get your attention images".  So I am sure his articles are read by many, but there are real people involved and I hope he decides to consider the impact on them in any future reporting.


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## No Trust (24 March 2013)

I think Michael West is an excellent journalist, who has *every right to voice an opinion*. Everyone may not agree but that's what's called Free Speech...

_For example, "However, anybody who signed up for a bit of dirt in the Maddison Estate may be interested to know Maddison is part of Peter Drake's $3 billion mortgage fund empire, which fell into the warm embrace of insolvency practitioners this week."

 Now, what would it matter for anyone "who signed up for a bit of dirt in the Maddison Estate" to know what it was part of? Is MW trying to force the value of Maddison down, and thereby affect the return to investors?_
Posted by ASICK

I think it is *very relevant *to any person putting down a deposit to know what the development is part of and *who is behind it*, that's just common sense and not in any way trying to force the value down, its a fact which needs to be reported...

Drake made his choices and he chose to take Michael West on, what did he expect a joyride ?? McIvor from Equititrust also chose *a very acrimonious path *with the media and this website, look at what he got... If the business was sound and there were no issues the media and all of us posting on this website would have nothing to attack them on... West may not be perfect, none of us are, but he has done a stellar job in exposing the Gold Coast mortgage cowboys...


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## ASICK (24 March 2013)

Good morning No Trust.

You say, "I think Michael West is an excellent journalist, who has *every right to voice an opinion*. Everyone may not agree but that's what's called Free Speech..."

I think you're a little skewed with your thinking there No Trust, my main complaint against MW relates to his lack of fair and balanced reporting when it comes to Trilogy Funds Management Limited. The issue broadly relates to "media bias".

 Here's a little bit on the exactly what media bias is:
http://en.wikipedia.org/wiki/Media_bias

"The term "media bias" implies a pervasive or widespread bias contravening the standards of journalism, rather than the perspective of an individual journalist or article."

"Practical limitations to media neutrality include the inability of journalists to report all available stories and facts, and the requirement that selected facts be linked into a coherent narrative" - this is true, but it's a very different story when the facts are known and not reported on - that's not a practical limitation, that's bias.

You say, "I think it is *very relevant *to any person putting down a deposit to know what the development is part of and *who is behind it*, that's just common sense and not in any way trying to force the value down, its a fact which needs to be reported..."

Yes, but there comes along with that the responsibility of recognising the affect on others, for example investors in certain LM funds.  It doesn't matter to me, but I can see that it just might affect LM investors, and as Mapc (an LM investor) has noted, it might very well affect him.

You say, "Drade his choices and he chose to take Michael West on, what did he expect a joyride ?? McIvor from Equititrust also chose *a very acrimonious path *with the media and this website, look at what he got... If the business was sound and there were no issues the media and all of us posting on this website would have nothing to attack them on... West may not be perfect, none of us are, but he has done a stellar job in exposing the Gold Coast mortgage cowboys..."

Actually, quite a spiel No Trust, but it was Drake himself who posted the video on his own website - so it wasn't as if one could say Drake was "exposed", one might say Drake "exposed himself" (so to speak) -and yes, I don't disagree that MW has put pressure on the likes of Citypac and LM, but I doubt whether one can say that he "exposed" them, he reported investor disquite where he saw a story - and so he should, that's the business he's in.  But he won't disclose facts if those facts support someone he's in dispute with: that's called BIAS.

In all of your posting, you don't even mention media bias, not one word.  You're not the slightest bit bothered that MW is not willing to disclose negative facts about Trilogy while (1) attacking LM assets (Maddison), (2) ridiculing Drake (Scarlet Pimpernel), and (3) making facual errors (about FTI fees).

To date with Michael West, when it comes to Trilogy, there has been no neutrality, there's been nothing but bias - to date, MW has not been neutral - he's a jerk.

He knows the PFMF has failed miserably under Trilogy despite all the promises:
http://www.moneymagik.com/yardy_yardy_yardy.php

He know the PFMF litigation has been a crock:
http://www.moneymagik.com/litigation.php

He knows of Trilogy's failures:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

and he won't report anything negative about Trilogy because he doesn't want Sullivan to be advantaged (and thereby disadvantage Trilogy).  He's not only not neutral, he's purposefully biased.  So, when it comes to any run by Triogy for an LM fund, MW plays gatekeeper in order to misinform investors in order to influence the outcome.

Now, to my mind, that's a tad worse than media bias.


----------



## Garpal Gumnut (24 March 2013)

I have found Michael West to be an accurate journalist.

I would agree with him that LM investors, and investors in any part of that conglomeration have been rooted, and will be lucky to see much if any of their money returned.

The comments recently from damaged investors are typical of any in the past deceived by mortgage funds, myself included, and shooting the messenger is a pointless exercise.

Your money as we discuss this topic is being electronically transferred between many accounts, far from reach, in any proceedings, years down the track.

gg


----------



## ASICK (24 March 2013)

Garpal Gumnut said:


> I have found Michael West to be an accurate journalist.
> 
> I would agree with him that LM investors, and investors in any part of that conglomeration have been rooted, and will be lucky to see much if any of their money returned.
> 
> ...




Well, then you'd agree with MW that fees charged to LM by FTI impact on LM investors - which they don't. If you take the time to read the posts, apart from bias, that was the only fact disputed.

No one disputes that investors are likely to recover very little - I, among others (eg. No Trust), posted that both here and on the Equititrust thread.  That's not the issue either.

Well, the money's gone somewhere, no dispute about that either.

This is not about "shooting the messenger", it's about bias - when the media (in this case MW) is knowingly not neutral. [and in relation to Maddison, for the media not to damage its value]

MW told a PFMF investor, (quotes from a contemporaneous record),

The PFMF member asked MW why he hasn't written an negative article about Trilogy:

MW, "See, Phil Sullivan's suing us too, so I'm not going to go and do an article that is going to enhance his interests" - that is, MW is not going to disclose negative aspects of Trilogy because MW doesn't want Sullivan (ex-CEO Citypac, ex-manager of the PFMF) to take advantage.  So MW will not include negative aspects of Trilogy's past and present management of funds - therefore LM investors are being told a lop-sided story about the battle between LM and Trilogy.  MW won't disclose anything negative against Trilogy to LM investors because that would give Sullivan an advantage in the PFMF.

I'm for disclosure against both sides - not just one.

MW, "I'm hardly going to bag his (Phil Sullivan's) opponents (Trilogy) for him while he's suing us" - no, he'll just bag some of Trilogy's opponents (eg. Sullivan and Drake).

MW, "It's not a matter of being unbiased.  I'm not going to put the boot into Trilogy when he's (Sullivan) suing us and Trilogy.  It's not a matter of being biased, it's just reality." 

My post principally relates to MEDIA BIAS.


----------



## No Trust (24 March 2013)

I agree with Garpal Gumnut Michael West is an accurate journalist and his comments about Maddison Estate are fully justified in terms of reporting the facts... Maddison is part of LM and the "Public" need to know who is behind it...





ASICK said:


> Well, then you'd agree with MW that fees charged to LM by FTI impact on LM investors - which they don't. If you take the time to read the posts, apart from bias, that was the only fact disputed.
> 
> No one disputes that investors are likely to recover very little - I, among others (eg. No Trust), posted that both here and on the Equititrust thread.  That's not the issue either.
> 
> ...


----------



## mapc (25 March 2013)

http://www.smh.com.au/business/lm-site-drops-advice-claim-20130324-2gnwv.html

FYI


----------



## ASICK (25 March 2013)

No Trust said:


> I agree with Garpal Gumnut Michael West is an accurate journalist and his comments about Maddison Estate are fully justified in terms of reporting the facts... Maddison is part of LM and the "Public" need to know who is behind it...




How about we compromise?

MW is a mostly accurate self-interested jerk.

Quotes to remember:

MW, "See, Phil Sullivan's suing us too, so I'm not going to go and do an article that is going to enhance his interests"

MW, "I'm hardly going to bag his (Phil Sullivan's) opponents (Trilogy) for him while he's suing us" 

MW, "It's not a matter of being unbiased. I'm not going to put the boot into Trilogy when he's (Sullivan) suing us and Trilogy. It's not a matter of being biased, it's just reality."


----------



## ASICK (25 March 2013)

*FTI - Administrators Down at LMIML*

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10873364

Shift of tone:

From:

"The voluntary administrators are working in co-operation with LMIM senior management to produce a comprehensive strategy to meet all obligations to its investors and creditors."

To:

"The voluntary administrators are working in co-operation with LMIM senior management to produce a comprehensive strategy to address obligations to its investors and creditors."

much ado about nothing - "meet all" to "address" - they can only do their best.


----------



## rachelg (25 March 2013)

I have just received a letter from the voluntary administrators. This was the first I had heard of any problems. I have quite a large sum invested in this through a policy with Friends Provident. I had tried to en-cash it a few months ago but due to **** ups with financial advisors and FP got nowhere. I was in the process of trying to change the funds my money was in or cash it all in as about to move house and wanted to use funds. 

So basically my very large concern is that I am now about to lose thousands and thousands - will investors just lose their money? 

Just shows your money is far better off under your mattress thee days and financial advisors not worth a penny.


----------



## ASICK (26 March 2013)

*FTI - Administrator of LMIML*

http://www.lmaustralia.com/Downloads/documents/8974r4Circular-to-Investors-E-Letterhead.aspx

The errors are disappointing:

"applicable laws.. Both LMIM"

and

"the v Voluntary Administrators conduct"

not a good start showing attention to detail.


----------



## ASICK (26 March 2013)

*Sullivan v. Fairfax & Ors*

As I understand it, Fairfax has settled with Sullivan (ex-CEO Citypac) for an undisclosed sum.


----------



## Irishdan (26 March 2013)

rachelg said:


> I have just received a letter from the voluntary administrators. This was the first I had heard of any problems. I have quite a large sum invested in this through a policy with Friends Provident. I had tried to en-cash it a few months ago but due to **** ups with financial advisors and FP got nowhere. I was in the process of trying to change the funds my money was in or cash it all in as about to move house and wanted to use funds.
> 
> So basically my very large concern is that I am now about to lose thousands and thousands - will investors just lose their money?
> 
> Just shows your money is far better off under your mattress thee days and financial advisors not worth a penny.




RAchelG if you are in Australia I would suggest you contact Slater and Gordon in Melbourne as they are running an action against advisers who recommended LM.
I would also call Piper ALderman Lawyers in Sydney to register to be part of their claim against LM's Professional indemnity insurance.


----------



## ASICK (26 March 2013)

*Class Actions Galore*



Irishdan said:


> RAchelG if you are in Australia I would suggest you contact Slater and Gordon in Melbourne as they are running an action against advisers who recommended LM.
> I would also call Piper ALderman Lawyers in Sydney to register to be part of their claim against LM's Professional indemnity insurance.




Hi Irishdan, do you have links to the action S&G are running, or hasn't it made it to the starting blocks yet?

Also, I'm sure you mean Piper Alderman's spruiked class action against LMIML (in administration) in the hope of finding comfort from an insurer.

I guess each of S&G and PA will have to find the basis of a claim first - has a claim been lodged?

Watch out for upfront investigatory fees.

If No Trust is watching: how's PA's spruiked action against Equititrust Limited going?

Don't get your hopes up with litigation until you read the claim and have certainty about an insurer in the firing line.

http://www.moneymagik.com/litigation.php


----------



## sht4branes (26 March 2013)

Irishdan said:


> RAchelG if you are in Australia I would suggest you contact Slater and Gordon in Melbourne as they are running an action against advisers who recommended LM.
> I would also call Piper ALderman Lawyers in Sydney to register to be part of their claim against LM's Professional indemnity insurance.




Irishman, is there a class action in N.Z. for the currency protected fund?


----------



## No Trust (26 March 2013)

Class actions take time to commence and given the complexity of the structures and multiple receiverships and liquidations of the various entities the lawyers will not commence the action until everything has been unraveled. The Piper Alderman Class action against Equititrust is still on foot... 

Piper Alderman's successful class action against Lehman Bros took years, expect the same in these matters...


----------



## RODENT69 (26 March 2013)

I can advise that the First Capital Payment to investors originated by LM and paid through Trilogy was received at the  Platforms ie BT, Asgard etc on 25 March 2013


----------



## ASICK (26 March 2013)

*Class Actions*



No Trust said:


> Class actions take time to commence and given the complexity of the structures and multiple receiverships and liquidations of the various entities the lawyers will not commence the action until everything has been unraveled. The Piper Alderman Class action against Equititrust is still on foot...
> 
> Piper Alderman's successful class action against Lehman Bros took years, expect the same in these matters...




ok, so no class action yet after all these months - just talk of one for Equititrust investors. Are they asking for punters to ante up?  forgive me for being the skeptic, but I guess any successful action comes down to two major ingredients, (1) evidence, and (2) a bag of loot from which to recover, and of course, sometimes the willingness of investors to put some $$$ into the kitty.

When investors lose money they naturally think those losses are recoverable, but that may not be case.  If there's no negligence, there'll be no recovery.  There'll be no recovery for mere bad management decisions.


----------



## rachelg (27 March 2013)

I did send an email to Slater and Gordon but I am not in Australia, I am a British citizen currently living in Europe. From my reading the class action suit is probably only for investors that were duped into investing more recently - after company already faced difficulties, but might be wrong on that. 

I put money into the LM fund through a life policy with Friend's Provident back in 2009. Was actually going to withdraw the lot a year or so ago but the encashment charges were so high decided to leave it until these dropped in a year! Was just in process of looking to move funds to a different fund as could alter them under the policy. Guess no need to bother looking into that any more!!!

My financial advisor (not the same one that suggested the fund in the first place!!!) said that as funds are segregated, likely administrators will just try to sell off to new management and should not suffer too much loss. Might be a tad optimistic, given I had to actually alert him to the matter! But fingers crossed, not getting any further info from administrators or Friends Provident at the moment, told to wait until first meeting on 2nd April. 
The main concern according to the FA was that funds could be tied up for a long time, but given I could not really get them for a year anyway even if nothing happened, so long as no major losses, will just be happy to get money out and away from LM and definitely Friends Provident, who are awful.


----------



## rachelg (28 March 2013)

Letter received from Trilogy today saying how concerned they had been/were - not quite sure of their involvement though?


----------



## ASICK (28 March 2013)

*Trilogy*



rachelg said:


> Letter received from Trilogy today saying how concerned they had been/were - not quite sure of their involvement though?




Yep, about as concerned as a wolf would be that the sheperd had locked up all the sheep for the night. I'm sure that the management fee wasn't even on their minds.  Yep, they're concerned about you.  



http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


----------



## ASICK (28 March 2013)

*Concern & Intrigue*

Seems Piper Alderman's also concerned - it seems to be out seeking proxies from financial advisors in order to attend the meeting of creditors  - many of those same advisors Slater & Gordon has spruiked chasing for investor losses.

Intrigue - two sources told me that that same Mr. Coburn who was engaged by Trilogy to get the goods on LMIML has been employed by FTI, that same crowd now administrating LMIML.  So I looked it up, and there he is, "Managing Director" no less.

http://au.linkedin.com/pub/dir/Niall/Coburn

I wonder if Drake et al knew about that when he put LMIML into FTI's doubtlessly capable hands?


----------



## rachelg (29 March 2013)

All very incestuous! 
But can now do nothing but wait I suppose.


----------



## ASICK (29 March 2013)

rachelg said:


> All very incestuous!
> But can now do nothing but wait I suppose.




I'm not sure that's the right word for it, perhaps, perplexing.




As I see it, if a claim was made against LM, any shortfall may very well be scooped out of the fund itself.  It seems to me that in such a case, the lawyers would gain a portion of the fund, which would of course offset any amount recovered from LM (and its directors) by investors. Subject to any directors' exposed assets, the investors would be, in fact, suing themselves.  That is, if a successful claim is made, investors could only hope to recover part of LM directors' exposed assets.

I'll be brave and speculate that there's probably nothing for investors in litigation.


----------



## RODENT69 (29 March 2013)

Some good news

I refer to my earlier posting # 531 about the first Capital Distribution

I have received my payment from Asgard yesterday,  via Trilogy and LM   My investment is in the WFMIF  and the payment rate was $0.01788  - which was a little more than I had estimated

 I suggest other Investors who may be entitled to this Capital Distribution may need to check with your FA or Platform provider for your payments.


----------



## ASICK (29 March 2013)

RODENT69 said:


> Some good news
> 
> I refer to my earlier posting # 531 about the first Capital Distribution
> 
> ...




Yes, a tad more than the (about) $0.17/unit I forecast in post # 473. Ah well, it was only a guesstimate and would always depend on how much Trilogy would retain for fund management and the exact number of units held in the wholesale fund itself.


----------



## Taja (30 March 2013)

I am a UK national resident in Thailand who was persuaded by a financial advisor to invest a substantial sum into LM's FMIF back in the sun-filled days of early 2008.  Like everyone else I am awaiting pessimistically the outcome of the voluntary administration process and wondering what - if anything - individual investors such as me can do.  Grateful for any advice, and also answers to two specific questions:

- Can someone in my position join in one or both of the class action suits which I understand are being pursued by the Australian law firms Piper Alderman and Slater & Gordon ?
- I would be very keen to talk to other fellow victims also resident in Thailand - does anyone know if it is possible to obtain a list of investors by country of residence?

Advice much appreciated - many thanks.


----------



## No Trust (31 March 2013)

Peter Drake pops up in the SMH article below... He is mentioned amongst some interesting company...

The media have really shone a spotlight on this collapse...

http://www.smh.com.au/business/sun-setting-on-fraud-capital-of-australia-20130329-2gz30.html


----------



## mapc (1 April 2013)

http://www.canberratimes.com.au/business/lm-windup-misses-investors-20130326-2gs81.html

For those interested this article appeared a couple of days ago and mentions possible plans by FTI to hand back control to LM management and the need for additional finance, ideally from Deutsche bank


----------



## Taja (1 April 2013)

mapc said:


> http://www.canberratimes.com.au/business/lm-windup-misses-investors-20130326-2gs81.html
> 
> For those interested this article appeared a couple of days ago and mentions possible plans by FTI to hand back control to LM management and the need for additional finance, ideally from Deutsche bank



Read more: http://www.smh.com.au/business/lm-windup-misses-investors-20130326-2gs81.html#ixzz2PCLuK96e

Thanks for drawing our attention to this.  

What seems to me to be worrying is the statement in this report by FTI's Ms Muller that "financial advisers may be creditors of LM Investment Management because they are owed commissions for putting clients into the company's funds".  If I understand correctly, this could mean that if/when it comes to winding up, the pot of net realisable LM FMIM assets to be distributed to investors could have been reduced by a further 5-10% (these are the levels of commissions promised to financial advisors that I have seen quoted in various reports).  This seems to be pretty unfair given the lack of proper due diligence by many of these same advisors in their recommendations to would-be investors.  

Grateful for views as to (a) whether this concern is justified and (b) what investors can do about this.

Regards to all.


----------



## Taja (1 April 2013)

Read more: http://www.smh.com.au/business/lm-windup-misses-investors-20130326-2gs81.html#ixzz2PCQAUh4F


Thank you mapc for drawing attention to this article

What concerns me is the quote in the article that "Ms Muller (of FTI) told the financial advisers they may be creditors of LM Investment Management because they are owed commissions for putting clients into the company's funds".  If I understand this correctly it could mean that - if/when the LM Fund is wound up - the pot of net realisable assets to be distributed to investors could be reduced by 5-10% (that is the level of commissions reportedly offered to financial advisors according to several reports).   Given the sloppy due diligence work done by many such advisors - perhaps encouraged by such juicy commissions - this seems to be adding insult to injury for the investors.

Grateful for views as to (a) this concern is justified and, if so, (b) what we investors can do about it.

Regards.


----------



## ASICK (2 April 2013)

*FTI*

http://beta.afr.com/p/business/property/fti_seeks_lm_receiver_role_over_CHwCNlfRHAgBAUPA3ZwLxN

"FTI Consulting is set to apply to the Queensland Supreme Court to be installed as receiver of LM Investment Management’s controversial $401 million property fund."

and who could blame them? after all, there's a bag full of $$$$ on offer ....

Rumours .. 

... a potential filing for bankruptcy
... the potential loss of a beautiful abode

Update:
http://www.propertyobserver.com.au/...ce=po&utm_medium=aida&utm_campaign=latestnews


----------



## No Trust (2 April 2013)

*Re: FTI*

Wow looks like the last of the Gold Coast Ego Maniac Mortgage Fund Managers is about to disappear... 

Same traits same penchant for beachfront houses... Are these guys lacking in other departments to have to display these symbols of their alleged success ???  Look like a bunch of small willy's now...






ASICK said:


> http://beta.afr.com/p/business/property/fti_seeks_lm_receiver_role_over_CHwCNlfRHAgBAUPA3ZwLxN
> 
> "FTI Consulting is set to apply to the Queensland Supreme Court to be installed as receiver of LM Investment Management’s controversial $401 million property fund."
> 
> ...


----------



## Taja (2 April 2013)

Thank you ASICK for this link.  

As a new member of this Forum I have been very grateful for the numerous earlier posts that you - and others such as DINGA (who generously took the initiative to actually start the Forum to bring people together) - have made.  Like countless others I just wish I had been more alert to all these sorts of issues before investing in LM.

Any thoughts as to my earlier post/query re. financial advisors being treated as creditors .. ?  Or are their commissions just breadcrumbs when set alongside the other losses from the fund ?

Thanks and regards.


----------



## Taja (2 April 2013)

*Re: LM Investment Management  -  Registry Request*



dinga said:


> Well Thomas, I am.....  picked up the USB stick apparently containing both FMIF and CPAIF registers of members, without any further unnecessary hindrance from LM.
> 
> Have only had a very cursory look, but was shocked (when really I shouldn't have been - since the Federal Court noted there were a large number of elderly investors in FMIF) to see a large number of listings of deceased estates.  Let's hope there are not very many more of us in that category before we can retrieve at least some of our monies...
> 
> ...




Dear Dinga -

First, a note of appreciation for your having set up this Forum which I only recently discovered and for the very informative posts by you and others over the past months.  I am also an investor in the LM FMIF (I invested in the sunny days of early 2008) and still have much to learn.  Like everyone else I am gloomily awaiting the outcome of the voluntary administration process and wondering what - if anything - investors such as myself can do to move things in the right direction.

Then a request.  I am a UK national resident in Thailand and would be keen to contact any fellow investors also here in Thailand.  You mentioned having acquired the register of all investors - is here any way you can send me the sub-list of those in Thailand (I am assuming there are quite a few others here, given the activities of several financial advisors in Bangkok) .. ?  

Much appreciated and many thanks again.


----------



## No Trust (3 April 2013)

From today's media reports nationally it looks like where there was smoke there is now fire... What is wrong with these guys and Related Party transactions. Have they not heard of arms length transactions ??? The Gold Coast is a joke as were the cliche beachfront mansions bought with other people's money... 

By the way what were Drake's academic qualifications...


----------



## ASICK (3 April 2013)

*Advisors - Questions*



Taja said:


> Thank you ASICK for this link.
> 
> As a new member of this Forum I have been very grateful for the numerous earlier posts that you - and others such as DINGA (who generously took the initiative to actually start the Forum to bring people together) - have made.  Like countless others I just wish I had been more alert to all these sorts of issues before investing in LM.
> 
> ...




Hi Taja,

It seems the advisor commissions are/were drawn from the fund.  See 2012 financials page 8 ($2,165,236 paid), and page 18 (note 2(I) - commission may be paid).  

However, as a guess, any legal obligation to pay advisors might arise out of an agreement between LMIML and the advisors (with the $$$ drawn by LMIML from the fund as authorised by the PDS).



No Trust said:


> From today's media reports nationally it looks like where there was smoke there is now fire... What is wrong with these guys and Related Party transactions. Have they not heard of arms length transactions ??? The Gold Coast is a joke as were the cliche beachfront mansions bought with other people's money...
> 
> By the way what were Drake's academic qualifications...




http://www.heraldsun.com.au/news/ad...an-to-lm-founder/story-e6frf7jo-1226611230010

http://www.smh.com.au/business/related-party-loan-link-probed-in-failed-lm-fund-20130402-2h53o.html

"*LM Investment Management, had not resigned as trustee of the fund, despite a provision in the fund constitution stipulating it must do so upon the appointment of administrators.* He denied it would be a conflict of interest to be appointed as both receiver of the fund and administrator of LMIM." (emphasis added)

Ah, the fresh aroma of $$$$$s wafting gently thru the air.


----------



## Taja (3 April 2013)

*Re: Advisors - Questions*



ASICK said:


> Hi Taja,
> 
> It seems the advisor commissions are/were drawn from the fund.  See 2012 financials page 8 ($2,165,236 paid), and page 18 (note 2(I) - commission may be paid).
> 
> ...




Dear ASICK -

Thanks again for the thoughts and the links.  The SMH article link suggests that financial advisors may still be "owed" some $ 9.9 million on top of the $ 2.165 million already paid out, which you refer to.  I still find it hard to accept that promises by LM to these advisors (even via written agreements with LM) for % commissions still places them in the category of "creditors", with the priority claim on funds that being a "creditor" entails.  Surely to be a creditor you have had to have lent something ..   But then I have been very naive so far and still have a great deal to learn about this murky world.

On another issue - I had asked DINGA is could share the register list of investors (he mentioned having got hold of this some months ago, last year).  I would be keen to try and contact fellow investors here in Thailand.  Any chance you might have this and be able to share?

Thanks and regards.


----------



## ASICK (3 April 2013)

*Re: Advisors - Questions*



Taja said:


> Dear ASICK -
> 
> Thanks again for the thoughts and the links.  The SMH article link suggests that financial advisors may still be "owed" some $ 9.9 million on top of the $ 2.165 million already paid out, which you refer to.  I still find it hard to accept that promises by LM to these advisors (even via written agreements with LM) for % commissions still places them in the category of "creditors", with the priority claim on funds that being a "creditor" entails.  Surely to be a creditor you have had to have lent something ..   But then I have been very naive so far and still have a great deal to learn about this murky world.
> 
> ...




Good afternoon Taja,

I'm not an investor in any LM funds - consequently, I don't have any interest to access the registry.

The $2m I quoted from the accounts only represented 2012, I don't have access to LMIML's accounts so I have no idea of the final amount owing (if any) to advisors.

You might find some reluctance for a fund member to pass along a copy of the register, however, you shouldn't have any problems receiving one from FTI since they're in control at this time (there may be a cost for a copy).


----------



## RODENT69 (3 April 2013)

For the interest of others, this is the reply I received from FTI re what is a creditor

This is what I asked -  I am advised that you consider Investors such as myself NOT CREDITORS,  given the definition in the ASIC Doc I find this difficult to understand. 

Specifically I have applied for a Redemption in 2008 and along with many thousands of other similar Investors we have requested our money back.  If that does not fits the ASIC definition I don’t know what does

I fully understand that DB etc are Creditors , but most of the money that LM has is Investors money NOT  so called creditors. At last check DB was owed only $25 -29Mil .  Investors are owed Hundreds of Millions in Redemptions.

A detailed explanation is requested re why you do not consider Investors as Creditors is requested please


This was the reply

In regards to your enquiry as to why investors are not considered creditors I advise that this is because redemption claims and claims for principal and interest investments in funds are equity in nature and therefore do not carry voting rights at a meeting of creditors. The exception to this is if an investor can prove that they have a claim for breach of trust or misleading and deceptive conduct or the like against LMIM. This claim must be able to be quantified.

In the case of why a Financial Advisor is a creditor, maybe no more complex than they have provided a service to LM in exchange for a payment from LM  ie  a Percentage of the clients business they sign up


----------



## ASICK (3 April 2013)

RODENT69 said:


> For the interest of others, this is the reply I received from FTI re what is a creditor
> 
> This is what I asked -  I am advised that you consider Investors such as myself NOT CREDITORS,  given the definition in the ASIC Doc I find this difficult to understand.
> 
> ...




Respective investors in the LM funds are the OWNERS of the respective LM funds in which they invested.    The LM funds are REGISTERED SCHEMES, or BUSINESSES in their own rights.  Each scheme is run by a responsible entity, the entity RESPONSIBLE for each scheme.

I think about members in such schemes as being a collection of investors packed up neatly in a little box, and that little box is tucked neatly inside the responsible entity's corporate "pocket".

The responsible entity is a SEPARATE business to each scheme, as is each SCHEME from the others.

Money owed to/by the scheme is NOT owed to/by the responsible entity, and visa versa.

The responsible entity acts ON BEHALF of (or FOR) the members of the scheme (or, on behalf of, or for the scheme).

Redemptions are payable FROM the scheme BY the responsible entity.  

Investors in LM schemes are NOT creditors of LM unless there is a quantifiable claim/s against LM by the scheme (or all or some of those investors) by way of a breach of legal obligation.

As OWNERS, investors in managed schemes are LAST in line - managers, receivers (to assets, if any), accountants, auditors, lawyers, rates, land tax, landscapers, gardeners, etc. all get paid - then, whatever is left over, investors get the remnants - the dregs.

Don't be surprised if the real outcome for LM investors is way, way down under $0.20/unit.


----------



## Titinet (3 April 2013)

*Re: FTI*

Dear all,

I'm one of the poor foreign investors in LM performance fund. Who can tell how many investors we are in this fund? Apparently, the creditors, advisors (who advised us to invest in this fund) benefit from a priority over the others (investors). There are meetings planned with creditors not with any of us by FTI. Who can help us to defend our interest? How can we get together and represented by an association based in Australia? I think that it's important to be heard...

Titinet


----------



## ASICK (3 April 2013)

*Re: FTI*



Titinet said:


> Dear all,
> 
> I'm one of the poor foreign investors in LM performance fund. Who can tell how many investors we are in this fund? Apparently, the creditors, advisors (who advised us to invest in this fund) benefit from a priority over the others (investors). There are meetings planned with creditors not with any of us by FTI. Who can help us to defend our interest? How can we get together and represented by an association based in Australia? I think that it's important to be heard...
> 
> Titinet




sorry to butt in again - but - the creditors are the creditors of LMIML, not the LM funds - LMIML is a separate entity to the funds.  The LMIML creditor advisors are not creditors of the LM funds.  However, in saying that, as at 30 June 2012, advisors still received over $2m from the LMFMIF.

Maybe the question to ask FTI is "Will LMIML continue to draw monies to be paid to advisors?".

LMFMIF investors (and other fund investors) will stand last in line to ALL other creditors of the respective funds.   These lines are different to the creditor line for LMIML.

We learnt that investors stand last in line way back in 2008.


----------



## Taja (3 April 2013)

Dear ASICK –

Luck you that you are not an investor – shrewder than some of us.  
Thanks for your helpful definitions of the various terms, and clarifications re. LMIML creditors, etc..  Your sober view of the prospects for “last in line” investors is of course pretty depressing.

Note your point about possible reluctance of investors to share something like a register of all investors (though DINGA had earlier seemed to suggest he would share with others – but he seems to be offline these days).  I will therefore try via FTI and keep people informed.  

Dear RODENT –

Thanks for the helpful info re. FTI’s response in regard to what it means to be a creditor.  Needless to say I entirely agree with you that, morally if not legally, investors such as ourselves (and especially those of us who have been claiming redemption for years now) would seem to have a better claim to be viewed as creditors.

Dear Titinet –

As I noted above, I will try and get a list of investors and let you know.  Like you, I am outside Australia (a UK national living in Thailand) and I am especially keen to hook up with others – especially those who may have been “persuaded” by the same Bangkok-based financial advisor (who assured me that LM was “bank-like”, solid, v low risk, and all the rest – all of which I bought like a child). 

In regard to pressing our collective interest – given our absence from the meetings being run by FTI and general lack of any voice for investors – please note that at least two Aussie law firms are on the case:  Piper Alderman and Slater & Gordon.  I am trying to talk to them to see (a) what line they will be taking and (b) what they can do for non-Australians such as ourselves.  Will post anything I hear.

Regards to all from Thailand.


----------



## Garpal Gumnut (3 April 2013)

I lost what then was a great deal of money thirty years ago, in a similar scam.

My advice to you LM guys is to wave it goodbye, and move on, and eventually get over it.

It may take a few years.

And you may never get over it.

But you were muppets to invest in it.

And I was then.

And I recovered.

Recognising that it was YOUR mistake is the first step to recovery.

gg


----------



## ASICK (4 April 2013)

Taja said:


> ... As I noted above, I will try and get a list of investors and let you know.  Like you, I am outside Australia (a UK national living in Thailand) and I am especially keen to hook up with others – especially those who may have been “persuaded” by the same Bangkok-based financial advisor (who assured me that LM was “bank-like”, solid, v low risk, and all the rest – all of which I bought like a child).
> 
> In regard to pressing our collective interest – given our absence from the meetings being run by FTI and general lack of any voice for investors – please note that at least two Aussie law firms are on the case:  Piper Alderman and Slater & Gordon.  I am trying to talk to them to see (a) what line they will be taking and (b) what they can do for non-Australians such as ourselves.  Will post anything I hear.
> 
> Regards to all from Thailand.




Don't think too much about litigation - my guess is there's nothing to get from LMIML, especially since there's no directors' indemnity insurance.  These "ambulance chaser" lawyers are only useful if there's a "pot of gold" at the end of the "rainbow".    Funds like the LMFMIF were set up pursuant to laws "wide enough to drive a truck thru" so I'd be surprised if advisors won't be found wanting.

Taja, losing in the PFMF was enough for me - you're not alone with your losses.

GG is right about acceptance of loss.   I get the impression that reality is starting to set in for many LM investors.  It'll be good if the LM funds are wound up by a receiver - sure, they're big fee grabbers, but nothing like a manager gouging a fee based on a dream-like fund value which will be unlikely to be recovered by investors. 

Receivers force reality on investors - see Equititrust:
http://www.smh.com.au/business/equi...rs-to-lose-close-to-90-pc-20130107-2ccqz.html

I'm sure if a manager was in control of Equititrust's fund then the report would be filled with optimism.

The only thing that matters now is how much is fed back into investors' pockets - nothing else matters.


----------



## ASICK (4 April 2013)

*Correction*

Correction to my previous post .. I'd be surprised if advisors ARE found wanting.  

Also I can't say enough about how sad it is to see investors in damaged funds cling to a hopeful unit price when the only entity to benefit from fund valuation is the manager (management fees are calculated by reference to funds under management, which includes debt): investors cannot benefit from unit price - investors only benefit from capital returns.   

It was clear (at least to me) that the 100% LVRs on all LMFMIF loans was a maxed-out effort to present the highest possible unit price of $0.59 to investors.  I'd bet that investors found comfort in a sustained unit value but that comfort will soon turn to alarm when assets are sold off at market prices.

If the word "firesale" comes up, don't forget to ask for a definition - then you'll be able to easily decide if assets are (or are not) sold at firesale prices - I don't think there's any escape, assets will be firesaled - there is simply no other way to recover the necessary cash to fund the scheme and to repay investors.

These damaged funds are truly a bonanza for some, but not for investors.  In my opinion it's all about WHO can make WHAT from your collective misfortune - it's not about YOU, it's about THEM.


----------



## No Trust (4 April 2013)

ASICK said:


> Don't think too much about litigation - my guess is there's nothing to get from LMIML, especially since there's no directors' indemnity insurance.  These "ambulance chaser" lawyers are only useful if there's a "pot of gold" at the end of the "rainbow".    Funds like the LMFMIF were set up pursuant to laws "wide enough to drive a truck thru" so I'd be surprised if advisors won't be found wanting.
> 
> Taja, losing in the PFMF was enough for me - you're not alone with your losses.
> 
> ...




Your right about managers optimism... That's why McIvor tried to hold on to the management of Equititrust funds in every way he could... It was a direct way of *channeling funds into his pocket*... Now he is a failed bankrupt from the dodgy Gold Coast with many more questions to answer relating to accounting inconsistencies identified by the liquidator...


----------



## No Trust (4 April 2013)

These guys are like pigs in a trough with loans to themselves, their companies from fund assets... and don't forget the ubiquitous pseudo phallic beach front homes for men with small financial pen#ses... *Flamboyance does not equate success*, this was discovered when McIvor was turned upside down by his own lawyer and was found to be a 2 bob millionaire... Bankruptcy soon ensued for unpaid legal fees as well as the major banks for the differential on the sale of luxury beachfront and waterfront mansions...  

Lets wait and see how this one plays out, however it is clear to see that the initial investigations have all the hall marks of another spivy Gold Coast mortgage fund collapse...

Look out for some mortgagee sales as was the case when Equititrust collapsed...


----------



## RODENT69 (4 April 2013)

I refer to my earlier Postings, #531, and later #539   this is a correction, with more info to come 

In my earlier postings I referred to the First Capital Distribution  for WFMIF Investors, which originated from LM as  Capital Distribution. I am now advised that this payment from LM was only about 60% of the amount required to clear the Outstanding Income Distributions liability, previously accounted for by LM covering the period from May 2010 to Dec 2010

As such Trilogy paid an amount to cover all these months -This does not of course extinguish the outstanding liability. I understand that approx a further $1.2Mil is still required to extinguish that liability

The distribution rate in CPU of $0.01788 that I posted is most likely to be incorrect. 

Investors in the WFMIF should followup with their FA, Platform etc to see what is being actually being received by each investor, and which months it covers, and work through the numbers ie Dollars received, CPU etc for yourselves.


----------



## Taja (4 April 2013)

For those who don't know/follow, FTI has posted their "meeting notes" from the meeting on 2nd April on their dedicated website .. http://www.lminvestmentadministration.com/notifications   However these are only presentation notes and do not reflect the actual discussions.  I have asked if actual minutes of that discussion will be posted too and await response.  I would be very curious to see the list of the FAs who took part in their (to me, highly questionable) role as "creditors".


----------



## Taja (4 April 2013)

For information, I got a reply to questions I had posed to FTI about the voluntary administration process:

- can you share the register of LM investors (to allow investors to communicate between themselves more effectively)?  Answer:  "No - for confidentiality reasons."

- is it not odd that FAs are being treated as "creditors" by virtue of the commission agreements with LMIM? Answer: "I ensure you that there is no preferential treatment being afforded to creditors over investors. The previous creditors report was posted on the website for all to view."

- will you be posting a record/minutes of the actual discussions which took place at the 2nd April meeting?  Answer: "We will continue to communicate through this website throughout the administration but will not be posting further information on the creditors meeting at this time."

Any thoughts from Forum members?

No doubt wiser people than me will not be surprised at any of this.


----------



## ASICK (5 April 2013)

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10875236

$0.55/unit? no way. 

I reckon FTI brings it down to somewhere near $0.40/unit.


----------



## ASICK (5 April 2013)

http://www.afr.com/p/business/property/lm_administrator_slams_rival_OvPk8HokarwRb2YpPoNUFM

"The administrators of collapsed mortgage and property fund group LM Investment Management, FTI Consulting, have said that rival funds group Trilogy Capital Group should not run the $740 *million in LM funds."

and the rest, for at least the moment, is for subscribers.

For what it's worth, I agree wholeheartedly with FTI.

Receivers might make a great fee but it's work performed - managers on the other hand, make a percentage of funds under management (FUM) - and this management fee can really amount to many times any receiver's account.


----------



## No Trust (5 April 2013)

I agree the fund needs to be put out of its misery not prolong the misery to investors... I would say however that ASIC via the Supreme court should appoint an independent receiver / Liquidator to the funds to ensure complete transparency. 

Even if there is a perception of conflict of interest, this is enough to pass the legal test to ensure transparency on behalf of all investors. Given the ASIC investigation this is now essential in terms of ensuring the investors interest.


----------



## ASICK (6 April 2013)

*LM MPF*

http://www.lminvestmentadministration.com/notifications

Some interesting facts indeed.

See page 116:
http://u.b5z.net/i/u/10199052/f/John_Park_Affidavit_-_05.04.2013.pdf

Nearly $27m of management fees paid/prepaid !!!!
Other operating expenses about $29m !!!!

Unbelievable !!!

BIG losses coming LMMPF members' way.


----------



## ASICK (6 April 2013)

*Phew!*

I haven't read all the material, but it looks like (as far as the MPF goes) ASIC will not oppose court appointment of FTI as receiver to the LM MPF.

http://u.b5z.net/i/u/10199052/f/Philip_Pan_Affidavit_-_05.04.2013.pdf

Perhaps it'll be likewise for the LMFMIF.

Looks like Trilogy's out of the race.


----------



## Taja (6 April 2013)

Dear ASICK -

Thanks for the regular updates and thoughts on the process - as well as the scepticism in regard to things like Unit values and how these tend to be talked up unrealistically by interested parties. It all helps us steel ourselves for the eventual outcome and be ready for the painful worst.  

One painful aspect is simply the long waiting period ahead of us to get to that outcome .. I assume it won't be before July since FTI have asked for an extension until then, and may be much later than that. 

Regards.


----------



## ASICK (6 April 2013)

Taja said:


> Dear ASICK -
> 
> Thanks for the regular updates and thoughts on the process - as well as the scepticism in regard to things like Unit values and how these tend to be talked up unrealistically by interested parties. It all helps us steel ourselves for the eventual outcome and be ready for the painful worst.
> 
> ...




Good evening Taja,

I think it's much better to understand the real possibility of a very low return from your respective investments.  If the outcome is better, then so be it - but there is no point living in "la la" land with a manager making millions off fees calculated by reference to funds under management (FUM) which value is simply not achievable by investors.

Who would have thought that Trilogy could have made about $20m in fees (1.5% management fee, .12% fund expenses) while investors only received (to date) $0.0875/unit? -  with only $0.0075/unit of that received since 1 July 2012 (and no further payments likely prior to 30 June 2013).

I guess those in the wholesale fund will be somewhat pleased that Trilogy will only receive 0.5% FUM management fees on what I believe will be a rapidly reducing value in that fund's assets.

I don't think anyone should be surprised to see a substantial drop in fund values at the hands of the administrators/receivers given that FTI is not making its money by reference to FUM, but rather for services provided - mind you, that's not going to be cheap either.  There's heaps of $$$ for the whichever entity gets control.

There's always an incentive for managers to report as high a unit price as possible, even if that means all LVRs equal to 100% - receivers will only provide members with values that are realistically achievable.  No one should be surprised if there's quite a substantial variance between the two.


----------



## sht4branes (7 April 2013)

Hi,

FTI have adjusted the unit price to $0.55 for the LMIF. It was in  LM's best interest to inflate the funds under management so they could receive as large fees as possible. If FTI are paid for a fee for service, what does this $0.55 figure mean in reality?FTI don't have any moral hazard in valuing fund assets so if 0.55 is an accurate number, it's a positive. We haven't lost everything.

If the unit price means nothing,why publish it? Probably deluded but if I get out with 55cents in the dollar, I would be delighted. There seems to be a lot more pessimism in the thread since LM called in the voluntary administrators. The administrators have got to be a good thing as LM are no longer in control of the fund. Things are on the up!

However, I do have sht4branes.


----------



## No Trust (7 April 2013)

We heard the same thing on the Equititrust Thread, may be a bit early to be optimistic, my view is that there are more surprises in store...


----------



## ASICK (7 April 2013)

sht4branes said:


> Hi,
> 
> FTI have adjusted the unit price to $0.55 for the LMIF. It was in  LM's best interest to inflate the funds under management so they could receive as large fees as possible. If FTI are paid for a fee for service, what does this $0.55 figure mean in reality?FTI don't have any moral hazard in valuing fund assets so if 0.55 is an accurate number, it's a positive. We haven't lost everything.
> 
> ...




I'll remain the sceptic, $0.55/unit, no way.

sht4branes, I don't think any of us think you've lost everything, but a number of us think you (like us) have lost most of your investment.

be careful about reliance on unit price - it's capital return that you should count.


----------



## RODENT69 (7 April 2013)

A few numbers to chew on re the first Capital Payment to investors in the WFMIF

As ASICK rightly says Trilogy would take 0.5% of FUM  -- However in reality this  numerically small % translated into Trilogy actually taking 15.60% *of all the monies they received as the Capital Payment*, where it is believed the FUM value is around only $55 Mil ( FUM figure not yet confirmed) still waiting for the 2012 Audited return!!

 What started out as a Capital Payment to Investors (when it left LM) Trilogy used to pay down the outstanding Income Distribution  liability (less their Fees and Costs)  This liability was for 8 monthly Income Distribution payments covering the period May 2010 to Dec 2010. There is still approx 40% remaining of this liability for a value of approx $1.2 Mil


----------



## ASICK (8 April 2013)

*Trilogy*



RODENT69 said:


> A few numbers to chew on re the first Capital Payment to investors in the WFMIF
> 
> As ASICK rightly says Trilogy would take 0.5% of FUM  -- However in reality this  numerically small % translated into Trilogy actually taking 15.60% *of all the monies they received as the Capital Payment*, where it is believed the FUM value is around only $55 Mil ( FUM figure not yet confirmed) still waiting for the 2012 Audited return!!
> 
> What started out as a Capital Payment to Investors (when it left LM) Trilogy used to pay down the outstanding Income Distribution  liability (less their Fees and Costs)  This liability was for 8 monthly Income Distribution payments covering the period May 2010 to Dec 2010. There is still approx 40% remaining of this liability for a value of approx $1.2 Mil




Ah.. the more you have to rely on Trilogy, the more you get to know about Trilogy.

Trilogy filed the PFMF's return with ASIC on 15 March 2013, yet to date, Trilogy hasn't released that return to PFMF investors - typical of Trilogy to leave investors without information.

Rodent, my comment re: .5% FUM was more about being better than 1.5% FUM and therefore more in line with what receivers might charge.

I'd be guessing that Trilogy held back a chunk for future fees - after all, the manager shouldn't go without.

And yes, don't keep thinking that Trilogy's .5% will remain .5% of what you guys get back - it doesn't quite work like that.  Trilogy'll do much better than that.

Keep in mind that PFMF members will only see $0.0075/unit return from 1 July 2012 to 30 June 2013  - we've learn not expect too much from Trilogy, regardless what Trilogy spruiks.

Read all about it !!! :
http://www.moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


----------



## RODENT69 (8 April 2013)

ASICK   I refer to your last posting #578

As we know you are not an investor in any LM funds HOWEVER  Piper alderman are asking "Investors" their views on prospective replacement RE's for LM.  From the article at the weekend in AFR I would not be surprised  if they think Trilogy is suitable, of course that's not desirable

Perhaps you might consider sending your summary notes / Link as per the last item in your posting to make it clear why many informed investors would not ever want Trilogy as an  RE.  

I don't know if other LM investors agree with what I am proposing here, or even if you agree? but I will be submitting a personal note to P.A. clearly indicating that I would not want Trilogy ever as the RE for all of the LM funds


Rodent69


----------



## ASICK (8 April 2013)

RODENT69 said:


> ASICK   I refer to your last posting #578
> 
> As we know you are not an investor in any LM funds HOWEVER  Piper alderman are asking "Investors" their views on prospective replacement RE's for LM.  From the article at the weekend in AFR I would not be surprised  if they think Trilogy is suitable, of course that's not desirable
> 
> ...




G'day Rodent,

Darn, that meddling Piper Alderman.  I was quite surprised that Piper Alderman were asking financial advisors to hold their proxies at the creditors meeting, what good could they do other than obfuscate the process?

Perhaps the lawyers would want an entity as manager that'd be more likely to do business with them? I'm sure FTI would be quite capable of running any proceedings on their own - that might not come as good news for Piper Alderman, no business, no money.

I'd like to think that Piper Alderman might be moved by:
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf

But like entities on this file:
http://moneymagik.com/crap_file.php

I don't think the issue for Piper Alderman is concern over Trilogy's past performance, I think it's more about making money off your problems.  Piper Alderman probably wants to be the first lawyer  to get "a foot in the door", but with FTI at the helm, I'd guess that's unlikely to be the case.

My views on Trilogy are clear:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

In particular why I wouldn't want Trilogy anywhere near any interest of mine (especially a litigation interest): http://www.moneymagik.com/litigation.php

All links are to public (disclaimed) documents - if anyone wants to send them anywhere, then they may.

Rodent, I would caution you to be careful dealing with (pushy) lawyers like Piper Alderman. If there is a wad of $$$ out there somewhere, then it'd be much better if a receiver is able to pursue it with your own (fund) money rather than give 30% - 40% away to a litigation funder thru the likes of Piper Alderman.

FTI will be well resourced to take care of all litigation - right now with the pending court applications, I'd say there's some "bent noses" down at Piper Alderman and Trilogy.

It was pleasing to see the article about FTI not wanting Trilogy anywhere near the LM funds (although I couldn't read the whole article) - I guess the article really set the stage for Trilogy's and Piper Alderman's respective roles as spectators.


----------



## RODENT69 (8 April 2013)

ASICK said:


> G'day Rodent,
> 
> Darn, that meddling Piper Alderman.  I was quite surprised that Piper Alderman were asking financial advisors to hold their proxies at the creditors meeting, what good could they do other than obfuscate the process?
> 
> ...





ASICK   Thanks very much, I certainly understand the points you make re PA vs FTI , and the cautionary reference having been approached by P.A. quite a while back, I do see this as a fishing expedition


----------



## ASICK (8 April 2013)

*Litigation*



RODENT69 said:


> ASICK   Thanks very much, I certainly understand the points you make re PA vs FTI , and the cautionary reference having been approached by P.A. quite a while back, I do see this as a fishing expedition




Happy to help Rodent - of course, as investors, you guys have to make up your own minds. 

Even if a successful action is launched against the previous LM directors, I think other security holders would probably have already taken any exposed assets, so that's not a likely path for recovery.

It seems to me from the PDS that there's no directors' indemnity except under certain circumstances the directors are entitled to be indemnified by the fund itself - so, the outcome for that course of action is a "no brainer".

That leaves valuers and the auditors.

The receivers of Equititrust's Income Fund is pursing one or more valuers - to date, I'm not aware of any actions by Trilogy against valuers of PFMF security assets.    Trouble is, just like noses, everyone's got an opinion - so I suspect a successful action against a valuer's valuation might not be as easy as first thought.

Then there's the auditor - Trilogy told PFMF investors that while it first thought legal claims could amount to in excess of $300m, due to contributory negligence that claim could be reduced to about $100m.  Finally it claimed $60m on behalf of the fund, even though the insurance could bear no more than $20m (Phil Sullivan, ex-CEO of City Pacific alleges the insurance is void because the run off policy wasn't maintained).

http://www.moneymagik.com/litigation.php

Since no claim was brought by Trilogy against the fund's auditor, it seems (at least to me) that contributory negligence has had  quite a dampening affect on the value of any potential claim on behalf of PFMF members.

http://en.wikipedia.org/wiki/Contributory_negligence

I think the information is "on the table" - at least an informed decision is able to be made.


----------



## ASICK (9 April 2013)

*And the Good News Keeps Rolling in !*

http://www.baysidebulletin.com.au/s...inted-at-capalabas-rhodes-development/?cs=213

""At the moment, the building site has been abandoned and the four-year building development application is still current but lapses in November," Cr Gleeson said." ... and the block is partly flooded !!!

and again, a part report from AFR:
http://www.afr.com/p/business/property/asic_backs_fti_as_receiver_to_lm_HwIpEbTAYqJhcMfi41QuDM
(subscriber only content)

"The Australian Securities and Investments Commission is supporting the appointment of FTI Consulting as receiver to the controversial $400 million LM Managed Performance Fund.", and we knew that from the material disclosed by FTI.


----------



## ASICK (9 April 2013)

*Equititrust Income Fund*

For those interested, here's some consolidated information about Equititrust Limited & the Equititrust Income Fund (EIF):  http://moneymagik.com/equititrust.php


----------



## ASICK (9 April 2013)

*Re: LM Investment Management  - Licence Suspended*

http://www.investordaily.com.au/cps/rde/xchg/id/style/16421.htm?rdeCOQ=SID-0A3D9633-86229D46


----------



## ASICK (9 April 2013)

*Re: LM Investment Management*

I started this link:
http://moneymagik.com/lm_investment_management.php

It'll be very slow getting together and I'm not sure how much info I'll be able to put there.

The table of news articles might be a useful resource for those looking for documents sorted in time.

The link is available for the menu (on the rhs, second from the bottom)


----------



## Taja (10 April 2013)

Thanks again ASICK for taking the trouble with these posts/updates and the link.  Very helpful.


----------



## ASICK (10 April 2013)

*Trilogy Healthcare REIT investors lost ALL.*

The Trilogy Healthcare REIT is being wound up.

Here's the mid-term 2013 report (as at 31 December 2012):
http://moneymagik.com/trilogy_healthcare_reit_dec_2012.pdf

All signed off nice and neat by Philip Ashley Ryan, of "breach of trust" fame:
http://moneymagik.com/trilogy1.php

Punters lost their capital.

The asset which cost over $8.1m was sold for $2.35m (net proceeds).

That's a loss of about 71% !

Proof positive about Trilogy's ability to make massive losses on behalf of its investors.  While it's not a large fund, every $1.00 is just as important to each of the investors in the Healthcare REIT as it is to every other investor in every other fund.

The bank forgave (lost) $871k - a "sweet" memory for doing business with Trilogy?  If there's any pleasing point here, it's that the bank lost that $871k and investors didn't.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
(link to be updated with the latest information)


----------



## Titinet (10 April 2013)

*Re: And the Good News Keeps Rolling in !*

Can anyone explain to me why MPF is the only fund under receivership process? Not the others? 
If FTI is the receiver, what will be the next action? 

Thanks


----------



## Mysteryman (11 April 2013)

I haven't been online for a while but I want to thank ASICK for all his valuable links, hints and information. It has been a big learning curve for me and most, I'm sure.

If any investors do not want to see Trilogy as RE of LMFMIF or any other LM fund for that matter, I encourage you to email FTI today and have your say. It seems some decisions may be made this Friday.


----------



## ASICK (11 April 2013)

*The Speed of Light and Other Things*

Thank you Taja and Mysteryman - I do what I can to provide more information for investors in your funds.  My only concern is that your funds don't follow down the same path as the PFMF and other funds did with Trilogy: http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

When I was taught the fundamentals of radio communications, I was taught light travels at the speed of about 300m metres/second (186k miles/second) - but strangely, communications between NZ and Australia seems to be a tad tardy: it seems to take a whole day to get there:
http://www.financialstandard.com.au/news/view/26842080

Still, stale news is better than no news at all.

Re: LM FMIF - I guess we'll find out the future of the FMIF sooner rather than later (since LM's licence has been suspended).  I thought that FTI had also applied to the court to be appointed receiver of the FMIF, but that doesn't seem to be the case.  Perhaps in the light of licence suspension FTI will make a further court application to be appointed receiver there too?

http://www.lmaustralia.com/Home/notifications.aspx


----------



## Mysteryman (11 April 2013)

Does anyone know by what date Companies are required to produce their end of year financial statement? Trilogy has been RE of LMWFMIF for over 5 months now and we are still waiting for 30 June 2012 statement.


----------



## ASICK (11 April 2013)

Mysteryman said:


> Does anyone know by what date Companies are required to produce their end of year financial statement? Trilogy has been RE of LMWFMIF for over 5 months now and we are still waiting for 30 June 2012 statement.




15 March 2013

Trilogy filed the PMFMF's return on 15 March 2013 but hasn't released it to investors yet:
http://balmaintrilogy.com.au/
(it's what we've come to expect from Trilogy)

The PFMF's return is available for a cost of $36 from ASIC as of a couple of days ago - as a note, I paid ASIC $36for the Trilogy Healthcare REIT's return.

Type your fund's name into the search field AT THE TOP of this page:
https://connectonline.asic.gov.au/R...ic first mortgage fund&searchType=OrgAndBusNm

Latest:
http://www.propertyobserver.com.au/...ho-spruiked-lmim-mortgage-funds/2013040960193


----------



## Mysteryman (11 April 2013)

Has anyone in the WFMIF noticed the total lack of information from Trilogy since they took over as RE of WFMIF? Whatever happened to the 'we will improve communication' spin we were handed out? Their website offers no extras - still stuck back at the time they took over. Have they expired? No could not have done. They just managed to extract a large fee and large expenses claim out of the latest payment we received from LM.


----------



## Mysteryman (11 April 2013)

ASICK said:


> 15 March 2013
> 
> Trilogy filed the PMFMF's return on 15 March 2013 but hasn't released it to investors yet:
> http://balmaintrilogy.com.au/
> ...




Thanks ASICK. Have searched your asic link but can find no evidence of Financials 2012. In fact nothing much added since November last year. If 15/3/2013 is deadline, I guess I'll have to contact asic about it.


----------



## Mysteryman (11 April 2013)

Mysteryman said:


> Thanks ASICK. Have searched your asic link but can find no evidence of Financials 2012. In fact nothing much added since November last year. If 15/3/2013 is deadline, I guess I'll have to contact asic about it.




Have contacted ASIC and got the following response in regard to missing LMWFMIF Financial statement for 2012:

"The Form 388 Copy of financial statements and reports (Form 388) is required to be lodge within 3 months after the end of the managed investment scheme's financial year.

ASIC have not received the Form 388 for 2012 for the above managed investment scheme.

The managed investment scheme may be picked up in a compliance assessment preformed by ASIC, ASIC will then issue them with a compliance letter asking the scheme to submit the Form 388."

Since LM were RE 3 months from end of Financial year, it seems they are non complying in this as well as many other areas. Well, what a surprise!! Whether Trilogy have had an extension due to RE ship of 5 months, who knows?


----------



## ASICK (11 April 2013)

Mysteryman said:


> Thanks ASICK. Have searched your asic link but can find no evidence of Financials 2012. In fact nothing much added since November last year. If 15/3/2013 is deadline, I guess I'll have to contact asic about it.




Hi Mysteryman, the closing date for filing seems to be 15 March in each year.  Trilogy filed the PFMF's on 15 March 2013 but didn't disclose it to investors until TODAY (11 April 2013), nearly a month later.

ASIC took over TWO WEEKS from 15 March to disclose that the financials had been filed, and then another week before the report was available to buy.

Nothing works in investors' favour - it's all about them, not about us.  If Trilogy was concerned about disclosing information at the earliest possible time, it'd publish the financials on its website on 15 March 2013.

Trilogy would be in a position to seek an extension of time in filing the return for your fund (as you allude to in your following posting): in which case, you'll all have to wait - you're not entitled to know much, after all, you're only the investor.

The bottom line is that you know the story about mid-term reports now, and that's something.   Full year reports are filed on or before 15 September each year.

I've updated the litigation information at the bottom of this page:
http://moneymagik.com/lm_investment_management.php
re: Investors Action Group

It's important to read the "about" link provided - the site is clearly run by a group of self-interested lawyers.


----------



## ASICK (12 April 2013)

*Re: LM Investment Management  -  court applications*

Seems Trilogy turned up at the Qld Supreme Court registry late yesterday afternoon.

$$$$ .. puff .. pant ... $$$$


----------



## Mysteryman (12 April 2013)

*Re: LM Investment Management  -  court applications*



ASICK said:


> Seems Trilogy turned up at the Qld Supreme Court registry late yesterday afternoon.
> 
> $$$$ .. puff .. pant ... $$$$




....and....      Can see you want us to guess why.......

Well it is decision day today by FTI.

......and I'll put my money on Trilogy being disappointed..... At least for now.


----------



## ASICK (12 April 2013)

*Re: LM Investment Management  -  court applications*



Mysteryman said:


> ....and....      Can see you want us to guess why.......
> 
> Well it is decision day today by FTI.
> 
> ......and I'll put my money on Trilogy being disappointed..... At least for now.




no .. no .. no .. Mysteryman .. no guessing ... I don't know.
I've just been told (by a non-LM related person) that Trilogy filed late yesterday - nothing more.

My only suggestion was Trilogy was motivated by $$$$$ .. I really didn't have anything more to add.

Why do you think Trilogy'll be disappointed? and why only for now?


----------



## Mysteryman (12 April 2013)

*Re: LM Investment Management  -  court applications*



ASICK said:


> no .. no .. no .. Mysteryman .. no guessing ... I don't know.
> I've just been told (by a non-LM related person) that Trilogy filed late yesterday - nothing more.
> 
> My only suggestion was Trilogy was motivated by $$$$$ .. I really didn't have anything more to add.
> ...




Well, I think Trilogy are still after FMIF and other funds. FTI are having some sort of 'proceedings' or 'hearing' today and I know no more than that. But I suspect Trilogy is not the flavour of the moment and the news will not be to their benefit - just a guess. But knowing them, they won't give up easily - it is not in their nature.


----------



## ASICK (12 April 2013)

Looks like Korda Mentha will wind everything up.


----------



## ASICK (13 April 2013)

http://www.international-adviser.com/news/products/australian-court-hands-control-of-key-lm-fund


----------



## ASICK (13 April 2013)

ASICK said:


> http://www.international-adviser.com/news/products/australian-court-hands-control-of-key-lm-fund




Another perspective:
http://www.goldcoast.com.au/article/2013/04/13/450304_gold-coast-business.html

Looking for a specific article?
http://moneymagik.com/lm_investment_management.php
(the contents of this page will be updated as new documents become available)


----------



## ASICK (14 April 2013)

*Great News*

http://news.silobreaker.com/lm-administrator-slams-rival-5_2266728265307652111
NOTE: Limited assess on this link.

"Despite backing by class action law firm Piper Alderman, the suitability of Trilogy Capital as potential new manager of the funds of the collapsed LM Investment Management has been questioned by administrator FTI Consulting. The latter will also collaborate with the Australian Securities & Investments Commission..."

Well, there we go, Piper Alderman supported Trilogy - of course, it's unlikely there'll be any need for Piper Alderman now there's a receiver in place - no need for a class action.  Oh dear .. and no need for Trilogy.

Great news !!!

(more documents now:
http://moneymagik.com/lm_investment_management.php)


----------



## Taja (15 April 2013)

Thanks ASICK.  Is there no end to the byzantine machinations here .. ?  I am naive, but I don't fully understand why Piper Alderman would be pushing Trilogy, and how that ties in to the class action lawsuit they are exploring ..? Any illumination gratefully received!

Thanks and regards.


----------



## ASICK (15 April 2013)

*"Ants Before Rain"*



Taja said:


> Thanks ASICK.  Is there no end to the byzantine machinations here .. ?  I am naive, but I don't fully understand why Piper Alderman would be pushing Trilogy, and how that ties in to the class action lawsuit they are exploring ..? Any illumination gratefully received!  Thanks and regards.




Actually Taja, it's really quite simple, and in its simplest state, it's all about $$$$$.

There are generally three types of legal costs:
1. THE LOWEST - The rate at which a specific court rates costs - the winning party may recover costs, but not those actually paid, rather those as prescribed by the court.  It's unlikely the winner will recover costs actually paid since the court scale is less than the prevailing market costs.
2. THE NORMAL - The rate at which work is normally charged out - these are at the card/market rate as set out by the firm, or as otherwise agreed to between the firm and the client (win/lose).
3a. THE HIGHEST - The rate work is done 'on spec' for individuals or small groups - there's risk here for the lawyer, so the rate goes up - if between a lawyer and client, the lawyer might seek a "cut" of the action - say, 30% of the damages awarded. After all, there's nothing in for the lawyer if the case is lost. In fact, the lawyer might be required to pay the other side's costs. The law firm covers all costs. 
3b. THE HIGHEST - Class Actions - actions which the law firm is unable to fund. Typically, the lawyers (solicitors/barristers) will agree to a REALLY BIG charge out rate and a deal is struck between the lawyers, the clients, and a litigation funder. In class actions, the lawyers may not get paid for anything other than "out of pocket" expenses unless there's a win - it depends on the deal between the funder and the lawyers.  Members of a class may be required to front up with some $$$$ for investigations. 

When it all boils down, it's all about $$$$, business.

In my view, Piper Alderman are "ambulance chasers" - I might be naÃ¯ve about this too, but I've never heard of a law firm seeking proxies from creditors as Piper Alderman did with LM's creditors.  Then we have Piper Alderman backing Trilogy to become manager.  To my mind, these actions show a lot of self-interest by Piper Alderman.  I mean, there's no case, and there's no assurance of a bag of loot to gain, and just look at Piper Alderman's behaviour!

Take for example the new website:
http://www.investorsactiongroup.com.au/?page_id=11 - read the "about":
http://www.investorsactiongroup.com.au/?page_id=2

and there it is, a group of Sydney barristers - sure, ask them about a class action.  They're getting in on the ground floor.  That's business.  And we have the likes of the PIF Action group spruiking that website.  And Piper Alderman's out there too, tying to ensure they get part of the action.

Piper Alderman have been spruiking a class action with Equititrust IF members since 13 April 2011:
http://moneymagik.com/lm_investment_management.php
and they still spruik today. And look at what's happening there:
http://moneymagik.com/Liquidators Reports - 20130325 - Circular to Investors.pdf

I wonder what No Trust (as an EIF investor) thinks of his not-so-favourite entity teaming up with Piper Alderman?

I wonder whether Piper Alderman took a look at Trilogy's history?
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

To my thinking, it's unlikely that a fund manager with a good reputation would look to manage the LM funds as there are today - that's where Trilogy comes in, and that's where Piper Alderman probably has to follow.

Fund managers are only paid to manage - masses of legal activity sap off profits.  From a profit perspective, it'd make sense for a fund manager to do a deal with a class action lawyer - after all, the 30% of the take isn't coming out of the manager's pocket, it's coming out of any award to the fund (that is, to investors).

In this way, the manager's profit from its management fees is protected.  Nice work if you can get it.

Administrators and receivers all charge out at a card (or agreed to) rate for work, so the more work they get, the more money they make - and boy, they're not cheap, but they'll probably work out a much better deal for investors viz-a-viz a slice of the action to class actions lawyers backed by a litigation funder.

I think it's important to get to grips that it's not about investors, it's about $$$$.

The *least *amount of work managers have to do, the *more *profit they make.  Expect class action. Don't be surprised that Piper Alderman backed Trilogy.

The *more *work administrators/receivers have to do, the *more *profit they make. Class actions are unlikely.  Don't be surprised that FTI shuns Trilogy and Piper Alderman.

Trilogy spruiked a class action for three years, and in the end sued by way of (1) up to $1m from the fund, and (2) work by Maurice Blackburn on spec (terms not disclosed to members): http://www.moneymagik.com/litigation.php

and IMF? well look at the crap that remains of its website: http://www.imf.com.au/cases.asp?ID=110

After paying $2m to fund the public examination, IMF did NOT fund the current litigation - IMF pulled out long ago: http://www.moneymagik.com/imf_litigation.mp3
(Rodger Bacon speaks to a fund investor - November 2012)

oh! and for the record, Trilogy has NOT disclosed to PFMF members that "it's not looking good"!

How would I describe Piper Alderman's behaviour in these funds? 
"Like ants before rain"


----------



## ASICK (15 April 2013)

*Maximizing Outcomes*

To my mind, a damaged fund with a manager (responsible entity) on an earner calculated by reference to funds under management (which includes debt) together with a lawyer/s on 'spec' or otherwise funded is the worst possible situation investors could possibly find themselves.  However, in saying that, investors should be prepared to see some of the recovered monies directed to litigation - for what's it's worth, I think such a spend is a good one indeed.

Michael West reported (in part), "City Pacific, whose once-$1 billion mortgage fund was frozen in March 2008, now limps along under new managers Balmain Trilogy.  Half a billion in losses shared by its 10,000 investors."
http://www.smh.com.au/business/the-...-management-20120517-1ysnv.html#ixzz2QTduutG0

Of course, given his bias, he didn't report the fact that Trilogy not only lost about 56% of the fund's value since taking it over, but also the fact that Trilogy's earn has been heading to $20m with only $0.0875/unit (*886m units = $77.5m) to investors in that same period! (With only $0.0075/unit likely for the period 1 July 2012 - 30 June 2013 - next payment? Maybe in the last quarter of 2013).

Neither did he report that Trilogy is going to spend about $1m of investors money pursing certain ex-Citypac directors when IMF would not.  Of course, no enquiry by Mr. West into the deal Trilogy did with Maurice Blackburn to bring the proceeding that IMF would not.

That's all very interesting when one reads this portion of a previous report from Mr. West:
"Further, funders are unlikely to bring frivolous cases, or cases coloured by vengeance or other suspect motives, as they are more likely to be governed by a logical view of success."
http://www.smh.com.au/business/open-season-for-litigation-funders-20121016-27nxu.html#ixzz2QTfKnukN

It also seems to me that the luminaries in these management companies tend to make the issues very, very personal - as Mr. West seems to do.    I think that's a problem too, because managers have an ability to bring actions which, while such actions are unlikely to recover $$$ for investors, those same actions serve as a vehicle for vengeance.

I maintain my view that an independent receiver appointed to each fund will protect each fund's interests with the potential for the greatest amount recovered for the members of those funds.

I'm pleased that the court appointed KordaMentha and Calibre Capital independently to the LM MPF - just as ASIC was slack in supporting FTI as receiver for the LM MPF, it was also slack in appointing Citypac's liquidator as the liquidator of the Citypac Income fund.  

As least in the matter of the LM MPF, the court has seen the merit of independent control of entities which are clearly conflicted.


----------



## ASICK (15 April 2013)

*Why Class Actions?*

If members of a managed fund/scheme wish to bring proceedings against an entity, say, an auditor, then there's a number of ways to bring such an action:

1. a member may bring an action on his/her/its own behalf - in many cases this is unlikely because of the risk of exposed assets and the upfront cost of the action itself.
2. members may group together in a class, and then bring the action.  A funder is generally required because members do not want to expose already diminished assets and perhaps because they can't apportion the cost of the action between themselves.  Lawyers and funders will need to group as many members as possible into the class to ensure the commercial viability of the action.
3. the scheme itself is able to bring the action using the fund's resources (best option, the scheme takes all the risk, and all of any rewards)
4. the scheme may bring an action using a litigation funder (may give up 30% of any awards but there's no exposure to loss).  Lawyers and funders will need to ensure the commercial viability of the action.

In my view, in order of preference, it's best to:

1. bring an action by the scheme, using the scheme's resources.
2. bring an action by the scheme, using a litigation funder.
3. bring a class action, using members' own money.
4. bring a class action, using a litigation funder.
5. bring an individual action.

If an action is too risky for a funder, it'll probably be too risky anyway:
http://www.moneymagik.com/litigation.php

If a funder is willing to fund, then the scheme should be willing to take the risk by itself.


----------



## ASICK (15 April 2013)

http://www.lmaustralia.com/Download...nvestors-(MPF)-E-Letterhead.aspx?ext=.pdf.pdf

This should be interesting - Piper Alderman got one of the two they supported into the ring.  

What's in it for Piper Alderman?

More importantly, what's in it for MPF investors?


----------



## Taja (15 April 2013)

ASICK, it's slowly sinking in - many thanks for the time and effort in your detailed response.


----------



## Mysteryman (16 April 2013)

Piper Alderman are at it again. Could be bad news from the FMIF. Are they backing Trilogy this time? It says:

"The firm presently acts for a major portion of the unit holders by value." Can this true?

http://www.piperalderman.com.au/firm/lm-investment-class-action


----------



## ASICK (16 April 2013)

*"A Brave New World"*



Mysteryman said:


> Piper Alderman are at it again. Could be bad news from the FMIF. Are they backing Trilogy this time? It says:
> 
> "The firm presently acts for a major portion of the unit holders by value." Can this true?
> 
> http://www.piperalderman.com.au/firm/lm-investment-class-action




"Piper Alderman has filed an application to replace the responsible entity of the LM First Mortgage Income Fund and expects that application to be heard shortly."

Yes, "ambulance chasing" has taken on a new face.  I just couldn't imagine Slater & Gordon doing likewise - but - will they be forced to do likewise given that lawyers such as Piper Alderman are going to the "scene of the accident" (so to speak) to be first in line?

I confess I was surprised at what's happened.  It showing me that avarice is quite a powerful driving force.

I also confess that I'm for independence on both sides, "This will ensure that the same party is not acting on both sides of the fence (a factor that the judge in the Performance Fund matter before the Court on Friday thought was determinative (amongst other things) in appointing a new trustee to the Performance Fund)."

However, having said that, the same law firm is driving the whole show - the self-interest is mind-boggling.

I find it difficult to believe that such effort has been exerted by Piper Alderman merely to get a job of work out of getting its preferred entity in place - the real money's in class actions or alternatively, in getting "part of the action", a percentage - a BIG percentage, like a base of 30% of the take, a job on spec.

If there's $$$ in these funds, then why go the class action/spec path? ah .. let's see which way they go.

I take a stab at the future: if there's litigation, it's probably going to go down the class action path with Piper Alderman in the box seat. (my prediction)

In the PFMF, Trilogy done a deal with Maurice Blackburn and still intends to spend $1m of PFMF money ($500k spent by early 2013).  While Balmain Trilogy's Griffin spruiked the 30% cut to IMF and the benefits of same, now that IMF's pulled out, no similar disclosure's been made about the deal struck with Maurice Blackburn.  A BIG % (say, 30%) could still be in the offering, but just not to IMF.
http://www.moneymagik.com/litigation.php

Back to LM: I don't believe that either of KordaMentha or Trilogy (or any other entity) are compelled to disclose deals they make with lawyers on behalf of the punters locked up in these funds, but there's no harm in asking them.

Bottom line, investors stand to hand over 30% to a funder and the lawyers if a class action or spec deal is struck - much more $$$$ than if the fund brings an action on its own behalf.

Of course, all this is subject to the existence of a cause of action against the directors' indemnity insurance, the auditor, or valuers - but I wouldn't be expecting anything from the directors themselves, as I understand it, the juicy exposures will probably already be well and truly gone.  

Don't be surprised to see filings for bankruptcy - and remember, creditors can't snap up $$$$$ snugly tucked away in super funds.

It's up to FTI to put on its "thinking cap" - but fronting up with a viable replacement in the LMFMIF might be a good move.  Some knowledge of Trilogy's past performances might be of value:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

Yes, it's a Brave New World.


----------



## ASICK (16 April 2013)

Taja said:


> ASICK, it's slowly sinking in - many thanks for the time and effort in your detailed response.




Good morning Taja. 

There are the fundamentals, and there is the breaking of new ground: you've got it all as an investor in an LM fund.

The most important thing that should be sinking in is that it's NOT about investors, it's about $$$$$$.


----------



## ASICK (16 April 2013)

Mysteryman said:


> Piper Alderman are at it again. Could be bad news from the FMIF. Are they backing Trilogy this time? It says:
> 
> "The firm presently acts for a major portion of the unit holders by value." Can this true?
> 
> http://www.piperalderman.com.au/firm/lm-investment-class-action




Yes, it could be true.  Keep in mind, "major" is not "majority" or "most"

"major" = "Important, serious, or significant": 
https://www.google.com.au/#hl=en&gs...38,d.aGc&fp=5776ac008959927f&biw=1920&bih=934

Don't be surprised by spruiks from Piper Alderman - they're known for them.

This was posted on Piper Alderman's website over a year ago (13 February 2012), "Piper Alderman is currently finalising the pleadings to commence a class action against Equititrust Limited ("the Company") and a number of its directors. The Court documents are expected to be filed in the coming weeks."  http://www.piperalderman.com.au/firm/equititrust-limited-class-action

Anyone seen the pleadings?


----------



## ASICK (16 April 2013)

*Piper Alderman*

http://www.itnews.com.au/News/335266,law-firm-mum-on-vodafone-class-action-sign-ups.aspx

It's all too easy for law firms to spruik about actions, in many cases there's no firm evidence, but the spruiking goes on.

Investors in managed funds are best to AVOID class actions AT ALL COSTS.

Class actions should be a LAST RESORT for members of managed funds.


----------



## ASICK (17 April 2013)

*BIG $$$$$ & Fish & Chip Wrappers*

http://www.itnews.com.au/News/335266,law-firm-mum-on-vodafone-class-action-sign-ups.aspx

"Vodafone last week said the firm was known for promoting class actions suits, a claim Ivantsoff rebuffed."

rebuff = "Reject (someone or something) in an abrupt or ungracious manner."
https://www.google.com.au/#hl=en&q=...83,d.aGc&fp=fcb5ee69c662e450&biw=1920&bih=934

That's quite an interesting exchange:

1. Vodafone says Piper Alderman (PA) promotes class actions.
2. PA rebuffed the claim by asserting it only "does" something if it's got merit.

To my mind, PA's retort has nothing to do with Vodafone's claim.  It's all very well to "do" class actions with merit, but really, that's got nothing to do with whether (or not) PA promotes class actions.

For my part, I agree with Vodafone, PA promotes class actions (whether or not PA "does" them) - three examples are (1) Vodafone, (2) Equititrust, and (3) LM.  I wonder if PA has adequate evidence to proceed in any one of these three cases?

I get the impression that PA operates very differently to the likes of Slater & Gordon and Maurice Blackburn - and the difference is that PA is actively going out to get business - so much so that in the matter of LM funds, PA has been actively interfering in fund matters.

Investors in at least one LM fund have been contacted by PA - I wonder whether advice to those investors from PA could really be considered independent when PA is motivated by self-interest? that is, since it's motivated by the allure of the massive fees which flow from class actions.

Investors might believe that they won't be able to make a claim without the likes of PA, but it's really the likes of PA who can't make the BIG $$$ without the likes of LM investors.  

FTI states (in part), "A firm of Sydney lawyers wrote to investors lobbying them for support to appoint either Trilogy Funds Management Limited or KordaMentha. These circulars drew support from only 7 investors, who were represented at the hearing."
http://www.lmaustralia.com/Download...nvestors-(MPF)-E-Letterhead.aspx?ext=.pdf.pdf

PA needed LM investors because PA sought standing in the court - without investors to give standing, PA and those it promotes (Trilogy & KordaMentha) would be  "out in the cold" (so to speak).

I get the impression that investors get caught up in PA's flurry of activity in its rush to "capture" investors in funds such as Equititrust and LM - the Statute of Limitations Act provides a time frame of six years within which to bring an action, but if one was caught up with PA's spruiks, one might think that the time frame was only six days.

I also think that investors are led to believe that there will be a claim for BIG $$$$$ - this belief comes about by the fact that they've lost money and therefore they're entitled to recover - but losses by themselves do not give rise to recovery, there has to be a breach of duty (statutory or otherwise).

It seems to me that PA gives investors an impression that an action will proceed, proceed at a time well before actual evidence to sustain a cause of action is established.  But there is not fire in every case of smoke, consequently investors might be hanging on year after year in anticipation of an event (a class action) that simply does not materialize.

It might be that investors may find themselves forking out up to 50% of a recovery (and giving up all recovered legal costs) by way of a class action when such an action may have be undertaken by a receiver or administrator without having had to give one cent to a litigation funder, and with recovery of the substantial part of the legal costs.  Has choice for investors been unnecessarily narrowed down to PA?

The sooner members of damaged managed funds realise that there's BIG $$$$$ to made from their predicament, the sooner they'll understand the motivation of the likes of PA.

FTI: from all to nothing? - what a surprise? At the outset, there was FTI as administrator of LM making all those $$$$ from looking after the LM funds as well.  Suddenly, the LM MPF is gone .. and now there's more legal activity by PA to see the LMFMIF gone.  From all to nothing for FTI?

Remember that old adage? 

"Today's headlines are tomorrow's fish & chip wrappers".


----------



## Mysteryman (17 April 2013)

Well said ASICK. I totally agree with your message 617. You say it like it is. A pity not every investor in LM will read what you have to say.

Being an investor in the WFMIF under Trilogy and after the Performance Fund was hived off to Kordamentha, I am worried that the courts may decide to also put the FMIF under Trilogy. Probably would make a nice little package in their eyes. While this may reduce the total fees we are now burdened with, it is not a desirable situation, given all that we have heard about Trilogy's performance in other funds. Another RE or administrator for both funds together would be best but not likely to happen. What are your thoughts on this ASICK?


----------



## ASICK (17 April 2013)

Mysteryman said:


> Well said ASICK. I totally agree with your message 617. You say it like it is. A pity not every investor in LM will read what you have to say.
> 
> Being an investor in the WFMIF under Trilogy and after the Performance Fund was hived off to Kordamentha, I am worried that the courts may decide to also put the FMIF under Trilogy. Probably would make a nice little package in their eyes. While this may reduce the total fees we are now burdened with, it is not a desirable situation, given all that we have heard about Trilogy's performance in other funds. Another RE or administrator for both funds together would be best but not likely to happen. What are your thoughts on this ASICK?




I tend to think that the funds will be palmed off to receivers - there's no point paying a management fee based on funds under management (FUM) which includes debt.  I agree, after the taste of $20m or so in fees to date from the PFMF, Trilogy knows that there's "$$$$ in these damaged funds" - probably not much for investors, but working off these unattainable gross asset values, managers have a field day.

I still marvel at how pleased investors are with the posted unit values even though those same values drop year after year - punters really do live for the day.

I don't think the court will appoint a manager for the FMIF, I think its days as an operational managed fund are well and truly over - and if properly informed in the material, I couldn't see a court appointing Trilogy anyway. While I'd be surprised if Piper Alderman would fully disclose Trilogy's failures, I'd hope that FTI would.
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

On that point, I'm curious to know whether (or not) Piper Alderman disclosed Trilogy's past failures to investors in its mail-out seeking support for Trilogy? Is anyone able to post a copy of the letter Piper Alderman sent out to members?

Just in case members haven't read about it, investors in Trilogy's Healthcare REIT lost ALL of their capital - in fact, the good ol' ANZ bank lost nearly $900k!  To me, that's great news about the ANZ - the bank deserves to lose for being part of a scheme that caused so much loss to so many, while permitting to use of nearly $500k of investors' money to lure investors into the fund so Rodger Bacon's relative, Rojacan Pty. Ltd. could escape unscathed with its seed-money together with a bag-full of interest.
http://moneymagik.com/analysis_REIT.php


----------



## ASICK (17 April 2013)

*Piper Alderman*

Here's the substantive excerpt of an email sent to an LM fund member by Piper Alderman, 

"Further to our earlier correspondence, we are considering applying to the court seeking a change in responsible entity of one or more of the funds managed by LM Investment Management Limited (LM), which are now in the control of administrators. The primary reasons for applying for such an order are as follows.

*Pursuance of Claims Against LM and related parties relating to the mismanagement of the funds*

A change in responsible entity will enable claims available to unit holders to be brought against LM and its associated parties relating to the mismanagement of the funds and the resultant losses sustained by unit holders. Such claims may provide a second source of money that unit holders will not otherwise have available to them if such claims are not pursued. If LM remains responsible entity this will present a significant hurdle to the investigation and pursuance of these claims as LM is unlikely to bring a claim against itself. This hurdle is already apparent as the administrators have confirmed that unit holders will not be treated as creditors of LM unless they are able to properly particularise and quantify their claims against LM and that will be extremely difficult unless a new responsible entity is able to access the books and records and undertake a proper investigation of the potential claims.

*Independence*

The administrators have had previous dealings with LM and its advisors and whilst the administrators are independent practitioners, we consider that the potential conflicts that may arise in relation to their duties owed to LM as a company and their duties owed to unit holders will present a conflict in due course, which can be avoided if an independent responsible entity is appointed. 

*What We Need From You*

We wish to understand the desires of unit holders. Accordingly, please answer the following:-

1)      Which LM managed fund(s) did you invest in?
2)      How much money did you invest in the fund (s) and have not been repaid?
3)      Would you be supportive of a change in responsible entity in principle?

Please provide answers to the above by return email (or otherwise by close of business on Tuesday 9 April).

Yours sincerely,"

What's missing? Geez, "What's in it for Piper Alderman?" that's what's missing.  Also missing is whether the spruiked legal action would be brought by way of a class action or by the receiver, and what circumstances would dictate which way the litigation would go, and ON WHAT TERMS?

This excerpt is interesting, "This hurdle is already apparent as the administrators have confirmed that unit holders will not be treated as creditors of LM unless they are able to properly particularise and quantify their claims against LM ..."

yes, true - but do investors really, seriously think that this is a matter of LM investors being creditors? - I find that a nonsense - it's about a potential insurance claim, and really, it's of no concern to LM administrators which entity gets what that's left of LM Investment Limited, FTI would merely dole out what's left according to law.

I'm stunned why investors should have found anything of concern in Piper Alderman's spruik given that it's the FMIF that's lent to the MPF, and not the other way around - it's the FMIF which holds the first mortgages. In my view, FMIF members need an entity in control which has NO association with KordaMentha to ensure independence in order that FMIF first mortgage rights are indeed exercised to the clear detriment of MPF unit holders (since first mortgages are unlikely to be satisfied).

The plot thickens.


----------



## Irishdan (17 April 2013)

My Heart bleeds....

http://www.couriermail.com.au/news/...-a-20m-price-tag/story-e6freoof-1226622415124


----------



## Mysteryman (17 April 2013)

*Re: Piper Alderman*



ASICK said:


> I'm stunned why investors should have found anything of concern in Piper Alderman's spruik given that it's the FMIF that's lent to the MPF, and not the other way around - it's the FMIF which holds the first mortgages. In my view, FMIF members need an entity in control which has NO association with KordaMentha to ensure independence in order that FMIF first mortgage rights are indeed exercised to the clear detriment of MPF unit holders (since first mortgages are unlikely to be satisfied).




Has the FMIF really lent to the MPF, I wasn't aware of it? If it has then that is another worry. Do you have the details?


----------



## ASICK (17 April 2013)

*Re: Piper Alderman*



Mysteryman said:


> Has the FMIF really lent to the MPF, I wasn't aware of it? If it has then that is another worry. Do you have the details?







I said, "I'm stunned why investors should have found anything of concern in Piper Alderman's spruik given that it's the FMIF that's lent to the MPF, and not the other way around -"

It was a test to see if you were paying attention Mysteryman .. (no it wasn't .. it was an error)

The LMFMIF has lent (as first mortgagee) to third parties behind which the MPF has lend (as second mortgagee).

Although the effect is the same, the LMFMIF did not lend to the LM MPF.

Thanks for pointing that out.


----------



## No Trust (18 April 2013)

Front Page of today's Gold Coast Bulletin... Is Quentin Tod from the Bulletin losing his marbles??? 

"A beachfront mansion made possible by greedy investors" ... So in Quentin Tod's eyes it was the investors fault that Drake built a multimillion dollar beachfront mansion to fuel his ego...  What an interesting Gold Coast way of looking at it...


----------



## ASICK (18 April 2013)

*Avarice*

An excerpt from a further email from Piper Alderman to an LM MPF investor, "Trilogy, who is the RE of the LM Wholesale Fund has consented to be a Trustee of the Performance Fund.  They are not eligible to be appointed a Court Appointed Receiver of the Performance Fund.  In this regard you will need to consider the potential conflicts that may arise as between the Performance Fund and the Wholesale Fund (and potentially the Income Fund).  A copy of Trilogy’s consent is attached."

Piper Alderman didn't see fit to disclose Trilogy's failures to investors:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

So much for full and frank disclosure!

Not likely when driven by self-interest.


----------



## mapc (18 April 2013)

No Trust said:


> Front Page of today's Gold Coast Bulletin... Is Quentin Tod from the Bulletin losing his marbles???
> 
> "A beachfront mansion made possible by greedy investors" ... So in Quentin Tod's eyes it was the investors fault that Drake built a multimillion dollar beachfront mansion to fuel his ego...  What an interesting Gold Coast way of looking at it...




I agree with you No Trust.  I thought it was particularly cruel.  Since when is going to a financial planner to help with the decision on where to invest your money greedy.  Even though I am not one, I feel he owes LM investors an apology.


----------



## No Trust (18 April 2013)

Quentin Tod should not be writing any more, they put him out to pasture once and should do so for good after his latest effort. Any intelligent person reading this article across Australia will have to question Tod's state of mind in writing something like this let alone the editor allowing it to be published. Maybe a eye should be cast on Tod and his ever so close relationship with Gold Coast Developers over the years...


----------



## No Trust (18 April 2013)

Has anyone ever shone a light on Tod's greed over the years, maybe he just doesn't want that to come out... Time for everything as they say...


----------



## ASICK (19 April 2013)

I guess the focus will now be on the present application before the court to appoint Trilogy as RE of the LMFMIF.  

I wonder whether FTI will be better prepared this time?


----------



## Mysteryman (19 April 2013)

ASICK said:


> I guess the focus will now be on the present application before the court to appoint Trilogy as RE of the LMFMIF.
> 
> I wonder whether FTI will be better prepared this time?




I'm not surprised. Could you tell me where this was reported.


----------



## ASICK (19 April 2013)

from a friend .. why? is it not the case?


----------



## RODENT69 (19 April 2013)

ASICK said:


> from a friend .. why? is it not the case?




ASICK    MYSTERYMAN    the affadivit  - Raymond Bruce  supporting Trilogy is on the PA website


----------



## ASICK (19 April 2013)

*Friends !*



RODENT69 said:


> ASICK    MYSTERYMAN    the affadivit  - Raymond Bruce  supporting Trilogy is on the PA website




Thanks Rodent .. my friend hasn't been wrong to date - I would have been surprised if he was wrong about Trilogy and PA - wow, what a pair !!

It shouldn't surprise LM members that interest in what's going on with LM funds has broadened in these past weeks.

Should I be surprised if Raymond Bruce didn't disclose any of Trilogy's failures?

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

no .. I wouldn't be surprised if he didn't - after all, he lives in NZ !


----------



## Mysteryman (19 April 2013)

Just noticed that Trilogy have at long last managed to update their stagnant website! 

But no, there is no news for the unit holders in the WFMIF who have now had Trilogy as RE for 5 months and would like to have some news about what is happening to their fund and what progress is being made to sort out all the problems in it. No news on latest valuation of fund. No financial statement produced for 30th June 2012. What happened to us being kept regularly informed. Well I guess they forgot about all that once they became RE.

But they have managed to stir themselves now there is the possibility of more funds up for grabs and added to the website with an 'Investor update' and 'Why appoint Trilogy as RE'.

I thought I might at least get some sort news about the languishing WFMIF in the 'Investor Update' but oh dear, no mention of us. I must stop this habit of expecting any information and just keep on paying the fees and expenses!


----------



## Taja (19 April 2013)

Thanks to all for posting these updates re. the Piper Alderman and Trilogy move to try and take over the FMIF.  

What can investors who are unhappy with this do to block this move .. ?  File an Affidavit opposing a Trilogy takeover, to counter the one already filed in favour of the takeover ?  

Welcome any thoughts.  Regards.


----------



## ASICK (19 April 2013)

Mysteryman said:


> Just noticed that Trilogy have at long last managed to update their stagnant website!
> 
> But no, there is no news for the unit holders in the WFMIF who have now had Trilogy as RE for 5 months and would like to have some news about what is happening to their fund and what progress is being made to sort out all the problems in it. No news on latest valuation of fund. No financial statement produced for 30th June 2012. What happened to us being kept regularly informed. Well I guess they forgot about all that once they became RE.
> 
> ...




hahahaha

Mysterman, be careful, readers'll think you and I are one !!!!!

Now, it didn't take long to get a handle on Trilogy, did it?

:iagree:


----------



## ASICK (19 April 2013)

*"Battle Royale"*



Taja said:


> Thanks to all for posting these updates re. the Piper Alderman and Trilogy move to try and take over the FMIF.
> 
> What can investors who are unhappy with this do to block this move .. ?  File an Affidavit opposing a Trilogy takeover, to counter the one already filed in favour of the takeover ?
> 
> Welcome any thoughts.  Regards.




Perhaps you could contact FTI and express support/concern.  

I couldn't imagine FTI not testing any affidavit supporting Trilogy.  

Some suggested questions might be:

"Do you know about Trilogy's Heathcare REIT?"

"Do you know about investor losses in that fund?"

"Did you know that investors lost all of their capital?"

http://moneymagik.com/analysis_REIT.php

"Do you know about Trilogy's PMMFF?"

"Do you know about investor losses in that fund?"

"Do you know that investors lost all of their capital?"

http://moneymagik.com/more_on_Trilogy_PMMFF.php

"Do you know about Trilogy's performance in its Pacific First Mortgage Fund"?

"Do you know that under Trilogy, the Pacific First Mortgage Fund lost 56% of its value?"




http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf

"Do you know about Philip Ashley Ryan's breach of trust?"

http://moneymagik.com/trilogy1.php

and on it goes ... and there's heaps more questions ... heaps !!!

I'd say it'd be great fun to cross-examine the evidence.

At a guess, I think it's going to be a "battle royale", if it's not, then FTI deserves to lose.


----------



## Taja (20 April 2013)

OK, thanks ASICK.  That should be plenty of ammunition for FTI to use if they are so inclined. 
Regards.


----------



## ASICK (20 April 2013)

*The Affidavit*



Taja said:


> OK, thanks ASICK.  That should be plenty of ammunition for FTI to use if they are so inclined.  Regards.




The Bruce affidavit speaks to factual issues relating to the fund, but apart from disclosing Trilogy is the manager of the wholesale fund, says nothing about Trilogy's failures in other funds, especially nothing in relation to Trilogy's poor performance as manager of the Pacific First Mortgage Fund.  
http://www.piperalderman.com.au/firm/lm-investment-class-action

But then, I'd find it hard to believe someone would depose to not being concerning about Ryan's breach of trust and the losses in the PMMFF, Healthcare REIT (even the ANZ bank lost), and Pacific First Mortgage Funds.  

There's so many other issues that one would have to ignore in order to support Trilogy:
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf

The plain is obviously to keep it simple and don't talk about Trilogy - hush ! nothing about Trilogy.


----------



## ASICK (23 April 2013)

*Class Actions: Interent Tensions*

"Class actions can provide access to justice for a large number of consumers who may otherwise have difficulty in resolving disputes.

But there is also an inherent tension in these types of schemes between the interests of the funders, liquidators, lawyers and participating members."

http://www.investordaily.com.au/cps...A3D9633-FD4F6BEB&rdeCOQ=SID-0A3D9632-0338F168

members of LM funds ought to start thinking about the "inherent tension" - it might mean to a lot of money to them.

correction to the last paragraph of my previous post: "plain" = "plan"


----------



## Freya (24 April 2013)

Taja said:


> OK, thanks ASICK.  That should be plenty of ammunition for FTI to use if they are so inclined.
> Regards.




Having looked at that spaghetti diagram, there must be conflicts all over the place. Trilogy are not the answer but it screams out for someone truly independent to just get in there and collect the money for investors. Any takers ?


----------



## ASICK (24 April 2013)

Freya said:


> Having looked at that spaghetti diagram, there must be conflicts all over the place. Trilogy are not the answer but it screams out for someone truly independent to just get in there and collect the money for investors. Any takers ?




Clearly conflicts existed between Drake, LMFMIF, and LMMPF - The LMMPF is now out of the picture (with KordaMentha) - if the LMFMIF goes to an independent receiver (not manager), then I think that would be the best outcome for investors.

IMO the worst position possible would be Trilogy (as manager) pocketing a fee based on funds under management (FUM, which includes debt) [or for that matter, any manager pocketing a fee based on FUM] and Piper Alderman and a litigation funder pocketing a BIG percentage of any litigation.  Not too much for Trilogy to do if Piper Alderman and litigation funder runs the litigation, hence more PROFIT !!!!

What a dreadful position for investors to be caught up in .. 

My bet - if Trilogy gets the LMFMIF, then I'll be writing about a "Four Part Trilogy Tragedy":
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

and Piper Alderman will be in there for a big % chunk of any potential litigation $$$$ !!!!


----------



## Freya (24 April 2013)

So how does an independent receiver get appointed ?

And who would you suggest ?


----------



## ASICK (24 April 2013)

*oh No !!! NOT TRILOGY !!!!*



Freya said:


> So how does an independent receiver get appointed ?
> 
> And who would you suggest ?




As I understand it (and I haven't given a lot of thought to the matter), an application by a fund member/s to a court of competent jurisdiction will be necessary.  That's why PA had to get LM investors in order to bring the applications of recent times - without the unitholder/s, the lawyers and Trilogy have no standing to bring the applications.

Right now, the "tail" seems to be wagging the "dog" (so to speak).

You might press FTI with your concerns/wishes.

Choices for an independent receiver?

How about:

McGrathNichol
http://www.smh.com.au/business/better-news-for-banksia-investors-20130423-2ic61.html
(although it's hard not to be mindful of potential Victorian government intervention in the deal)

or:
Bentleys
http://www.bentleys.com.au/

Interestingly, the real money is in receiving the funds, not as administrator to LM Investment Limited.  I wonder what FTI's move will be? Will it try to hang on to the LMFMIF and remain administrator LM Investment Management? IMO, that'd be a big risk.  Will FTI try to hold on to the LMFMIF as receiver and have another administrator appointed to LM Investment Limited?

It most certainly would be painful to give up the chance to receive the LMFMIF, especially after losing the chance to receive the LMMPF to KordaMentha.

At least none of these entities KordaMentha, FTI, Trilogy, and the like have anything to lose, other than an opportunity to make a bag-full of $$$$$$.


----------



## RODENT69 (24 April 2013)

Somebody in the middle of all this current Affidavit/Trilogy/PA/ FTI/LM -  once said QUOTE "It does not seem right that an application to court, with support from a small number of investors with limited information could take priority over a proper member vote, where all members receive all information and have a say UNQUOTE.

Personally I tend to agree with this statement, but it wont stop the process in the court happening.

This investor, and maybe others? have been writing to FTI expressing support and attempting to make sure they are better prepared to defend their position against PA/ Trilogy re the FMIF 

I am advised that Mr Bruce (Affidavit) has been made aware of this Forum and the related links to Trilogy performance (or lack there of) as has been written about often in this Forum by ASICK

I was advised that Trilogy would have a new website for last week, its there now but contains no new information about the WFMIF , but does have all the new info re PA, Affidavit etc

www.trilogyfunds.com.au   NB  this is not a link 

The Trilogy Monthly Income Trust looks so good I might Invest , or ask them to in-specie transfer my holdings in the WFMIF to that fund --just a joke folks


----------



## Taja (24 April 2013)

In response to Rodent69, yes I also wrote to FTI a few days ago to express concern about the move to hand control to Trilogy, and cited the instances of their poor performance that ASICK has outlined for us.  

I got a non-committal reply from FTI simply saying that:  "We are aware of the application which has been made by Piper Alderman and will shortly be sending some information to investors on this issue. As well as being emailed and posted this correspondence will be posted at www.lminvestmentadministration.com by Wednesday of this week."  Renee Lobb - Manager Corporate Finance/Restructuring - FTI."     As of yet I see nothing on the FTI website.

I also find it very odd that one or two investors can initiate a request, via Affidavit, such as handing control to Trilogy, while no apparent effort is made to canvas views of the thousands of other investors.   But does this then mean that one or two of us could then file a counter-Affidavit to the Supreme Court, to try and block this move .. ?  (I suggest this although this would probably be impractical for me, not being resident in Australia).


----------



## Mysteryman (24 April 2013)

Taja said:


> In response to Rodent69, yes I also wrote to FTI a few days ago to express concern about the move to hand control to Trilogy, and cited the instances of their poor performance that ASICK has outlined for us.
> 
> I got a non-committal reply from FTI simply saying that:  "We are aware of the application which has been made by Piper Alderman and will shortly be sending some information to investors on this issue. As well as being emailed and posted this correspondence will be posted at www.lminvestmentadministration.com by Wednesday of this week."  Renee Lobb - Manager Corporate Finance/Restructuring - FTI."     As of yet I see nothing on the FTI website.
> 
> I also find it very odd that one or two investors can initiate a request, via Affidavit, such as handing control to Trilogy, while no apparent effort is made to canvas views of the thousands of other investors.   But does this then mean that one or two of us could then file a counter-Affidavit to the Supreme Court, to try and block this move .. ?  (I suggest this although this would probably be impractical for me, not being resident in Australia).




It would appear from Trilogy's unit holder letter on their website, if I'm reading it correctly, that if the Supreme Court make Trilogy RE that this is a temporary situation and within 90 days they have to call a meeting for unit holders to vote on them becoming permanent. Not sure what happens if it is a resounding no vote - I guess back to the Supreme Court.


----------



## ASICK (24 April 2013)

Mysteryman said:


> It would appear from Trilogy's unit holder letter on their website, if I'm reading it correctly, that if the Supreme Court make Trilogy RE that this is a temporary situation and within 90 days they have to call a meeting for unit holders to vote on them becoming permanent. Not sure what happens if it is a resounding no vote - I guess back to the Supreme Court.




It's great to see LM members' postings hit the forum in such a rush.

If Trilogy gets up in the court, they'll most likely stay in the fund.  This is because as manager, Trilogy will call the meeting, prepare the documents, and chair the meeting - bottom line, Trilogy will have the fund's resources to cement its position as manager.

Also, if FTI doesn't have supportive affidavits, then they won't get traction in the court (or course, IMO).

And, if Trilogy gets up, then I'd guess your Mr. Bruce will be praying that Trilogy does a good job in the fund - after all, if Trilogy does a pitiful job as it's done in the PFMF and elsewhere,  then I'd guess Mr. & Mrs. Bruce may have a sinking feeling for the rest of their lives - after all, it would have been they who brought Trilogy into LMFMIF members' lives [the application and the supporting affidavit will stand as testament to their deed]


----------



## ASICK (24 April 2013)

RODENT69 said:


> ... The Trilogy Monthly Income Trust looks so good I might Invest , or ask them to in-specie transfer my holdings in the WFMIF to that fund --just a joke folks ...




Some info for your consideration:

http://moneymagik.com/trilogy_monthly_income_trust_alternative_comment.php

http://moneymagik.com/trilogy_epping_commercial_income_trust.php


----------



## Taja (24 April 2013)

Can I post again my earlier query: if an investor can file an affidavit to sponsor a move to Trilogy, can another investor(s) similarly file an affidavit to counter this in some way .. ?  Anyone know ?  No doubt a naive query but it would be good to know what is the scope for legal initiative right now.

Thanks and regards.


----------



## ASICK (25 April 2013)

*Court Application*



Taja said:


> Can I post again my earlier query: if an investor can file an affidavit to sponsor a move to Trilogy, can another investor(s) similarly file an affidavit to counter this in some way .. ?  Anyone know ?  No doubt a naive query but it would be good to know what is the scope for legal initiative right now.
> 
> Thanks and regards.




Yes.  It is precisely what FTI has to do.  You (even in Thailand) or any other investor is entitled to bring an application at any time (but the investor/s has to bring the application at his/her/their own cost), even after (if) Trilogy is appointed by  the court.  FTI has standing, but (as I posted before) in the circumstances, members' affidavits will be necessary to support FTI (or another entity) in order to counter Trilogy's supporter, Mr. Bruce.

This is why, if you have a position, you just can't sit back and not give support by contacting the side you wish to support.


----------



## Taja (25 April 2013)

Thanks ASICK for clarifying that.  I understand you to say that a counter affidavit could be filed even after the Court has appointed Trilogy as RE (if indeed that is the decision that is taken). 

It would be good first to get the notification that FTI had promised to send (by yesterday) to hear what exactly they do intend to do - or not.

That aside, another forum participant has notified me that a Brisbane lawyer is planning to contact investors with a view to filing an affidavit countering the Trilogy move. 

Regards.


----------



## ASICK (25 April 2013)

Taja said:


> Thanks ASICK for clarifying that.  I understand you to say that a counter affidavit could be filed even after the Court has appointed Trilogy as RE (if indeed that is the decision that is taken).
> 
> It would be good first to get the notification that FTI had promised to send (by yesterday) to hear what exactly they do intend to do - or not.
> 
> ...




I'm pleased you understood - my last paragraph should have meant that one can't sit by and do nothing if the progress of things is not to one's liking.

I understand the hearing to attempt to have Trilogy appointed as RE is on next Monday.

Even though I'm not an investor, I too am keen to learn what FTI will do - I most certainly hope that FTI doesn't underestimate the self-interest of the dynamic duo (Piper Alderman and Trilogy).


----------



## Taja (25 April 2013)

FTI has just sent out a circular to investors which I have received.  It deals with the technicalities of evaluating assets and liabilities etc of FMIF and feeder funds - but says not a single word about the impending court hearing of the application to entrust control to Trilogy.


----------



## ASICK (25 April 2013)

Taja said:


> FTI has just sent out a circular to investors which I have received.  It deals with the technicalities of evaluating assets and liabilities etc of FMIF and feeder funds - but says not a single word about the impending court hearing of the application to entrust control to Trilogy.




Why am I not surprised? FTI haven't updated either website. Are you able to post the document on ASF?


----------



## Taja (25 April 2013)

I attach here the FTI Circular released today. (I have not done this before so hope it works.)


----------



## Dudd (26 April 2013)

Taja said:


> Thanks ASICK for clarifying that.  I understand you to say that a counter affidavit could be filed even after the Court has appointed Trilogy as RE (if indeed that is the decision that is taken).
> 
> It would be good first to get the notification that FTI had promised to send (by yesterday) to hear what exactly they do intend to do - or not.
> 
> ...




Taja
Could you post the name and contact details of the Brisbane lawyer you mentioned.  I would join and contribute financially to any such move.

Dudd


----------



## ASICK (26 April 2013)

*Documents & Potential Opportunities*



Dudd said:


> Taja
> Could you post the name and contact details of the Brisbane lawyer you mentioned.  I would join and contribute financially to any such move.
> 
> Dudd




You might want to find out what it's all about first? 

Taja, thanks for posting the document.

While I'm all for seeing investors get money back quickly, I would have thought paying off the facility would be first in line - especially with the over-the-top interest rate the fund's paying for the pleasure of holding the facility.


----------



## Taja (26 April 2013)

Dudd said:


> Taja
> Could you post the name and contact details of the Brisbane lawyer you mentioned.  I would join and contribute financially to any such move.
> 
> Dudd




Dear Dudd -

I was contacted by another Forum participant who told me of the Brisbane lawyer but as of yet I have no contact details for this lawyer.  I will certainly forward to you if/when I get such details. 

Regards.


----------



## ASICK (26 April 2013)

*Class Actions - ASIC*

There's more to class actions than some of you may think:-

http://www.asic.gov.au/asic/asic.ns...chemes and proof of debt schemes?opendocument

''Class actions can provide access to justice for a large number of consumers who may otherwise have difficulties in resolving disputes.

But there is also an inherent tension in these types of schemes between the interests of the funders, liquidators, lawyers and participating members.

Our guidance about the recent law changes in this area helps in the protection of members by setting out expectations of what is required to satisfy the obligation to maintain adequate practices and follow certain procedures for managing any conflicts."

http://tinyurl.com/bwpevyt

"RG 248.11 The nature of the arrangements between the parties involved in a litigation  scheme or a proof of debt scheme has the potential to lead to a divergence  between the interests of the members and the interests of the funder and  lawyers because:
(a) the funder has an interest in minimising the legal and administrative costs associated with the scheme and maximising their return;
(b) lawyers have an interest in receiving fees and costs associated with the provision of legal services; and
(c) the members have an interest in minimising the legal and administrative costs associated with the scheme, minimising the remuneration paid to the funder and maximising the amounts recovered from the defendant or insolvent company."

"RG 248.12 The divergence of interests may result in conflicts between the interests of the funder, lawyers and members. These conflicts of interest can be actual or potential, and present or future."

"RG 248.20 We are concerned with ensuring that you have practices and procedures in place to protect the interests of members and that you follow these practices and procedures."

"When do you need to comply with the obligation? - RG 248.21 You must be able to show that you can comply with the obligation to maintain adequate practices and follow certain procedures for managing conflicts of interest from the time you commence recruitment of prospective members to the litigation scheme or proof of debt scheme until all members cease to have an interest in the scheme.'' 

''Independence of the funder, lawyers and members - Your written procedures must include procedures about how to deal with situations in which there is a pre-existing relationship between any of the funder, lawyer and members: reg 7.6.01AB(4)(d)(vi). - Section D"


----------



## RODENT69 (26 April 2013)

FTI   has just posted a new doc on its website, its under  notifications,  FMIF, and  the doc is titled  Response To Trilogy Correspondence dated 17 April

Makes very interesting reading.  They clearly are defending their position.


----------



## Taja (26 April 2013)

Taja said:


> Dear Dudd -
> 
> I was contacted by another Forum participant who told me of the Brisbane lawyer but as of yet I have no contact details for this lawyer.  I will certainly forward to you if/when I get such details.
> 
> Regards.




Dear Dudd - I have just sent you a personal message with the name and contact of the Brisbane solicitor.  (He does not want the details posted onto this public Forum.)   I am happy to share these details with anyone else.  

I also had a Skype chat with him about LM and specifically about the FMIF and its feeder funds.  He seems to be well-versed in the issues around this saga, and - echoing ASICK - expressed grave doubts about Trilogy, and also quite serious reservations about FTI and their inherent conflicts of interest (as well as about their less than impressive record in communicating to investors in recent weeks). He feels that the best solution for investors is - as I believe ASICK has recommended - for an independent liquidator to be appointed, and one which is remunerated on a fee-per-time-worked basis rather than on a percentage raked off the funds.  He says that his own firm has experience in this ...

He is prepared to go to Court Monday - on spec. - to try and block the Trilogy take-over if investors ask him to.


----------



## ASICK (26 April 2013)

RODENT69 said:


> FTI   has just posted a new doc on its website, its under  notifications,  FMIF, and  the doc is titled  Response To Trilogy Correspondence dated 17 April
> 
> Makes very interesting reading.  They clearly are defending their position.




"The cost structure of FMIF is governed by its constitution. The only costs faced by FMIF are management fees at 1.5% pa of assets and certain prescribed recoverable costs." - ah! the allure of the BIG $$$$$$.

Keep in mind Trilogy returned about $79m to investors while pocketing about $20m.

It seems FTI is in this to repay creditors of LM.



Taja said:


> Dear Dudd - I have just sent you a personal message with the name and contact of the Brisbane solicitor.  (He does not want the details posted onto this public Forum.)   I am happy to share these details with anyone else.   ... He is prepared to go to Court Monday - on spec. - to try and block the Trilogy take-over if investors ask him to.




and he wants to do what Trilogy has done with PA?  

Doesn't anyone think it'd be better for members of the forum to vet the newcomer? .. remember, it's NOT about investors, it's about $$$$$$ for the receiver/liquidator/RE.

but, in the end, it's investors' risk, not outsiders such as myself.

However, I do think it's better to have an independent receiver in the LMFMIF, a receiver not operating on a % of FUM.

FTI hasn't spoken to the receiver role that LM had adopted to earn more millions of $$$$.

I think FTI is making  a mistake if it fights - only my opinion - but for the same money, it's simple to get full independence - even with Trilogy at the helm.   For a better deal,  appoint a receiver.

I don't like secret "investors' business" - but that's just my opinion.


----------



## Mysteryman (26 April 2013)

ASICK said:


> I think FTI is making  a mistake if it fights - only my opinion - but for the same money, it's simple to get full independence - even with Trilogy at the helm.   For a better deal,  appoint a receiver.




ASICK, I very much appreciate your opinions on latest circulars etc, but please could you elaborate on the quote regarding 'simple to get full independence - even with Trilogy at the helm'. I don't understand what you mean.

Also, a naive question: How would one go about appointing a receiver for the fund?


----------



## ASICK (26 April 2013)

*It's All a Bit Too Late*



Mysteryman said:


> ASICK, I very much appreciate your opinions on latest circulars etc, but please could elaborate on the quote regarding 'simple to get full independence - even with Trilogy at the helm'. I don't understand what you mean.
> 
> Also, a naive question: How would one go about getting a receiver for the fund?




Well, if you want independence (from FTI (as administrator of LMIML)) then it's just a simple matter of appointing an alternative RE, say, Trilogy (for example)  - but really, if investors' have learnt anything, not Trilogy.  But to minimize the costs, a receiver should be appointed in lieu of an Responsible Entity.

Maybe this mystery solicitor fits the bill (as receiver)? - of course, I'm sure the solicitor has both eyes firmly on the $$$$ too - investors should never lose sight of the motivation that drives the likes of PA, the mystery solicitor, KordaMentha, FTI, and Trilogy.

I posted previously about what FTI might do, and it seems that its chosen not to fight Trilogy, but rather defend it's own position and "juggle all the balls" (so to speak) - that is, keep on as administrator of LMIML and keep LMIML firmly tapped into the "honey pot" (that is, a percentage of the LMFMIF's FUM (which includes the facility debt)).  I think this is the risky path, and if unsuccessful, the court will hand the fund to Trilogy (in the absence of an application from the mystery solicitor (or other alternative)).

We all make (what we hope are somewhat educated) guesses, and my guess is that if FTI take the path they seem to have chosen, then they'll lose the fund to Trilogy.  Judges do like to see independence, and if there's nothing in the material about Trilogy's failures, Trilogy will look good to the judge.

FTI won't be the first to learn hard lessons - and I'm sure they won't be the last.

Again, you could try Bentleys (as receiver), but methinks it's all a bit too late since the matter will go to court next Monday.


----------



## Loiner (26 April 2013)

Mysteryman said:


> Also, a naive question: How would one go about appointing a receiver for the fund?




I'm with you on this Mysteryman: How do we bring about the appointment of a receiver? 
I presume LM putting themselves into Voluntary Administration was a move to protect themselves from actual receivership, but it doesn't appear to help the investors. Can anyone advise the mechanism or process that will take this show from the vultures fighting over the carcass to a wind down of assets?

We were told by Drake that a firesale wouldn't happen, but it now seems preferable to a long drawn out milking of the funds.

Any ideas or advice out there about how to do this?


----------



## ASICK (26 April 2013)

http://u.b5z.net/i/u/10199052/f/8978r1_Response_to_Trilogy_Corres_of_17_April_2013_FINAL.pdf

comments which concern me:

"Thus if the administrators uncover any improper actions by LM’s directors and officers prior to the appointment of voluntary administrators, they will rigorously investigate and *if warranted* take action to gain compensation for FMIF and its members."

A comment by Stacks Finance in relation to "viable litigation" caused a number of PFMF members to wrongly conclude that Stacks was not genuine about pursuing litigation against former City Pacific Limited directors.

Use of the qualifying words "if warranted" or "viable" tend to make me think that the authors are somewhat concerned about what investors expect - that is, investors want litigation, "come hell or high water" (so to speak) and as such, investors wishes need to be so qualified by "if warranted".

But such qualifying  words as "if warranted" might give FMIF investors the impression that FTI would not pursue litigation as robustly as PA might.  I think it might have boded better for FTI if those qualifying words weren't included in the letter at all.

"No receiver has been appointed tor FMIF. There will be no “receiver driven” sale of assets by FMIF." - spoken just like a responsible entity on the drip feed from a % of FUM.  However, the reality is that the plan is to sell off the fund in the market at the time of each sale - it doesn't matter what one calls it, a fire sale, a receiver's sale, or just a plain old sale, the sale price will probably be just the same.

I think FTI are attempting to convey to investors that they're able to somehow do a better job than a receiver could do - it could work, just as the words "fire sales" scare the pants off punters - but, as stated above, a sale is a sale, no matter what one calls.  If investors want money, then assets have to be sold off apace - there's no other way about it.

"A switch is not clearly in the interests of members. So, whilst ensuring that any conflicts that may arise are properly managed, LM will be resisting the attempt to switch the RE, as it is not in the interest of members."

Conflicts "properly managed"? Why take the risk when independent alternatives are available?

I don't read that FTI has presented a case for a switch "not being in the interests of members", rather, I see the case as one that a switch is "not being in the interests of FTI".

I guess the measure of FTI's concern for FMIF investors will be whether it presents a receiver (or even manager) as an alternative to themselves in the case FTI is unable to resist Mr. Bruce's application for Trilogy to take over the FMIF.  If FTI's case is merely to resist Trilogy, then FTI's failure will result in Trilogy taking over the FMIF.



It seems to me that FTI aren't the right ones for the FMIF, and that an investor or two should go to court with a receiver and just ask the judge to have the fund wound up without the grand expense of a responsible entity pocketing millions from a % of FUM (which includes debt).


----------



## Taja (26 April 2013)

A quick update.  I hear that the Court hearing for the Trilogy application is postponed to Thursday next.


----------



## Taja (28 April 2013)

Poor Mr Drake ..  http://m.nbr.co.nz/article/peter-drakes-life-luxury-and-elusiveness-dw-138952


----------



## ASICK (29 April 2013)

*Oh! My Beating Heart*



Taja said:


> Poor Mr Drake ..  http://m.nbr.co.nz/article/peter-drakes-life-luxury-and-elusiveness-dw-138952




"Earlier this week, Ms. Ballard referred questions about LM's managed performance fund being labelled a potential ponzi scheme to the fund's new trustees, KordaMentha and Calibre Capital" - I guess this is because LM admitted in the "4 Corners" program that it used new investments to pay interest to existing investors.

What? is that it? Then how many managed funds might be labelled a Ponzi scheme? How about Banks?

but especially, how about Trilogy's Monthly Income Trust?

"As the interest on most of its mortgage loans are typically capitalized, distributions income will be sourced from a variety of different streams, other than current interest payments from borrowers, such as ... APPLICATION MONIES ... ." [QSM Independent Assessment (page 15)]

http://moneymagik.com/trilogy_monthly_income_trust_alternative_comment.p  hp

and, all that talk about Ms. Ballard:

and, "since then (when LM went into voluntary administration), Ms. Ballard's mobile phone number has been removed from her email signature"

Wow ! what a mind-numbing article - so much writing about getting in contact with Ms. Ballard who probably, along with many other employees, lost her job - and given that administrators had taken over, it's not unreasonable that business was no longer "as usual".

"People close to LM in the property business tell NBR ONLINE they're heartened to see New Zealand's record of jailing those behind finance companies collapses"

Really, "jailing those behind finance companies (sic) collapses" - wow, lucky Trilogy's Healthcare REIT collapsed in Australia:  http://moneymagik.com/analysis_REIT.php

"However, that faith does not extend to its own regulator, the Australian Securities and Investment Commission, which has been told that LM's managed performance fund is a potential ponzi scheme."

No, of course it doesn't, in Australia, there has to be a "wrongdoing" - really? yes, that's what NBR Online reports:

"ASIC still has time to restore faith, if it finds any wrongdoing" - so, is it supported to find a wrongdoing when one doesn't exist?  Then it'd be able to "restore faith"?  So, if it doesn't, then?

Of course, that's different to NZ where it seems there doesn't have to be a wrongdoing (according to "people close to LM in the property business") - I think it's got something to do with what's in the water over there !

Maybe David Williams might do better in a gossip column somewhere.

Oh .. be still my beating heart:


----------



## RODENT69 (29 April 2013)

Court action adjourned  today until Thursday, LMIM (Administrators Appointed) has called for an Investors meeting on 30 May Refer LM website under FMIF for details


----------



## ASICK (29 April 2013)

*A Rush Job?*

http://u.b5z.net/i/u/10199052/f/FMIF_Meeting_documents.pdf

IMO FTI doesn't seem to have confidence in winning at court.  While it seems to have convinced itself that it's able to be  independent, I doubt whether it'll be able to convince a judge.  In order to avoid that outcome and control the process, FTI has called the meeting.  

Trilogy said if it was appointed by the court, it would pay for a meeting - which entity is paying for FTI's meeting?

If the meeting is an attempt to avoid costs to the fund, is the fund paying for this meeting?

Issues:

Licence - it seems an inappropriate licence isn't an impediment to taking over a fund - Trilogy's recent takeover of an LM fund is clear proof of that.

Changeover Costs - not stated - might be not too much at all.

Time to Complete Windup - Nothing to stop Trilogy employing LM staff members - they did it with ex-Citypac staff members when they took over the PFMF.

Impact on Borrowers - I don't see this as a drama, after all, Trilogy are only a month or so behind, and if they employ LM staff, they're where FTI is.

Finance Consequences - always a great spruik - but the reality is that the bank has its $$$ secured by fund assets - as in the past with other funds, it doesn't seem much of a drama for a bank to give the nod to a prospective manager.

Claw-back - possible.  What's possible worth? I'd say, not too much value at all.

And the issue that FTI hasn't mentioned, INDEPENDENCE.  I guess this issue will come high on Trilogy's response.  IMO, there is simply no way that FTI will be able to avoid dealing with the subject of independence.

FTI says, "LM expects that if it remains as manager investors will recover capital distributions faster and in a greater amount."

Yes, I'm sure it does - that is, expects wonderful things from itself.  But, that's a forward looking statement and as such, should be either (1) substantiated, or (2) disclaimed.  Seems FTI hasn't chosen either path.

It seems FTI has not provided a disclaimer in its Explanatory Memorandum (EM). 

IMO, FTI shouldn't be supported due to the issue of independence - and Trilogy shouldn't be supported because of its poor track record.

Vote - (1) NO, (2) NO.

go to court and have a receiver appointed.

It seems to me that the call for a meeting has been a rush job.

Just my opinion.


----------



## ASICK (29 April 2013)

*Vote (1) Yes, (2) No*

Amendment:

If I was an investor, I'd vote (1) YES, (2) NO.

over to you guys .. I'm sure you've got heaps to post about.


----------



## ASICK (1 May 2013)

*"No Fires Sales"*

As far as I'm concerned, there's no bigger BS story than the old "no fire sales" spruik.

http://moneymagik.com/martha_cove_ad.php
http://moneymagik.com/the_entrance_in_one_line.php
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf (life with Trilogy)
February 2013 - http://moneymagik.com/Martha Cove Portfolio - IM 2013-4.pdf - see page 25, "The opportunity on offer affords prospective purchasers the flexibility to buy the entire portfolio “in one line”, acquire individual or multiple components or joint venture with the existing owners." (emphasis added)

Trilogy's Healthcare REIT is in the process of being wound up:
*Punters lost all their capital*
The ANZ bank forgave (lost) $871,003 !
The security asset cost Trilogy's Healthcare REIT over $8.1m with Gross proceeds of sale $2,350,000
$6,681,447 of investors' money LOST = 71% loss on the fund asset ! 

Fire Sales? nah .. they'll say it's the market .. even when an asset is sold over 60% BELOW a value determined just months before, they'll say that's not a fire sale, they'll say it's the market !

Investors really have to get spruikers of the old "fire sale" mantra to define exactly what they believe a fire sale to be - for example, if the fund needs money to pay expenses, is the sale  of a fund asset at a massive reduction a fire sale?

If assets are sold at a massive reduction to pay investor capital repayments, are such sales fire sales?  Investors shouldn't kid themselves, if money's needed, then an asset/s will be sold - whatever price the market gives up, that's the sale price - and the amount of loss will not even be a consideration - it won't be otherwise.

In fact, the spruiker should state whether assets will be sold by way of fire sales to meet fund expenses and/or capital repayments.

But don't expect managers to disclose the variance from holding price to sale price - that makes it easy to spruik "no fire sales" without having to prove there was actually no fire sales.

Anyway, what exactly is a fire sale?

No Fire Sales? Phooey !!!!


----------



## ASICK (1 May 2013)

*Where Did He Get the Time ?*

"Records held by the Australian Securities and Investments Commission reveal Queensland financier Peter Drake, the founder and co-director of LM, is listed as the director, secretary and sole shareholder of Aalto Apartments Pty Ltd."

Read more: http://www.canberratimes.com.au/act...tment-block-20130430-2irhf.html#ixzz2RzyN1k1w


----------



## ASICK (2 May 2013)

*Trilogy's In Court*

http://www.goodreturns.co.nz/articl...court-to-win-control-of-lm-mortgage-fund.html


----------



## ASICK (2 May 2013)

*Ouch!*

http://u.b5z.net/i/u/10199052/f/8974r11.pdf

http://u.b5z.net/i/u/10199052/f/Sealed_application_30-4-13.pdf

http://u.b5z.net/i/u/10199052/f/Affidavit_of_Sean_Charles_Russell_sworn_30-4-13.pdf

All here: http://www.lminvestmentadministration.com/mpf


----------



## ASICK (3 May 2013)

*It's All So Easy With Trilogy*

http://www.moneymagik.com/yardy_yardy_yah.php

Trilogy took over the PFMF in July 2009 - City Pacific had the fund valued at $630m - In about November 2009 Trilogy revalued the fund at about $426m ($0.48/unit) and retrospectively applied that value to 30 June 2009.

Trilogy has repaid $0.0875/unit (about $77.5) to investors in the near FOUR YEARS while racking up over $17m in fees.  Under Trilogy's management investors lost 56% of the value Trilogy revalued the fund at.

Now we find (from an investor who spoke to Balmain Trilogy) that there's no more capital repayments, until MAYBE, the end of 2013.

In the PFMF: A foreshadowed update hasn't appeared yet - the fund's RG45 for February 2013 hasn't been released to investors yet.

Yet Trilogy continues to rake in the millions $$$$$.

And how about the litigation?  http://www.moneymagik.com/litigation.php

And the deal between Trilogy and Maurice Blackburn? Not disclosed to investors.  It was in November 2012 when Rodger Bacon told an investor "off the record" information that would be released to investors:
http://www.moneymagik.com/imf_litigation.mp3

Well, it's May 2013, and still, the information has not been released.

Ah ! Trilogy ! You've done it again.

But wait ! There's more !!

Here's two excerpts, the first is from Andrew Griffin (Sydney, November, 2010), the second (which follows on) from Rodger Bacon (November 2012): http://www.moneymagik.com/griffin_bacon_pie_in_the_sky.mp3

Isn't it so easy? Just make a representation, and when all fails, then just dismiss it out of hand.

It's so easy for investors to be fed any sort of nonsense - and they "drink" it all, just like nectar from the gods.

All the while, the manager makes the BIG $$$$ ... in the end, punters get SFA.

It's all so easy.


----------



## No Trust (3 May 2013)

*Re: It's All So Easy With Trilogy*

SPOT ON ASICK !!!



ASICK said:


> http://www.moneymagik.com/yardy_yardy_yah.php
> 
> Trilogy took over the PFMF in July 2009 - City Pacific had the fund valued at $630m - In about November 2009 Trilogy revalued the fund at about $426m ($0.48/unit) and retrospectively applied that value to 30 June 2009.
> 
> ...


----------



## No Trust (3 May 2013)

What's disappointing is the *lack of interaction *on this thread by other investors...  ASICK I know you are not an investor but you seem to be *doing all the work*... I feel the same on the Equititrust thread... Are Australian's this apathetic ???  Its their money at stake...

In any event, *full credit *to you ASICK for all your *hard work*... 

To LM Investors, this thread is closely monitored by all parties involved and if you want your voice to be heard *make a stance *don't sit on the fence...

The Equititrust thread was read by all and sundry, including the bankers and the regulatory authorities... It made a difference. Don't underestimate the power of this tool...


----------



## ASICK (3 May 2013)

*"A Frozen Fund is a Manager's Delight"*



No Trust said:


> What's disappointing is the *lack of interaction *on this thread by other investors...  ASICK I know you are not an investor but you seem to be *doing all the work*... I feel the same on the Equititrust thread... Are Australian's this apathetic ???  Its their money at stake...
> 
> In any event, *full credit *to you ASICK for all your *hard work*...
> 
> ...




Thanks No Trust.   All the hard work went before - in the compilation of the information, information that's now all too easy to bring forth on demand:  http://www.moneymagik.com/

www.moneymagik.com/ is a factual site, and facts are something that many investors don't want to come to grips with.  I've said it before, but many investors have no idea how to read the fund's financial reports and rg45s - many investors (in damaged funds) think that unit price has substance but all so often a buoyant unit price does no more than sustain a healthy management fee for the responsible entity while not translating into actual cash for the punters.

The (then) CPFMF went down in 2008, so we've been at it a long time - I can understand that many LM investors are just as naÃ¯ve about their own predicament as we were back there in 2008.   I also guess that some members of this forum may be tied up in one of the two applications before the court at this time.

Nevertheless, what I post is mostly history, and if investors aren't careful and don't take note, then history may very well repeat itself, but this time for LM investors.

Optimism has its place in life, but not in damaged managed investment schemes/funds where so many see such funds as the deal of a lifetime - "A Frozen Fund is a Manager's Delight"

As a note, I recall speaking to a fellow employed by a fund manager, he said (paraphrased), "in the old days, if we wanted information, we'd have to go the local library and search thru the old issues of papers, now all one has to do is type a search into Google" - therein lies the power of the internet - and yes No Trust, this forum and websites are valuable resources for investors, resources which sadly remain underutilized.


----------



## RODENT69 (3 May 2013)

ASICK,  you are correct that some Forum Members  have a bit on their plates at the moment, we are waiting for specific things to be resolved by relevant parties, including court actions.

ASICK  has recently written about the need for an Inderpendent Receiver to be appointed to wind up ALL the funds. I certainly agree. This has been communicated to the parties involved , in the strongest possible mannner. 

I dont think FTI for one liked hearing that they were not wanted. Most(if not all) Investors want is the funds to be wound up ASAP and whats left of our money to be returned to us

I am advised that the long awaited Audited Return for the LM WFMIF 2012 F/Y  (with Trilogy as RE) will shortly be made available.  

PS   Loved the Pirates video


----------



## Mysteryman (3 May 2013)

Anyone have any news on yesterday's outcome?


----------



## ASICK (3 May 2013)

*Get It Over With - ASAP*



RODENT69 said:


> ASICK,  you are correct that some Forum Members  have a bit on their plates at the moment, we are waiting for specific things to be resolved by relevant parties, including court actions.
> 
> ASICK  has recently written about the need for an Inderpendent Receiver to be appointed to wind up ALL the funds. I certainly agree. This has been communicated to the parties involved , in the strongest possible mannner.
> 
> ...




yes, how apt, "The Jolly Rodger".

I understand why FTI would want to control the LMFMIF, on a fee based as a % of FUM, it's a real "honey pot".  I find the words "in the best interests of investors" ring a little tinny and disclose just how naÃ¯ve the government was when it enacted Corporations Act 601FC.

FTI says that, even if successful in the appeal against the decision to appoint KordaMentha, FTI doesn't expect that the court would reappoint LM.  I think the right thing to do is to appoint an independent receiver to each fund so the funds will have the opportunity to pursue every legal opportunity without fear of favour or conflict.

I wouldn't expect FTI to like hearing that, and I wouldn't expect LMIML creditors to like it either - after all, all those $$$ no longer being fed back to LMIML is not conducive to recovery of monies owing.

I really don't think there's any cheap way out for LM investors - but the sooner the funds are wound up, I think the better the outcome will be.  As a PFMF investor, it seems to me that investors would have been better if Trilogy had knocked the fund off three years ago - at least we'd have earned interest and not paid the massive management fee: I don't think Trilogy would be happy with fees for only one year.

It seems to me that the longer the fund exists, the greater the outpouring of funds to management and hangers-on.   The best case one might expect is that any increase might cover costs, but the resultant $$$ return would probably not be any better, even years down the track.

A frozen fund is a resource that benefits management (and others), but not investors.


----------



## sht4branes (3 May 2013)

"I really don't think there's any cheap way out for LM investors - but the sooner the funds are wound up, I think the better the outcome will be. As a PFMF investor, it seems to me that investors would have been better if Trilogy had knocked the fund off three years ago - at least we'd have earned interest and not paid the massive management fee: I don't think Trilogy would be happy with fees for only one year.

It seems to me that the longer the fund exists, the greater the outpouring of funds to management and hangers-on. The best case one might expect is that any increase might cover costs, but the resultant $$$ return would probably not be any better, even years down the track.

A frozen fund is a resource that benefits management (and others), but not investors."

I totally agree ASICK.

Sell the assets, reimburse investors and stop the suits dining out on the carcass of our investments. An independent administrator needs to be appointed for each fund. Keep Trilogy out as they have an awful record over promising, under delivering and fee gouging. 

If it takes a "Fire Sale", so be it. Some money now is better than a false promise of future money, which may never arrive. We can all move on and go after the FA's who recommended LM Mortgage in the first place.These are the major culprits, in my view.

I believe investors get to vote about the RE at the end of this month.I am not aware of the result from yesterday's court hearing.


----------



## Taja (3 May 2013)

Dear all - my understanding is that the Supreme Court hearings have been adjourned:  the hearing on the FTI vs Korda Mentha tussle over MPF to 10th May, and the hearing on the FTI vs Trilogy tussle over FMIF to 13th May.  

It is very odd that FTI has itself not seen fit to inform us of these changes in timetable - the FTI "LMinvestmentadministration" website remains unchanged and still today refers to the hearings due yesterday 2nd May !  So much for on-the-ball management, transparency and for the considerable hourly fees they are earning to manage things (not that Trilogy have shown themselves to be any better).  

I am also persuaded by the arguments for moving to an independent receiver and for an end to the haemorrage of % FUM "fees" being creamed off to no good purpose as far as we investors are concerned.


----------



## ASICK (3 May 2013)

*Sauteed Mushrooms Anyone?*

The MFS Premium Income Fund, taken over by Wellington Capital - Ms. Hutson at the helm.

http://www.wellcap.com.au/index.php?option=com_content&view=article&id=12&Itemid=15

Here's Wellington Captial's Explanatory Memorandum: 
http://www.wellcap.com.au/assets/pif/updates/2008/Explanatory Memorandum.pdf

(see page 56)
31 December 2007 Financials: $760,149,000 ($0.99/unit)
31 May 2008 Carrying value: $691,195,000 ($0.92/unit)
Estimated realizable value (if assets worked thru): $341,171,000 ($0.45/unit)
Estimated value if assets liquidated by 31 March 2009: $108,435,000 ($0.14/unit)

30 June 2008 Financials - total net assets $335.782,000 
(page 8 - also see note 7)
http://www.wellcap.com.au/assets/pif/updates/2008/Annual Report 2008 - Premium Income Fund.pdf

The meeting was held in May 2008 - it might have been worth waiting until receipt of the fund's 2008 financials which revealed that as at 30 June 2008, unitholder equity had dropped (in one month) to about the realizable value spruiked in the EM - ($335.8m v. $341.2m)

Nevermind the $0.14/unit guess for liquidation, the $0.45/unit guess for the outcome if the assets were worked thru suddenly looked like crap.   How could anyone think that a fund that dropped from $0.99/unit (31 Dec 2007) to $0.92/unit (31 May 2008) to about $0.45/unit (30 Jun 2008) could realize $0.45/unit in the future? 

Actually, I would have thought the $0.14/unit by 31 March 2009 would have suddenly looked very good indeed.

Here's M.W.'s take in 2008: http://www.smh.com.au/business/asic-must-step-in-on-behalf-of-pif-investors-20080911-4e5o.html

"Many PIF investors believe the only options available to them are to either accept the offer by Wellington Capital to run their fund, or watch it liquidated at 14c a unit.

They have been led to believe a "no" vote means liquidation and therefore losses. This is wrong. ASIC needs to step in. Now that PIF's parent Octaviar (the old MFS) is bound for administration and PIF has $200 million in claims to pursue, the imperative for clear and independent instructions is even greater.

The best outcome for PIF would be the orderly work-out out of the fund's external investments and loan book and a return of capital to investors.

The best way for PIF investors to achieve this would be to vote "no" to the Wellington proposal and appoint their own manager to wind-up the fund and pursue any legal claims." (emphasis added)

Well, the PIF was listed - since then, all fund security assets (except those under contract) have been transferred (without reference to investors) into a company called Asset Resolution Limited (ARL) in exchange for unitholders holding shares in the company.
http://www.wellcap.com.au/assets/pif/updates/2012/nsx release-sale-of-assets-to-arl-5-sep-2012.pdf

I'm told that capital return has been in about the mid-single digits (cents/unit) - the value of ARL shares? no one seems to know.

SautÃ©ed mushrooms anyone?


----------



## ASICK (3 May 2013)

Taja said:


> ... It is very odd that FTI has itself not seen fit to inform us of these changes in timetable - the FTI "LMinvestmentadministration" website remains unchanged and still today refers to the hearings due yesterday 2nd May !  So much for on-the-ball management, transparency and for the considerable hourly fees they are earning to manage things (not that Trilogy have shown themselves to be any better). ...




I agree, it's a poor show that investors aren't promptly kept up to date via the website:  http://www.lminvestmentadministration.com/fmif_and_feeder_funds

Nothing new on Trilogy's website either:  http://www.trilogyfunds.com.au/newsroom/latest-news/
(darn, they didn't report the loss of investors' capital in the Trilogy Healthcare REIT:
http://moneymagik.com/analysis_REIT.php )

Nothing new on Piper Alderman's website either: http://www.piperalderman.com.au/firm/lm-investment-management-limited


----------



## Titinet (3 May 2013)

I'm not familiar with Australia law at all. I feel quite desparated about the procedure totally opaque:
- no clear information about where we go 
- no connexion between investors (especially foreigners)
- Got impression that few investors can represent all investors
- manipulation of few investors by interested parties
- battle to dispute the cakes by few firms except participation of investors 


Why FIT can't send to all investors an explication about the procedure, different possiblities and a list of candidants as potential RE. So all investors can express opinions and vote to a resolution...

Very strange for me....


----------



## Taja (3 May 2013)

Titinet said:


> I'm not familiar with Australia law at all. I feel quite desparated about the procedure totally opaque:
> - no clear information about where we go
> - no connexion between investors (especially foreigners)
> - Got impression that few investors can represent all investors
> ...




Dear Titinet - I fully agree.  I am also not Australian but was persuaded by my financial advisor to invest in LM because I was told that the Australian financial market was very well regulated.  Well, at least in regard to mortgage funds, this seems to be very questionable.  And, like you, I also find it incredible that the arrangements leave individual investors like us so isolated from each other and that any form of collective action is so difficult - and not only for foreign investors, like us, but also for Australians too.  FTI were unwilling to provide me with any the list of other investors even though I understand that legally we are entitled to apply for this information.

And, on top of that, knowing how and where to get "disinterested" guidance on the best options is also very hard.  The financial advisor who persuaded me into this is unable and unwilling to offer any help at all to me or to the many other investors on their books - no surprise perhaps.

What surprises me from my perusal of the Australian media is the lack of any apparent public stirrings of anger and outrage at the way LMIM (and predecessor outfits such as Equitrust) have been treating investors - I would have thought the retirement community in Australia might have had some political muscle and would have been pressing for legal/regulatory reform.  Or maybe it all takes time ..


----------



## Titinet (3 May 2013)

Fully agreed. By the way, who can control the expenses on the funds? If it's trustee or RE who base their fees on the managements of the funds, of course they will keep the fund as long as possible under their management, instead of manage the fund to minimise the loss. Is it  possible to link their fees to the value of the funds?

The class action may not be a good option, taking into account of procedure and lawyer fees. To sell the assets can be an option, or find another solution to continue the projects and make them valuable. That's the role of FTI or replaced RE, for the best interest of investors...

Quite strange also that they don't talk about Mr Drak, the main responsible of all the mess...


----------



## ASICK (3 May 2013)

*ASIC -  Drake - The PIF is at an End*

For information of those not familiar with Australian law - ASIC is not a prudential regulator.  ASIC regulates form, not substance.  That is, if the manager is hopeless, that's the problem for investors, not ASIC.  If the manager doesn't fill a form out properly or comply with law, that's a matter for ASIC.

Mere losses of money are not concerns for ASIC.   I get the impression there'll be no recovery of loss from Mr. Drake for any LM fund - it seems to me that a bank holds sway over the mansion on the Gold Coast.  If Mr. Drake is bankrupted, then that's it - remember, his super is safe.

As I understand it, there only one directors' indemnity insurance policy held by LMIML with a maximum (total) claim of about $20m - so it seems to me that the $20m will potentially be shared by all LM investors (if a director/or directors of LMIML is found by a court to be negligent)  -  of course, I'm sure that the facts relating to a potential claim and the $20m will be verified in due course.

It's interesting that I posted about Wellington Capital this afternoon - look what's just been sent to me:
In June 2013:  http://www.nsxa.com.au/ftp/news/021726980.PDF

After all of this in May 2008:
http://www.wellcap.com.au/assets/pif/updates/2008/Explanatory Memorandum.pdf

now Wellington wants to move all the assets off to ARL and close the fund.  Sure, there's gold in those assets, just not for investors.

Yep .. that's working in investors' best interests ...


----------



## Titinet (3 May 2013)

*Re: ASIC -  Drake - The PIF is at an End*

It's really encouraging to invest in Australia, the most safe country for investors as told by our FA!


----------



## Mysteryman (3 May 2013)

Latest email rom Piper Alderman:

"LM First Mortgage Income Fund (LMFMIF)

The application to seek a replacement RE for the LM First Mortgage Income Fund was listed yesterday.  A number of parties intervened in those proceedings including ASIC and some members of the LMFMIF.  The unit holders who appeared thought that a winding up application of the LMFMIF was appropriate and that LMIM should undertake that process with a supervisor. 

Our clients opposed that application and pressed that the application to wind up the Fund be heard first before any application to wind up the LMFMIF was heard.  Any application to wind up the LMFMIF with supervision will necessarily mean two sets of costs will be incurred.  Unfortunately, the Court was not minded to adopt an approach where the application to appoint a new RE was heard and stood the matter to wind down the LMFMIF over for hearing to 13 May 2013.  At that hearing we will again urge the court to hear the application for a new RE prior to any application to wind up the LMFMIF and appoint someone to supervise that occurring.

It is only in the event that an application to change the RE is unsuccessful that our clients will seek that a receiver and manager be appointed to the LMFMIF. 

We have now also been served with another application by ASIC to wind up the LMFMIF, appoint a supervisor for the winding up and a receiver and manager over the LMFMIF.

It is our strong view that members will not be best served if two people are doing the job which can be best done by one.  We do not understand, on present information, that the winding up order or the appointment of a receiver in any way diminishes the entitlements of the RE to its fees and expenses or would otherwise be in the interests of members.

We are disappointed that applications have been filed to wind up the LMFMIF and appoint receivers or supervisors.  Our clients are only seeking orders in this regard if the application to replace the RE is unsuccessful.

We remain of the firm view that the appointment of a new RE is the most cost effective way for the LMFMIF to operate.  Our clients are seeking to replace the RE to ensure unit holders retain some value in the LMFMIF and to prevent what has occurred in the Equititrust funds.  In Equititrust the RE remained with liquidators in control and receivers are in control of the assets with two sets of fees being incurred and sought to be recovered from that LMFMIF.  We do not believe this a case like Equititrust where the RE cannot be changed without penalty to the LMFMIF accordingly we think that approach is not appropriate in respect of the LMFMIF.

It is also our firm view that the best approach is for the RE to be changed."


----------



## Taja (3 May 2013)

Good on you Mysteryman for making public this letter from Piper Alderman (I had also received it).  A lot of what she says or claims here is not clear to me and goes over my head - I would much appreciate a commentary from someone who knows the issues better!  

Thanks in advance - and, to echo other posts on this page - many thanks again to those who post so frequently and knowledgeably here and who have helped educate other investors such as myself.

Regards.


----------



## rachelg (4 May 2013)

It seems a positive step that Kordea have been appointed (even if to be appealed) as supposedly independent to deal with the LM Managed Performance Funds. However, their latest letter does not give positive reading - seems lot of dubious dealings, loans to top guy in LM, many of loans are not properly secured....and all this fighting between parties sounds like we will get little back as investors. 

Certainly winding things up and getting something back sounds preferably - otherwise long delays and court fees and legal fees....nothing left for investors.


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## ASICK (4 May 2013)

*That Pesky Piper Alderman & Other Things*



Mysteryman said:


> ... It is only in the event that an application to change the RE is unsuccessful that our clients will seek that a receiver and manager be appointed to the LMFMIF.
> 
> We have now also been served with another application by ASIC to wind up the LMFMIF, appoint a supervisor for the winding up and a receiver and manager over the LMFMIF.
> 
> ...




A communication bloated with the first person, "we" and "our" (not relating to its client) - when one writes on behalf of a client, one uses the term "my client", or on behalf of a firm, "our client", this document from Piper Alderman is most certainly not merely one sent on behalf of its client, but rather from itself also.

Examples of Piper Alderman's content "We remain", "We think the approach is not appropriate",  "It is also our firm view".   Seems to me that Piper Alderman meddles too much, and it could very well be that investors might be getting sick and tired of that meddling.

"In Equititrust the RE remained with liquidators in control and receivers are in control of the assets with two sets of fees being incurred and sought to be recovered from that LMFMIF." - well, No Trust might comment on this little gem.  A read of the "Equititrust" thread on ASF might be illuminating:
https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=162  [see post 3230]

Also see:
http://equititrust.com.au/Pdfs/Receiver/Receivers Reports - 20130418 - 12th Report to Investors.pdf [para 2.3 on page 4]

Let's not forget, Piper Alderman is meddling in Equititrust too.

It's great to see investor participation  and it's great to see documents posted by members.

It's refreshing to see ASIC take a more active (and positive)  role - I only wish they'd acted for the PFMF back in 2009.


----------



## No Trust (4 May 2013)

*Re: That Pesky Piper Alderman & Other Things*

Exactly ASICK, what are Piper Alderman on about... The court appointed David Whyte from BDO and McIvor appointed Hall Chadwick as an administrator in a hair brained sheme to save his ass with some very dubious individuals some who have now been banned by ASIC. Hall Chadwick promised on 2 occasions to not claim fees from the funds and then in a very gutless move decided to go back on their promise... The QLD Supreme Court also set out the responsibilities of each of the multiple insolvency practitioners to prevent duplication... The only ones duplicating fees are Hall Chadwick and in a delusional move now want to claim against the funds. As you can see from your attached links the claim went no where and nothing was filed in the Supreme Court...

In the event that they do, they will have a hell of a fight in the media and the court of public opinion... They will lose and be portrayed as a greedy opportunistic insolvency firm that goes back on its word and attacks innocent elderly investors...

Piper Alderman should get its facts straight...



ASICK said:


> A communication bloated with the first person, "we" and "our" (not relating to its client) - when one writes on behalf of a client, one uses the term "my client", or on behalf of a firm, "our client", this document from Piper Alderman is most certainly not merely one sent on behalf of its client, but rather from itself also.
> 
> Examples of Piper Alderman's content "We remain", "We think the approach is not appropriate",  "It is also our firm view".   Seems to me that Piper Alderman meddles too much, and it could very well be that investors might be getting sick and tired of that meddling.
> 
> ...


----------



## ASICK (4 May 2013)

*Sharing*



No Trust said:


> Exactly ASICK, what are Piper Alderman on about... The court appointed David Whyte from BDO and McIvor appointed Hall Chadwick as an administrator in a hair brained sheme to save his ass with some very dubious individuals some who have now been banned by ASIC. Hall Chadwick promised on 2 occasions to not claim fees from the funds and then in a very gutless move decided to go back on their promise... The QLD Supreme Court also set out the responsibilities of each of the multiple insolvency practitioners to prevent duplication... The only ones duplicating fees are Hall Chadwick and in a delusional move now want to claim against the funds. As you can see from your attached links the claim went no where and nothing was filed in the Supreme Court...
> 
> In the event that they do, they will have a hell of a fight in the media and the court of public opinion... They will lose and be portrayed as a greedy opportunistic insolvency firm that goes back on its word and attacks innocent elderly investors...
> 
> Piper Alderman should get its facts straight...




It really is important to post all communications which aren't listed on open websites - this is because there are those amongst us who have interests and knowledge about other events and names - additional information is useful in piecing together a more complete picture of what's going on - additional information brings the broader context to communications.

I remember being shown the list of names of those who attended the LM meeting in Sydney last year - as soon as I saw "Rojacan Pty. Ltd." listed then I knew that Trilogy was interested in LM funds - Rodger was there - Drake was not.  I knew of Rojacan Pty. Ltd. as the entity associated with Rodger Bacon which seeded the Trilogy Healthcare REIT - the fund in which investors lost ALL of their capital - crikey, the ANZ bank lost near $900k (the only good news) - Rojacan Pty. Ltd. took a handsome interest rate and existed the fund without loss - punters lost all:
http://www.moneymagik.com/analysis_REIT.php

I'm sure "Rojacan Pty. Ltd." meant nothing to LM investors, and particularly, I'm confident that it meant nothing to LMIML - but such is the power of knowledge, it can forewarn, and it can educate, and if appropriate action is taken with that knowledge in mind, it can protect.

If you receive documents and choose not to post them, that is your prerogative, but it also might be a costly mistake.  Many entities are fearful of disclosure because the internet has brought instant communications and a broader range of critical views - there's no need to alone in these messes anymore - get the most from the internet: post and disclose.

MORE: on the losses in the Trilogy Healthcare REIT and elsewhere - I wonder why Piper Alderman isn't forthcoming about Trilogy's failures? I would have thought it should have disclosed the failures:

http://www.moneymagik.com/three_part_trilogy_funds_management_tragedy.php

and Trilogy's Philip Ashley Ryan's breach of trust in the Supreme Court of Queensland? http://www.moneymagik.com/trilogy1.php


----------



## ASICK (4 May 2013)

*Philip Ashley Ryan*

http://www.couriermail.com.au/news/...nd-was-once-sued/story-e6freon6-1225736498354

It's worthwhile speaking to this issue.

"Mr Ryan stressed that he and his fellow directors had to bear personal liability for the actions of a rogue employee, who made the loan back in 1999. "There are completely different regulations today. Our compliance is totally different to what it was then," he said."

He's right about the rogue employee - whose name happened to be "Blackadder"  - yipes !!!! 
http://www.asic.gov.au/asic/asic.ns...ailed+solicitors+mortgage+scheme?openDocument
http://www.austlii.edu.au/au/cases/cth/FCA/2006/520.html

but what Ryan didn't volunteer was that he (and others) was found to have breached a client's trust in a completely separate matter in the Supreme Court of Queensland.  

At first instance:
http://archive.sclqld.org.au/qjudgment/2006/QSC06-003.pdf

On appeal:
http://archive.sclqld.org.au/qjudgment/2006/QCA06-432.pdf

The defendants (Ryan et al) attempted to appeal on issue estoppel - that's where they plead that the matter had been dealt with before and so, the judge in the Supreme Court of Qld should have followed the judge in the Federal Court (the ASIC case) - but the Qld. Court of Appeal wouldn't have a bar of it - and dismissed the appeal.

To be clear, there were TWO cases, in the Federal Court (the ASIC case) and the fault was put down to a fraud by a fellow named "Blackadder" - the second was in the Supreme court of Queensland where Ryan and others were found to have breached a client's trust.

"Trilogy chairman Rodger Bacon defended Mr Ryan. "He's a fine guy with great skills and abilities and has never been restricted by any legal body," Mr Bacon said."

and while that may be true, Bacon also didn't bother to disclose Ryan's breach of trust.

I'm afraid to say that Anthony Marx's reporting of this matter was quite pitiful - superficial research has simply let Trilogy off the hook once again.


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## ASICK (4 May 2013)

*"Grim Reapers Who Feast on the Dead"*

In case you missed it from 29 October 2012:

http://www.smh.com.au/business/grim-reapers-who-feast-on-the-dead-20121029-28dom.html

from 3 December 2012 :

http://www.smh.com.au/business/fee-hunters-grab-56m-in-14-months-20121202-2aoz4.html


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## RODENT69 (4 May 2013)

*Re: That Pesky Piper Alderman & Other Things*



ASICK said:


> A communication bloated with the first person, "we" and "our" (not relating to its client) - when one writes on behalf of a client, one uses the term "my client", or on behalf of a firm, "our client", this document from Piper Alderman is most certainly not merely one sent on behalf of its client, but rather from itself also.
> 
> Examples of Piper Alderman's content "We remain", "We think the approach is not appropriate",  "It is also our firm view".   Seems to me that Piper Alderman meddles too much, and it could very well be that investors might be getting sick and tired of that meddling.
> 
> ...




ASICK, Mysterman, Taja   others   I too received the Piper Alderman communication, if that's what its called.  As ASICK has written the words they have used in this communication piece can only be described as indicative of a company expressing a self interest, not solely the interest of the investors who they are supposed to represent!!

I have wriiten in the past to both FTI and Piper Alderman and basically told them to butt out. All investors want is for the funds to be would up ASAP


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## RODENT69 (4 May 2013)

Dear all

Attached FYI and feedback? is an Excel Spreadsheet I have been playing around with. I dont have the skills that ASICK has in drawing pretty pictures but you may find it interesting

It contains selected data from the Audited returns for the LMFMIF  and related feeder funds for 2011 F/Y(where available) and for 2012 F/Y

I did this in attempt to better understand the "Missing Distributions - Reinvestment of Distributions of Feeder funds issue " where distributions were clearly paid to FMIF  Investors but not paid to Feeder feeder Investors. 

As all may be aware Trilogy paid the most recent LM Capital Distribution to investors in the WFMIF as a partial Investor catch up payment covering the missing 8 months for May to Dec 2010, equivalent to about 62% of  the outstanding laibility, with a further $1.2mil still to be paid. 
View attachment Copy of LM Funds Summary data  Fin Years  2011 -2012.xlsx


Sorry ASICK but yes I am still persuing this matter with LM, FTI, Trilogy and my Platform BT/Asgard


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## ASICK (4 May 2013)

RODENT69 said:


> ... Sorry ASICK but yes I am still persuing this matter with LM, FTI, Trilogy and my Platform BT/Asgard




Hi Rodent, you have to do what you have to do.
I remain perplexed by the goings-on (accounting) within the LMFMIF - I wonder if LM knew what was happening and I wonder if anyone else knows precisely what happened.  It seems to me that there wasn't any 'rhyme nor reason' about the distributions to each class of unitholdings within the LMFMIF.  Further it also seems a mess about how redemptions were made and then reinvested - I can't see fairness amongst any of the redemptions, reinvestments, and distributions .  I really think it's a mess.  There's nothing but what's left of investors' capital now - and at a guess, not too much of that either.
Rodent, you'll be pleased to know that spread-sheets are not my forte.


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## Mysteryman (5 May 2013)

I endorse what Rodent69 is saying in 705. It may be true that there is nothing but capital left in the FMIF and precious little of that, due I am sure, to over valuations in the last few years, debt and general mismanagement. Distributions to feeder funds have been conveniently reinvested back into the FMIF for tax year 2012 and the second half of tax year 2011. This I suspect is in order to pay the ever increasing management fees and huge interest on debt with the Deutsche bank. For the WFMIF this amounts to $5,116,301 for 2012 and $2,459,271 for the second half of 2011.   

However, what Rodent69 is writing about is the $2,379,264 that investors in the WFMIF are owed for unpaid, declared distributions for May to December 2010. This as far as I can perceive has not been reinvested in the FMIF. I note that the FMIF have received the equivalent distributions for May 2010 to October 2010 and are shortly due to be paid November and December 2010. If these are not being paid out of capital, I would like to know how LM/FTI is finding the money to pay them and not investors in the WFMIF. The fact that Trilogy is now the RE of WFMIF has no bearing on the unequal treatment of the two funds.

This issue has been taken up with LM and FTI on a number of occasions by various investors but we are being stonewalled with non answers. With an unwillingness to answer, one can't help feeling that they have something to hide.

Since, it has been mentioned several times here, that this forum is followed closely by LM, FTI, PA and Trilogy, it would be good for one of them to add their piece to this forum and offer some sort of an detailed explanation with regard to this inequality. Go on, feel free to have your say. After all, anonymity can be maintained and there is always the use of private email on this forum.


----------



## ASICK (5 May 2013)

*"In a Perfect World"*



Mysteryman said:


> ... This issue has been taken up with LM and FTI on a number of occasions by various investors but we are being stonewalled with non answers. With an unwillingness to answer, one can't help feeling that they have something to hide. ...




I'd maintain my guess that they're as confused as you are, and it could very well be that the answer they might tell you is an answer that you don't want to hear, that all future payments will be capital repayments.



Mysteryman said:


> ... Since, it has been mentioned several times here, that this forum is followed closely by LM, FTI, PA and Trilogy, it would be good for one of them to add their piece to this forum and offer some sort of an detailed explanation with regard to this inequality. Go on, feel free to have your say. After all, anonymity can be maintained and there is always the use of private email on this forum.




"anonymity" - then there's no point - furthermore it's not permitted for FTI (as goes LM) and Trilogy (see ASIC notice (4) on the "Reply to Thread" dialogue box) - ASIC notice (2) requires a declaration of interest which would mean Piper Alderman could not post without disclosure.
"private email" - then use normal email/mail, have a meeting in person or by phone - have a beer together.

"good for one of them to add their piece to this forum" - I'd love to see that - full and frank conversation? I don't think that's on the table. I saw the result of Paul Stacks (of Stacks Finance) joining the PFMF UHAG forum to interact with investors - I'd say he regretted becoming a member - all the unanswered questions. 

That's the problem for all of them, any unanswered questions are open for all to view - that's different to how it is now - you guys write emails to various entities and get answers or part answers, and for the most part you're the only ones who know - but bring them here and it's "open season" - it's cross-examination time. Even if allowed, I reckon they wouldn't dare.

Keep in mind that they have the resources to disclose information to investors via websites, the media, and/or direct email/mail - heck, they could even fire up a call centre  - they have the $$$$ which gives each of them a clear advantage over investors - I'm sure they'd like to keep in that way.  These entities need to control the flow of information, not be cross-examined.


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## JbFalcone (6 May 2013)

A friend of mines put alot of money into his account in this bank, and it has gone bankrupt. Now the bank is not allowing him to take out his money , he has been trying to take this sum of money out for a good part of 2 years now but is still not able to. What options are there for him and what can he do in this situation?


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## ASICK (6 May 2013)

*A History Lesson - Co-lending in the PFMF: A Shell Game*

http://www.colonialfirststate.com.au/prospects/CityPacific_update4_20080828.pdf [page 6]

"Co-lending arrangements - On 18 March 2008, City Pacific announced it had entered into a $100 million co-lending agreement with Fortress Credit Corporation (Australian) II Pty Ltd (Fortress). The agreement provides that Fortress will co-lend approximately $100 million with the Fund in a range of first mortgages currently held by the Fund.

The co-lending arrangement allowed the release of up to $100 million back to the Fund along with a reduction of the Fund’s investment in those mortgages, which was used to continue the investment objectives of the Fund. 

The co-lending agreement provides Fortress with priority ahead of the Fund for the repayment of its principal in a manner similar to the existing bank facility referred to above under the heading ‘Finance Facility’.

City Pacific may enter into other co-lending arrangements where it considers it is in the best interests of investors. Any new arrangements will be advised to investors."

In 2008 when things when pear-shaped for the (then) City Pacific First Mortgage Fund (CPFMF), the CBA was pressuring City Pacific Limited to pay down the (then) $240m facility provided to the CPFMF - can you believe it, $240m?

Good ol' Fortress come along and co-lent with the CPFMF to the tune of $100m - believe it or not, many punters were relieved. Duh !   They actually thought that having Fortress as a co-lender was better than having a bank facility - Duh (again) !  What was the essential difference between a co-lending institutional lender and a bank facility? geez, nothing !

The reality was that both had their lendings secured by fund assets - both Fortress and the CBA were guaranteed return of their capital, then fund would cover the shortfall.    

But many thought a co-lender took on risk, but it didn't - just like a bank, it protected its investment.

City Pacific didn't reduce the fund's obligations to guarantee debt, it simply shifted debt from the bank to the institutional lender.  Heck, City Pacific actually foreshadowed that more such arrangements might be made. That's unbelievable given the fund was frozen at the time the statement containing the above excerpt was made.

Fortress bought out a number of mortgages and continued lending (just as Citypac would do), and just like the bank, the fund secured Fortress' lending (capital and interest) against loss.

See, from an accounting point of view, the fund's gross assets are assessed, and then any bank loan (and other liability) is subtracted from that amount to obtain net assets (which are attributable to unitholders).   It doesn't matter to the bank how many assets are sold to pay back the facility (and interest), but it matters to unitholders.

In a falling market, more assets are necessarily sold in order to  pay back a facility - this is exactly the same with co-lending arrangements.  The only difference is that the bank facility value forms part of the accounting process while the co-lending value only rates a mention in a note in the accounts. 

However, the effect of a debt, whether it's on or off balance sheet is identical, and for unitholders, the risk is also identical.  But investors didn't seem to 'cotton on' to this fact.  In fact, when spruiking about debt, Citypac didn't always mention the impact of Fortress' loan, rather it focused (to the delight of the ignorant) on the pay down of $100m of the CBA facility.

http://www.colonialfirststate.com.au/prospects/CPL0001AU_1.pdf (created 16 September 2009)

"The Fund’s finance facility has been reduced by half down to $120 million. This finance facility
represents a ratio of 12% of debt to assets in the Fund."

Why is this excerpt important? Well, because there's no mention of the fund's obligation to the institutional lender, Fortress for the $100m of co-lender Fortress engaged in.  In truth, the level of obligation hadn't changed one iota - simply put, $100m had shifted off balance sheet but remained secure at the risk of the fund.

Just another event in the life of a managed investment scheme.

(Both documents disclose what investors in the CPFMF (now Trilogy's PFMF) were told back there in 2008)

And the devastation continues along with Trilogy: http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


----------



## ASICK (6 May 2013)

*Good News Everyone*



http://www.smh.com.au/business/court-bid-to-wind-up-fund-20130505-2j1ai.html


----------



## ASICK (6 May 2013)

*Ah ! Trilogy ! You've Done it Again !*

http://www.balmaintrilogy.com.au/

(re: Trilogy's PFMF - note to 11 April 2013 documents) "A copy of the Accounts will be emailed to Unitholders shortly, along with a Fund Update. In addition, a comprehensive Fund Update containing an Asset Review and litigation update will be uploaded to the website in April and mailed or emailed to Unitholders in accordance with their communication preferences."

oppps ... nope, nothing yet ...  it's just impossible for me to  believe anything they say !!!!!

http://www.moneymagik.com/imf_litigation.mp3
(Rodger Bacon speaks to a PFMF unitholder in November 2012)

off the record until we announce it officially?  hahahah

Has it been announced officially all these months later? nope. .. 

Ah ! Trilogy ! You've done it again !


----------



## Taja (6 May 2013)

*FMIF - supreme court hearing*

I am not sure if this has been made public yet or not, but just a note to say that for the 13th May Supreme Court hearing for FMIF, ASIC has now filed an affidavit for an independent receiver - and now even Piper Alderman have filed for an independent receiver as Plan B, if their original Plan A application to switch from FTI to Trilogy is not approved by the court ! 

Regards.


----------



## ASICK (6 May 2013)

*Re: FMIF - supreme court hearing*



Taja said:


> I am not sure if this has been made public yet or not, but just a note to say that for the 13th May Supreme Court hearing for FMIF, ASIC has now filed an affidavit for an independent receiver - and now even Piper Alderman have filed for an independent receiver as Plan B, if their original Plan A application to switch from FTI to Trilogy is not approved by the court !
> 
> Regards.




From ASIC's site:
http://www.asic.gov.au/asic/asic.nsf/byheadline/LM+Investment+Management+Limited?openDocument


----------



## No Trust (7 May 2013)

Today's Gold Coast Bulletin ASIC looking to now appoint PWC...

Looks like ASIC is intervening and taking the same action as it did with Equititrust and appointing someone independent to wind up the funds...


----------



## ASICK (7 May 2013)

*Duplication of Costs: Is it a Nonsense?*

There's been talk from various parties about the appointment of a receiver to a managed investment scheme constituting a duplication of costs for fund members.  That is, a fund would be liable for both the receiver's costs and the manager's (responsible entity's) costs.  

I don't think it's possible for a responsible entity to continue claiming a fee once a receiver has been appointed - I think the appointment of a receiver invalidates the management contract due to frustration of that contract - the contract arising out of the PDS/constitution, pursuant to the relevant law.  After all, with a receiver appointed, the manager is no long able to manage the fund and can no longer fulfil its obligations to members of the fund.

In the circumstances, it would be unjust for members of a fund to suffer duplication of costs in the event a receiver is appointed by a court to that fund.  

"Frustration/Subsequent impossibility - A frustrating event is an extreme supervening event occurring after the formation of the contract which makes further performance impossible, or so radically different to that envisaged, that it would be unjust for the contract to continue."
http://www.google.com.au/url?sa=t&r...woHoCA&usg=AFQjCNHh7T6VK4_-kOlSyc04hCnSvJPWeg [Page 6: 4. Other matters that may invalidate a contract - Frustration/Subsequent impossibility]


----------



## No Trust (7 May 2013)

*Re: Duplication of Costs: Is it a Nonsense?*

I totally agree..




ASICK said:


> There's been talk from various parties about the appointment of a receiver to a managed investment scheme constituting a duplication of costs for fund members.  That is, a fund would be liable for both the receiver's costs and the manager's (responsible entity's) costs.
> 
> I don't think it's possible for a responsible entity to continue claiming a fee once a receiver has been appointed - I think the appointment of a receiver invalidates the management contract due to frustration of that contract - the contract arising out of the PDS/constitution, pursuant to the relevant law.  After all, with a receiver appointed, the manager is no long able to manage the fund and can no longer fulfil its obligations to members of the fund.
> 
> ...


----------



## ASICK (7 May 2013)

*Pawns in the Game*

I wonder which entity/entities is/are paying for the proposed meetings of members of the three LM funds?

If the funds are paying and the court appoints a receiver prior to the meetings, will be funds be recompensed by LMIML (administrator appointed)?

I wonder how much in court costs are being paid for by the FMFMIF?

Nothing like being kept in the dark, right?

Investors are pawns in the game, and there's really not much they can do about it.

Such is life as an investor in a failed managed investment scheme.

Remember, "A frozen fund is a manager's (or receiver's, whatever the case may be) delight"


----------



## RODENT69 (7 May 2013)

Latest info on LM  site - FTI  Litigation  -Affidavit Stephen  Russell  dated 6 May  is very lengthy, but seems to say  that FTI don't want a Receiver appointed, as well as other points.

God knows how the court will get through all this and other Material and make an informed decision


----------



## ASICK (7 May 2013)

RODENT69 said:


> Latest info on LM  site - FTI  Litigation  -Affidavit Stephen  Russell  dated 6 May  is very lengthy, but seems to say  that FTI don't want a Receiver appointed, as well as other points.
> 
> God knows how the court will get through all this and other Material and make an informed decision




I looked and looked, and found it:
http://www.lminvestmentadministration.com/litigation


----------



## ASICK (7 May 2013)

*A Good Read*



ASICK said:


> I looked and looked, and found it:
> http://www.lminvestmentadministration.com/litigation




Have a read of "SCR14"
http://u.b5z.net/i/u/10199052/f/Sec...__Russell_sworn_1_May_2013-01052013184638.pdf

especially the last "PR" paragraph (last page of document)

PR = Philip Ryan
http://moneymagik.com/trilogy1.php

Managing Director of Trilogy:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


----------



## ASICK (7 May 2013)

*BDO's David Whyte*

http://u.b5z.net/i/u/10199052/f/Affidavit_of_David_Whyte_sworn_29_04_13__TCS00510830_.pdf

Crikey, the $1m man from BDO is in the mix now !!!!!

http://equititrust.com.au/Updates.html

Receiver for the Equititrust Income Fund (EIF) is not enough for the $1m man?

Look to the last page of each report for his costs and disbursements - wow! Bucket loads of $$$$$ !

In the near 12 months since BDO took over, the average estimated return dropped from $0.24/unit to $0.14/unit - and not one cent of capital has been returned - but add up the costs - and look, he's out for more .. 
http://moneymagik.com/equititrust.php

"Frozen funds are most certainly a receiver's delight"

Here's an interesting document:
http://equititrust.com.au/Pdfs/Rece...ter to Investors re Administrators Report.pdf 
[see page 2 - "3. Potential Replacement of Responsible Entity"]

As receiver, in the abovementioned document, David Whyte spoke negatively to a number of prospective responsible entities put up by the administrator of Equititrust Limited (the previous RE for the EIF).  But guess which prospective suitors weren't spoken to? Ah, did you guess it? Trilogy and Balmain  !

oh .. by the way, BDO audits Trilogy funds like Trilogy's PFMF !

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

And there's humour too:

http://u.b5z.net/i/u/10199052/f/Sec...__Russell_sworn_1_May_2013-01052013184638.pdf

"SCR14": Page 2 - JC - top of page - second paragraph

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php


----------



## ASICK (7 May 2013)

*BDO and a Trilogy Failure*

BDO is the auditor to the failed Trilogy Healthcare REIT
http://moneymagik.com/trilogy_healthcare_reit_dec_2012.pdf

where the fund's asset which cost about $8.1m was sold for $2.5m !
Investors lost all their capital.

Ah .. Trilogy .. You've Done it Again !


----------



## Taja (8 May 2013)

ASICK said:


> I looked and looked, and found it:
> http://www.lminvestmentadministration.com/litigation




Thanks ASICK for alerting us to this.  Indeed, the various documents make for very interesting reading - a lot to be mined there.  As you had noted, the attachment to the 2nd Affidavit by Stephen Russell (arguing to retain FTI) includes a record of an exchange in November 2012 between Michael Welter (of the Bangkok-based Financial Adviser firm TopNotch) and Joe Christie of Trilogy.  Two quite striking things:

_J.C.: So you are not coming to the LM training for advisors ?
M.W.: No, I am not going there.
_
If it was regular practice for international financial advisers to go (invited? expenses paid?) to "LM training sessions", one can only wonder at the degree of complicity engendered - and at the extent to which the advisers were persuaded to relax their critical faculties in regard to LM goings-on.  And "training" on what exactly ..?

_J.C.: No, we are investigating a lot and also investigating the Maddison Project.  Do you know the Maddison Project ?
M.W.: Yes I know the Maddison Project.
J.C.: You know the financial situation in relation to the Maddison Project ?
M.W.: I know the MPF is doing well.
J.C.: Yes, but they had a lot of problems.
M.W.: I know they had some problems with the redemption fee but you know the Fund is going well.
J.C.: But do you know how much money is spent on the Maddison Project?
M.W.: No, I don't.
J.C.: It's about $ 25 m mortgage from Suncorp and $ 220 m from the MPF.  Have you seen the Project?
M.W.: No, I haven't seen the Project.
J.C.: There is nothing there._

Despite these whisperings from Trilogy (whatever one may think of that outfit) I know that this same firm of financial advisers was recommending MPF to investors right through until March 2013.  

Regards.


----------



## ASICK (8 May 2013)

*The 'Dash for Cash'*

Good morning Taja, I wasn't aware of the "litigation" link until I expanded my search for the documents Rodent posted about yesterday. Normally I'd look on the LMFMIF link on the LM website - I couldn't find the documents there or on any of the other links I'd normally haunt.

Mr. Welter's recollection of conversations is detailed - to me, that suggests reliable contemporaneous records.  I guess when one has such records, it's worth considering the other side has too, so, any excerpt has to disclose context, which it seems to me, Mr. Welter does.

I note a website heavily criticizing Mr. Welter/Topnotch and LM (easily found by a Google search), but that aside, Mr. Welter's evidence stands alone regardless.  I spend a lot of time in Thailand, so would I go to seek advice from a financial advisor in Thailand? no, I wouldn't - would I ever had, no. 

Interestingly JC agrees with MW that the MPF is doing well - it is MW that raises the issue of problems with redemptions, not MW.

I guess many things look clearer in hindsight - when one's in business, it's sometimes difficult to resist 'bagging the competition' - During the period MW speaks to, Trilogy was out to take over the LM funds, and so (at least to me), anything Trilogy said could well have been interpreted by MW as 'bagging LM' or even an embellishment of the facts to advance Trilogy's case (to take over the fund).

I wonder how many investors took earlier media concerns about LM as having merit? From my own experiences, I didn't want to believe that the City Pacific fund in which I'd invested was unstable.  I sensed that even my earlier quite negative postings about the LMFMIF (not long after the forum was started) were taken with scepticism by readers - reality takes time to settle in.

One should keep in mind that even the "4 Corners" program qualified its report about Maddison to the extent that it might just turn out well: http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm

(a little after 00:37) "If the Gold Coast economy booms, Maddison Estate could be a winner, but it's not without risk" 

Further, the program disclosed (at about 00:36), that (1) loans are capitalized, and (2) interest paid to investors is sourced from (i) cash reserves, (ii) income from other loans, (iii) new investment.

Surprise Surprise,  precisely the same as Trilogy's Monthly Income Trust:
http://moneymagik.com/trilogy_monthly_income_trust_alternative_comment.php




I think the more interesting issue is any disclosed relationship between Trilogy and Piper Alderman. It seems to me that FTI is beginning to focus quite strongly on Piper Alderman.

This is now becoming 'bigger than "Ben Hur"' - and it may be the case that it's all being played out with investors' hard-earned. Look at it all, from an outsider's perspective, it looks like a free-for-all, a big grab for the $$$$$$.  

Like I'll continue to say, "A frozen fund is a manager's or receiver's (whatever the case may) delight" - If the PFMF is any indicator, there's a bag full of $$$$ in fees for the lucky winner of the 'Dash for Cash'.

Participants in the 'Dash for Cash':

1. Trilogy - see http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
2. FTI - administrator of LMIML
3. BDO's David Whyte - see http://moneymagik.com/equititrust.php
4. ASIC's nomination


----------



## ASICK (9 May 2013)

*It's All Theatre*

*Unit Price, the orderly sale of assets, and the avoidance of the dreaded fire sale.*

As investors in the PFMF, we've heard all the spruiks.  Acting in our best interests, Trilogy managed to lose about 56% of the PFMF's value in three and a half years of managing the fund (until 30 June 2012).   While spruiking "no fire sales", Trilogy managed to dispose of assets at very low prices (which according to Trilogy, were not fire sales).  

http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf
(see bottom page 4 "Fire sales" and page 5 "Wakerley")

Generally a "fire sale" is sale of an asset at a very low price, but as you'll find out, the sale of an asset for a very low price is not a fire sale if it's sold in the current market to satisfy fund expenses.   In any event, you'll all find out, a manager/receiver who promises "no fire sales" will decry accusations of fire sales merely because fire sales were promised to be avoided, therefore there's no fire sales, even if asset sale prices are very low indeed.

Generally speaking, I've noted that investors concern themselves about three (1) a sustained unit price, and (2) avoidance of fire sales, and (3) a professional approach is taken to managing a fund's assets.

*Sustained Unit Price*

Unit price is very important to investors, even if that price is not able to achieved.  From experience, I would say that investors should regard unit prices in damaged funds as no more than indicative of value - further, investors should consider the strength of that indication in light of the most recent RG45 Table "H" (LVR in ranges).   Unit price is 'pie in the sky' unless it's able to be converted to cash.  Investors will only get what they'll actually get, and as far as I'm concerned, the path to completion is loaded up with no more than pure theatre.

*Avoidance of Fire Sales*

I think a manager has no choice other than to sell assets at the price buyers are willing to pay - yes, it's obvious, but many investors think that by holding on, potential buyers will offer more and more and more - but, that doesn't seem to be the experience - in the PFMF, holding onto assets has increased costs to fund members while not producing anything other than low value sales (or increased security asset impairments).

I'm sure the definition of fire sale presupposes that the item being sold has a general attraction to a wide group of potential buyers, and therefore by holding off, and offering the item for a reasonable period of time, the item is able to be sold for a higher price.  I guess a fire sale is said to take place if the item is immediately offered and sold to the market.

In many cases, the assets securing loans made by damaged managed funds are attractive to a narrower group of savvy potential buyers, so for these assets, it's a buyer's market - these limited buyers will simply bide their time and either move onto something else, or alternatively, buy when the manager/receiver has no other choice but to sell.

To my mind, fire sales cannot be avoided because assets have to be disposed of in order to pay fund expenses - assets certainly have to be disposed of if members are to be repaid capital.   I'm of the view that fire sales (that is, sales of assets at low prices) will be the norm rather than the exception.  

*Professional Approach*

The "orderly sell down" - I think it's no more than making organized fire sales - what else can be done?  

Investors want to believe that by doing things in an organized way that the outcome will be better, but I don't think it's possible - the buyer decides the price - whether something is neat and organized (or not) will not motivate the buyer to pay more.

The orderly non-firesale of assets sounds attractive to investors, but in the end, it's the market which will determine the price.  


It's all theatre - $$$ in hand is reality.

Some doses of reality:

http://moneymagik.com/equititrust.php
http://moneymagik.com/yardy_yardy_yah.php
http://moneymagik.com/litigation.php
http://moneymagik.com/lm_investment_management.php


----------



## ASICK (9 May 2013)

*WInd up the Fund?: Seems Not to be on Trilogy's Mind*

http://www.goldcoast.com.au/article/2013/05/09/451591_gold-coast-business.html

"But Rodger Bacon, deputy chairman of Trilogy Capital Group, which is seeking to be made responsible entity for the fund, said the delay would hurt unitholders.

"The most important factor here should be the unitholders, who do not want to see the fund wound up and assets destroyed," he said. "They are disappointed at continued adjournments, which we believe are a distraction. "Unitholders can rest assured we will not be distracted from our goal, which is to see the best return for them.""

Ah .. Trilogy doesn't seem to want to wind the fund up --- all those $$$$$$ in management fees ... and receivers to the assets .. oh .. $$$$$$$

See Trilogy in the PFMF:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

ASIC wants the fund wound up, but that's not on Trilogy's mind.

In my view ASIC should have acted promptly - it should have appointed independent receivers promptly - by delaying, ASIC let the whole thing get out of hand.

It's a mess, and investors (including Mr. Bruce) are paying.


----------



## Mysteryman (9 May 2013)

If anyone needs any convincing that the FMIF is moribund and should be wound up by a receiver, do read Roger Shotten's submission of applicant to be found on the LM/FTI website, under Litigation. It is on pages 106 to 125 of the Affidavit of Stephen Charles Russell 6 May 2013. Well worth reading.


----------



## ASICK (9 May 2013)

*$$$$$$*



Mysteryman said:


> If anyone needs any convincing that the FMIF is moribund and should be wound up by a receiver, do read Roger Shotten's submission of applicant to be found on the LM/FTI website, under Litigation. It is on pages 106 to 125 of the Affidavit of Stephen Charles Russell 6 May 2013. Well worth reading.




I certainly don't disagree with the tenor of Mr. Shotten's submission, but I'd query some of the particulars:

1. on page 110, (l), that the fund has stopped trading - trading? It's most certainly stopped income distributions to investors, but the fund is still engaged in the business of lending money - however, it is not making new loans except to existing lenders (via receivers).
2. on page 111, (iii), that redemptions are due and payable?  I don't think there's any such case.  Redemptions (capital repayments) are now subject to the relevant provisions of the Corporations Act (and constitution).
3. on page 112, (3), LMIML is a debtor of the fund - is LMIML a debtor of the fund? I didn't think that was the case (at this point).

As an aside, shouldn't the affidavit of David Whyte (of wind up Equititrust IF fame - $$$$ in fees, no return to investors, average estimated unit price dropped from $0.24/unit to $0.14/unit) be listed in the Bruce column? http://www.lminvestmentadministration.com/litigation

I'm so used to seeing Trilogy and BDO in the same document that I'd be surprised if they aren't.

I can't find that Shotten is putting David Whyte up for anything? 
(or have I missed it?)


----------



## ASICK (9 May 2013)

*"emissary authority"*

The news has now gone over the seas:
http://www.ahipcup.net/latest-twist-in-lm-court-row/


----------



## ASICK (10 May 2013)

*Trailing Commissions*

and there's more:
http://u.b5z.net/i/u/10199052/f/_Oth_Mem__Affidavit_of_Shane_Roberts_sworn_7_May_2013_.pdf

" ... Mr. Simon Lister ... and a partner of Magellan Tresidder Tuohy Ltd a financial planning company that advises over 200 individual investors in the LM funds accounting for approximately $30 million worth of investment in the MPF, CPAIF, and the LM First Mortgage Income Fund ("FMIF")."

no to Trilogy 
no to a receiver

yes to LM (FTI appointed as administrator)

I guess that'd be yes to the income stream continuing in to LMIML .. and $$$ for creditors (which includes advisors?)  

I didn't note in the affidavit whether Mr. Lister stands to gain a benefit (or not)  if LMIML (administrators appointed) remains manager, or alternatively, what benefits Mr. Lister stands to lose (if any) if LMIML is ousted.

As I understand it, certain advisors are paid a trailing commission from LMIML.

Seems the issue of trailing fees hasn't poked it head up yet - perhaps it should?


----------



## ASICK (10 May 2013)

*A Public Relations Disaster?*

http://u.b5z.net/i/u/10199052/f/_1st_Resp__Fifth_Affidavit_of_Stephen_Russell_7_May_2013.pdf

It seems Deutsche Bank will likely appoint its own receiver if the applications to appoint a receiver remain on foot.

Great news everybody .. let them do it .. and then .. Deutsche Bank will cop the investor backlash if investor equity is decimated.

Poor darling got its corporate nose out of joint because no one took any notice of it.

dittims.

Maybe Deutsche Bank ought to think ahead a few moves?


----------



## No Trust (10 May 2013)

If der dumb Germans thoughts a heads ze little, zey wud never lend ze money to ze LM... IDIOTS what did they expect...


----------



## ASICK (10 May 2013)

*The "Dash for Cash"*

Let's see Deutsche Bank appoint a receiver.  I'd guess in such circumstances the responsible entity would be still able to draw a management fee.

ASIC can then amend its application to have LMIML removed as manager.

Can it be so simple?


----------



## ASICK (10 May 2013)

*The "Dash for Cash"*

http://u.b5z.net/i/u/10199052/f/_1st_Resp__Fourth_Affidavit_of_Stephen_Russell_7_May_2013.pdf

I just wonder how many investors out there think it's better to pay back capital distributions while leaving a debt facility costing 15%(soon to be 18%?)?

FTI speaks to a regular distributions of capital to investors until the fund is wound down.   sure .. all the while paying the bank at least 15% on the debt facility.   Does anyone out there seriously believe that distributions of capital will be regular?  This is one that I really want to see.

Costs - remember, LMIML will be drawing a fee of 1.5% FUM, which will not include the costs of receiving the assets.  LMIML made millions out of receiving assets, it seems FTI will carry on the tradition.   Administration of LMIML (as manager for the LMFMIF and other funds) is really a BIG $$$$$ earner - worth fighting for, both for FTI, the creditors, and of course, the advisors.

Ah ! The Investor Advisory Committee (IAC) - will "review the FMIF strategy (as updated by the administrators from time to time) and provide recommendations and suggestions to the administrators on that strategy" - yes, professionals need recommendations and suggestions from punters - perhaps a box with a label, "Suggestions/Recommendations" - but there's no word on whether FTI will take any notice of them.

"It is also proposed any compromise in relation to the amount owing to FMIF under any loan (including where an asset is sold which will result in a loss on the outstanding balance of the original loan advance) will be discussed with the IAC before any decision is made." - yes, that's a great out for FTI on a low sale "We checked in with the IAC first, and they thought it was okay" - oh dear, won't all the members of the IAC be bound by non-disclosure agreements?

"It is proposed where possible that meetings will be conducted by phone to minimize costs" - and if not by phone, then costs will be incurred by the fund?  

Of course, members should know that if the IAC is not created by virtue of the fund's constitution, then it really has nothing to do with the fund.  

Will any disclosure by the IAC constitute investment advice? Will members of the IAC be indemnified by LM (administrators appointed)?

Are these IAC type constructs of value?

In the PFMF it wasn't (at least for investors it wasn't):
http://moneymagik.com/icc.php

but never mind, when it's all over, there's nothing anyone can do anyway.


----------



## ASICK (10 May 2013)

*The Proposed IAC*

I've been reminded that ASIC will not deal with any complaints about an investor committee.  If LM (in administration) remains in the fund, or if Trilogy takes over, and as a result of either, an ICC/IAC is constructed, members of the fund will not be able to complain to ASIC about the ICC/IAC - okay, you can make a complaint, but ASIC will simply write back and tell you that it's got nothing to do with them.  (from experience).

Members of such constructs are generally bound by non-disclosure agreements and generally desist from communications about the fund with ordinary investors (yes, mere investors).

If you think an ICC/IAC is of value, I think you'll be surprised to discover quite the contrary if an IAC is put together for your fund.


----------



## ASICK (10 May 2013)

*The "Dash For Cash"*

http://u.b5z.net/i/u/10199052/f/_Appl__Affidavit_of_Paul_Wood_sworn_6_May_2013.pdf

Paragraphs 4 - 5 re: Trilogy managing funds - surprise, surprise --- no mention of an association with Balmain, and no mention of the PFMF - no mention of the TOTAL loss of investor capital in the Trilogy Healthcare REIT - and no mention of the losses in the PMMFF !
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
Yes, the healthcare fund has not wound up yet.
https://connectonline.asic.gov.au/R...rilogy healthcare reit&searchType=OrgAndBusNm
Latest return: http://moneymagik.com/trilogy_healthcare_reit_dec_2012.pdf

paragraph 51(a) re: fund dropping from $783.3m to $328.8m, or - 58%
Compare with Trilogy in the PFMF - from about $426m (30 June 2009)  to  about $181m ( 31 December 2012), or -about 58%

Crikey, LM's performance (-58%)  matches Trilogy's !!!!! 

But Trilogy outperforms with the total loss of capital in the totally failed Trilogy Healthcare REIT (-100%)


----------



## ASICK (10 May 2013)

*The "Dash For Cash"*

Geez guys, there's heaps to post about - this litigation is really growing  - my guess is that it's not the end.
Surely LM members have a lot to opine about?

http://u.b5z.net/i/u/10199052/f/_Appl__Affidavit_of_Michael_James_Baltins_sworn_3_May_2013.pdf

It seems Trilogy's side is attempting to convince the court by presenting a one-sided "clayton's" meeting - that is, a meeting Trilogy has, when it's not having a meeting, all without opposition.
http://u.b5z.net/i/u/10199052/f/_Ap...orn_3_May_2013_Exhibit_MJB1__part_1_of_3_.pdf
http://u.b5z.net/i/u/10199052/f/_Ap...orn_3_May_2013_Exhibit_MJB1__part_2_of_3_.pdf
http://u.b5z.net/i/u/10199052/f/_Ap...orn_3_May_2013_Exhibit_MJB1__part_3_of_3_.pdf

There's no doubt that investors in LM funds aren't happy, but before making a decision about whether an investor would support a prospective manager (or not), then surely investors should be permitted to make an informed decision.

It doesn't appear (at least to me) that the investors disclosed in Mr. Baltins' affidavit as supporting Trilogy could, to any extent, be regarded as well informed.


----------



## Loiner (10 May 2013)

*Their Dash For Our Cash*



ASICK said:


> It doesn't appear (at least to me) that the investors disclosed in Mr. Baltins' affidavit as supporting Trilogy could, to any extent, be regarded as well informed.




Hi Asick, I don't think the voters in Mr Baltin's affidavit were well informed either. They obviously haven't read this forum or heard your warnings. Where did they get those Piper Alderman pro formas from and why did they think an RE change to Trilogy was a good idea? I am a CPIAF investor and I have never seen that form, nor was I invited to participate in Mr Baltin's vote. I can see my name in there and I'm down as a "No Reply Received".
Where you suggest some LM Investors should opine, well my opinion is that the vote in his affidavit was rigged!

Something smells very fishy for there to be no CPAIF votes at all against Trilogy. This is especially as in early April I had spoken on the phone with Amanda Banton, his senior at Pipers, and told her that although definately in favour of an RE change, I wouldn't support Trilogy. I confirmed to her in an email that there must be somebody else. I also know of a similar tale from another investor.

Are Piper Alderman and Trilogy in cahoots together here? They are all looking very untrustworthy now. There is too much litigation being initiated by outside parties and too many vested interests wanting to get a slice of the action. How can we investors protect ourselves from this and bring about an efficient and quicker end to this whole sorry shooting match? The real ASIC don't seem to be doing very much really. What is wrong with what appears to be the only regulatory body in this mess?


----------



## ASICK (10 May 2013)

*LM Funds: Piper Alderman / Trilogy*

Hi Loiner,  I guess that FTI is providing all the information so investors are able to judge for themselves.

FTI (as LM administrators) raised concerns about Piper Alderman:
http://u.b5z.net/i/u/10199052/f/8974r11.pdf (see page 2)

The alleged conversation between Welter & Ryan:
http://u.b5z.net/i/u/10199052/f/Sec...__Russell_sworn_1_May_2013-01052013184638.pdf
(see page 7: PR's alleged penultimate and final paragraphs)

Then there's that letter to investors from Piper Alderman where the author wobbles in and out of the first person.

and of course, Piper Alderman's proposed class action requires evidence (inside information).

I also wonder why anyone would want Trilogy to replace LM (-58% performance) when Trilogy's performance in the PFMF has been somewhat identical (about -58%)?  (and in the Trilogy Healthcare REIT, -100%).  

If the intent was to give LM investors a better chance, why even consider an entity such as Trilogy whose track record in taking over the damaged PFMF has been no better than LMIML with the LMFMIF?

Why consider David Whyte of BDO? average unit price after one year in the Equititrust Income Fund (in receivership) dropped from $0.24/unit to $0.14/unit with BIG $$$$ fees and not cent returned to investors.
http://moneymagik.com/equititrust.php

Remember BDO audits a number of Trilogy funds including the PFMF and failed Trilogy Healthcare REIT.  BDO also receives a number of PFMF security assets (more info coming soon).

I've already opined that ASIC acted too late - this mess may well have been avoided if ASIC was more decisive.  

Maybe the judge will determine that the whole thing has become a mess and to avoid a prolonged court battle, simply grant ASIC's interlocutory application and appoint a receiver to the LMFMIF.

The list of material is growing, as are the facts and allegations, and so are the responses to those facts and allegations, and so will the replies to those responses, and on it will go, tit-for-tat.

The "Dash For Cash" is in full swing.

Maybe some might take stock and say, "What the hell is going on?".

If they don't, I'm hopeful the court will.


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## ASICK (11 May 2013)

*The "Dash For Cash"*

http://u.b5z.net/i/u/10199052/f/_Appl__Affidavit_of_Paul_Wood_sworn_6_May_2013.pdf

"17. ... Trilogy as the new responsible entity would *seek *to ... (b) Obtain appropriate finance (either by external borrowings or the sale of assets) to enable the development of other assets of the LMFMIF to be completed (including upgrading the zoning of these developments) so that they can be sold for a greater price than they would otherwise sell for if sold in an incomplete state" (emphasis added)

From Wiki, "seek" =  2.  Attempt or desire to obtain or achieve (something)

Now, I've heard this all before from Trilogy:
http://moneymagik.com/update_12_11_12.php (see heading "Assets")

http://www.moneymagik.com/bacon_mc_wak_1.mp3
(Rodger Bacon speaking to an investor in November 2012)

but what happened within about one month/two months respectively? Wakerley was sold (as a firesale*) and MC has been offered for sale (as a firesale*) 

* firesale as defined by Andrew Griffin at Martha Cove in April 2011: http://www.moneymagik.com/fire_sale_defined.mp3

I'm curious as to where Trilogy actually did carry out staged developments?

"Life With Trilogy":http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf


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## ASICK (12 May 2013)

*The "Dash For Cash": History*

http://balmaintrilogy.com.au/pdf/BTI 5033 PFMF RG45 FEB12.pdf

This RG45 (correct at *29 February 2012*) was released to investors on 1 May 2012 (http://www.balmaintrilogy.com.au)

It discloses (Table "H") that about $162m (of $210.5m total assets) could lie between 90% - 100% LVR.  $190.5m (of $210.5m total) could lie between 80% - 100% LVR.   [The more value in high LVR (expressed as a percentage) ranges, the more risk, and the more likelihood of loss/impairments]

Here's the 2012 return for the PFMF (as at *30 June 2012*):
http://balmaintrilogy.com.au/pdf/BTI 5033 PFMF RG45 FEB12.pdf

Consistent with the indications in the RG45, in 2012 unitholders lost $128,785,463 (see page 8), the 2011 unitholders lost $63,910,239 !

BDO audits the PFMF (see page 34)
BDO in the Equititrust EIF: http://moneymagik.com/equititrust.php [big fees, no return to investors, average unit value estimate dropped from $0.24/unit to $0.14/unit)

See Note 8 on page 19 for the fiasco headed "Investment Property" - Trilogy went ahead and bought a unit in "King Tide" on the Gold Coast.  Trilogy put a deposit on the management rights and another unit - Trilogy did not proceed the second unit purchase and it did not proceed with acquiring the management rights. The purchases were post-GFC, and boy did they make a mess of it with a massive loss (%-wise) of $256k  to the fund for a mere $511k investment.  It's worth another post to get the full picture on this one - see just what Trilogy is capable of.   For those who support Trilogy and who read this, at least you've been warned. 

Here's the accompanying letter to the 2012 return:
http://balmaintrilogy.com.au/pdf/BTI 5033 PFMF RG45 FEB12.pdf

Among other things, the letter discloses:

1. Members lost $0.15/unit of equity ($0.03/unit capital repaid)
2. $0.08/unit of loss was caused by impairments at Martha Cove
3. $0.07/unit loss due to asset value drops

So, with $0.03/unit paid back, $0.12/unit remaining, and $0.15/unit lost, that equates to a 50% loss of unitholder equity in ONE YEAR ! And some LM investors see Trilogy as a better option to LM?  

Members of LM funds receive spruiks from Trilogy about losses in the LM funds, but the spruiks are coming from an entity that's capable of massive losses, both in terms of $$$ and %.

Remember, the Trilogy Healthcare REIT - investors lost ONE HUNDRED PERCENT of their capital !
http://moneymagik.com/analysis_REIT.php

Trilogy has not released the February 2013 PFMF RG45 at this time.

From Trilogy on 11 April 2013, "A copy of the Accounts will be emailed to Unitholders shortly, along with a Fund Update. In addition, a comprehensive Fund Update containing an Asset Review and litigation update will be uploaded to the website in April and mailed or emailed to Unitholders in accordance with their communication preferences."

Well, here we are at 12 May 2013, and, yes, you guessed it, nothing.  Maybe the litigation update (if we get one) might include the "off the record" information foreshadowed to be released in this conversation between Rodger Bacon (of Trilogy) and a PFMF unitholder in November 2012 (SIX MONTHS AGO):
http://www.moneymagik.com/imf_litigation.mp3

Normally the selected ICC (you might call it an IAC) would have a spruik, but nothing now for over a YEAR - not a peep.  The ICC was supposed to have 10 members, but look at the reality:

http://moneymagik.com/icc.php (all information verifiable on the links to Trilogy/BT)

Trilogy came into the PFMF in July 2009 and consequently re-valued the fund in about November 2009 from the $630m as valued by Citypac to about $426m, and $426m was declared as the value at 30 June 2009 - so let's be clear, the losses in investor equity suffered by members of the PFMF are calculated by reference to the value assessed by Trilogy, not as assessed by  the previous manager.

This is why I say that disclosures in these damaged managed funds are pure theatre - the values are meaningless to investors - if the fund was really worth $426m, then why wasn't it all sold up? Well, because, as history has shown, it wasn't worth that at all, at least not to investors, but it was great for the manager to crank out a multi-million dollar fee (as a % of FUM) - all legit.

When your fund is valued, don't delude yourselves into thinking that it's really worth that much to you, because, if history is an indicator, it won't be, it'll be much less.  If there's a fee for the taking based on % of FUM, the value of the fund will be real for that calculation, but investors shouldn't get too excited, unit price does not mean cash in the hand.

If history is ignored, then it's possible that it just might be repeated.


----------



## RODENT69 (12 May 2013)

Attached for the information of LM  Wholesale First Mortgage Income Fund investors   -(LMWFMIF ) is the long delayed 2012 FY audited report from Trilogy

Investors should note closely the Ernst &Young  comments regarding Material uncertainty & Distribution Income 
	

		
			
		

		
	

View attachment LMWF Annual Report 2012_Published.pdf

	

		
			
		

		
	
,


----------



## ASICK (12 May 2013)

*So Ripe, So Ripe*



RODENT69 said:


> Attached for the information of LM  Wholesale First Mortgage Income Fund investors   -(LMWFMIF ) is the long delayed 2012 FY audited report from Trilogy
> 
> Investors should note closely the Ernst &Young  comments regarding Material uncertainty & Distribution Income
> 
> ...




Good afternoon Rodent, Thanks for posting the document. I think the (income) distributions are a goner - and I wonder if you're surprised about the "material uncertainty"? Every damaged fund gets that little spiel.   I think it's fair to say that you'll all be lucky if you get a capital return of between 15% - 20% (going on past performances of similar funds).  Remember, the loans were all over 90 days in default and at 100% LVR.  I'd bet there's a number of readers who're still optimistic about the unit value, but let's not get any unit price declared from time to time confused with what may be the actual outcome for investors.

I didn't know whether to laugh or cry when I saw the management fee values  - what a setup !!! oh well, scheme.  To make so much money, nearly $2m merely to gather up punters' hard-earned and push it over to one single entity (LMFMIF) where there's yet another fee to be gleaned (as well as receiving fees (as receiver) for the failed loans the manager itself made - the added reward for failure) wow !  There's something that just doesn't sit right about that sort of deal - yes, it's legal, but ....

Oh dear .. the $$$$$ .. no wonder there's a "Dash For Cash" - so, ripe these damaged funds, so ripe.

Now Trilogy has a lovely earner, even at of 0.5% of value (plus GST) - of course, fees made while the fund has a relatively high value will "magnify" as the fund drops and starts to distribute funds to investors.   That is, management fees will end up as a greater % of those funds actually returned over time, especially if the whole thing drags out for a few years - If your fund continues to pay a fee to Trilogy, then I'm sure you'll all get what I mean as time passes. 

Trilogy must have been beside themselves when they took over management of the fund - what a dream outcome.

Did you all get a BIG :thankyou: from Trilogy?

So much for so little to do.

As they say "no sweat", yes, "now sweat" indeed.


----------



## ASICK (13 May 2013)

*Gold Fever !*

Crikey, Piper Alderman's on an earner:

(From Google: 
https://www.google.com.au/#q=lm+inv...16,d.aGc&fp=230352c77bd1bd3e&biw=1920&bih=934)

http://kordamentha.com/docs/au_109_...sworn-on-8-may-2013-with-exhibit.pdf?sfvrsn=2 - check out all those investors' email addresses !!!!
http://www.kordamentha.com/docs/au_109_lm/16-draft-court-order-in-2869_13.pdf?sfvrsn=2

(even "Pi##ed Consumer" comes up on this one)


----------



## No Trust (13 May 2013)

SUMS DON'T ADD UP FOR MADDISION
Quentin Tod 
Gold Coast Bulletin
13 May 2013


Page 48 today's Gold Coast Bulletin... The Maddison figures are eye watering in that veteran Gold Coast Developers estimate the sale value of the site at $20 Million Dollars at today's values.


"The ‘‘folly’’ of LM’s grand Maddison plan becomes evident when it’s realised that to achieve a $1.6 billion end value, the mooted 1500 homes would have to average more than $1 million each. Chop the plan back to 800 lots, and the homes would have to be worth $2 million each.
The big question, of course, is where’s the $200 million-odd that’s been added to the original Arrowtown borrowings by LM and Suncorp.
Paying consultants and pushing dirt around for three or four months isn’t that expensive.
Someone has a lot of explaining to do, especially to the sorry investors who appear set to lose lots of lolly on Drake’s Folly."


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## No Trust (13 May 2013)

Similar hallmarks to Mark McIvor's folly in Ipswich with bankrupt "King Con" on behalf of innocent Equititrust investors... In a similar vein where did the money go ??

Yet McIvor and Drake both had the obligatory beachfront pads... Who really paid for them, that is the question...


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## ASICK (13 May 2013)

*Reality / Media / Class Actions*



No Trust said:


> SUMS DON'T ADD UP FOR MADDISION - Quentin Tod  - Gold Coast Bulletin 13 May 2013 Page 48 today's Gold Coast Bulletin... The Maddison figures are eye watering in that veteran Gold Coast Developers estimate the sale value of the site at $20 Million Dollars at today's values.
> 
> "The ‘‘folly’’ of LM’s grand Maddison plan becomes evident when it’s realised that to achieve a $1.6 billion end value, the mooted 1500 homes would have to average more than $1 million each. Chop the plan back to 800 lots, and the homes would have to be worth $2 million each. The big question, of course, is where’s the $200 million-odd that’s been added to the original Arrowtown borrowings by LM and Suncorp. Paying consultants and pushing dirt around for three or four months isn’t that expensive. Someone has a lot of explaining to do, especially to the sorry investors who appear set to lose lots of lolly on Drake’s Folly."




I don't think the $1.6 billion spruik is anything to bother about, I mean from both the Gold Coast Bulletin and LM, but the $20m estimated value really something for LM MPF investors to concern themselves about.  That's a hell of potential loss to face.   It's going to be hard to KM to be optimistic about "Maddison" in the face of these sorts of reports.

The big question will be, "Will KM keep the dream alive, or will they sell and return capital to investors?" - really big $$$ for KM if they develop - far, far less if they sell.  Let's see.

http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html

Michael West reported (in part), "In the MPF’s December 2012 update, the largest loan in the fund was to a development on the highway between Brisbane and the Gold Coast called Maddison Estate. This loan was for $234 million and it makes up some 62 per cent of the entire commercial loan portfolio of the fund.

Bizarrely, this $234 million is the second mortgage, ranking behind Suncorp which holds a $20 million mortgage. The second mortgage is registered to a *Coomera Ridge Pty Ltd*, of which Peter Drake is sole director.

To distil, more than half of investors’ money in this particular LM fund has been directed into a loan to a property development company controlled by Peter Drake. 

The mortgagee for Maddison Estate is Maddison Estate Pty Ltd, a company of which Peter Drake is the sole director and which has one shareholder. That shareholder is LM Coomera Holdings Pty Ltd which also has a sole director, Peter Drake, and one shareholder which is LMIM Asset Management Pty Ltd, which also has one director, Peter Drake, and one shareholder, Peter Drake." (emphasis added)

By reference to the affidavit of Simon Michael Vertullo sworn 8 May 2013 pp. 211 - 212, the second mortgage holder is LM Coomera Pty. Ltd. (now Maddison Estate Pty. Ltd.):
https://connectonline.asic.gov.au/R...ext=lm coomera pty ltd&searchType=OrgAndBusNm

Coomera Ridge Pty. Ltd. is the registered owner.
https://connectonline.asic.gov.au/R...rchText=coomera+ridge+&searchType=OrgAndBusNm

Nevertheless, it seems "Maddison" is the MPF's "Martha Cove" the PFMF asset on which PFMF investors stand to lose well over $100m - and "Seven Mountains" where the PFMF lost about $200m - see some information about "Seven Mountains" here: http://www.mauriceblackburnnsw.com....tions/current-class-actions/city-pacific.aspx 

And while on the subject of litigation, LM investors shouldn't be thinking they'll each recover all their respective losses in a class action - how about $0.0125/unit?  It's easy to get a general idea, divide (Max claim value) by number of investors and subtract the funder's share : -

eg.  a successful claim would yield (assume limit of insurer's potential liability = $20m, ($20m / 800m ( for example - but in any event, all investors in all funds))  = $0.025/unit  -- If the funder takes 50%, there's a potential $0.0125/unit (more if the take for the funder is less).  So, it doesn't matter if the actual court claim was, say, $200m, there's nothing likely to be recovered in excess of the maximum limit of the insurer's liability.

My guess is that there's about $0.01/unit (or so) if everything runs to plan.   Sure, better than nothing, but a much better outcome if the funds run the cases themselves (could be up to twice the return).

[the estimate would apply if potential claims are limited to those against LM and/or directors]


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## No Trust (13 May 2013)

Beyond belief that this could happen, yet we have seen the same scam pulled by McIvor at Equititrust in his dealings and intermingling of private and corporate interests. Both Gold Coast companies and individuals and both now bust...

Where was the regulator ??? Ignoring the complaints that were made... ASIC were forewarned about McIvor and yet did nothing. If they had acted at the time and prevent loans to the likes of King Con many investors would have been saved...

Maddison really was a ill thought out development by someone with a big ego but no development credentials very much like McIvor's delusions of development expertise... McIvor was not a survivor and is now a bankrupt...


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## ASICK (14 May 2013)

*Another Pearl*

From  Google:
http://www.kordamentha.com/docs/au_...3-including-exhibitsDA095665CD5E.pdf?sfvrsn=2

pp. 5 - 6, Loans

p. 6, 6 loans fully impaired (worth $0), 13 loans not servicing interest & impaired.

p. 44, paragraph 10 onwards, re: Maddison

p. 12, paragraph 59 onwards, re: Prepaid management fees

and there's more ... 

all in all, not a good read for LM MPF investors.


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## ASICK (14 May 2013)

*Court Links*

For those not involved with the proceedings:

LMFMIF: http://apps.courts.qld.gov.au/esear...Location=BRISB&Court=SUPRE&Filenumber=3383/13

LMMPF: http://apps.courts.qld.gov.au/esear...Location=BRISB&Court=SUPRE&Filenumber=2869/13

LM litigation (generally): http://apps.courts.qld.gov.au/esearching/Results.aspx?Lastcompanyname=lm+investment+management

There's gotta be a BIG bag of LM fund $$$ goin the lawyers' way ...  ouch !!!!


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## ASICK (15 May 2013)

*Trilogy - PFMF Selloff?*

Trilogy seems to be looking to the end of the PFMF.  

Asset sales/auctions at Martha Cove, Braeside, Carrara, and Grande Pacific.

This'll mean a reduced management fee from the PFMF - I really don't know what precipitated these fund assets sell-offs, but I  (for one) will  be pleased to see the end of Trilogy (and Balmain) and the PFMF and see any crumbs returned as soon as possible.

Some links are on the front page of http://www.moneymagik.com/

My guess is that the reduced fee from the PFMF will mean a Trilogy hungry to see $$$ come from LM funds.

It'd be much nicer an outcome if Trilogy was to remain hungry, that's for sure.

[Trilogy doesn't seem to be mentioned in any media release relating to PFMF assets]


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## ASICK (16 May 2013)

*LMIM submissions re: KordaMenta/LMMPF*

Compliments of Mr. Google:

http://www.kordamentha.com/docs/au_109_lm/14-submissions-of-lmim.pdf?sfvrsn=2

particularly see page 7, paragraph 21

Qld Supreme Court Registry File: http://apps.courts.qld.gov.au/esear...Location=BRISB&Court=SUPRE&Filenumber=2869/13


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## ASICK (16 May 2013)

*Representatives In the Mix?*



ASICK said:


> Compliments of Mr. Google:
> 
> http://www.kordamentha.com/docs/au_109_lm/14-submissions-of-lmim.pdf?sfvrsn=2
> 
> ...




And which law firm represents the side seeking to have Trilogy appointed as RE to the LMFMIF?

Why, it's Piper Alderman.

I wouldn't be surprised to see the same argument re: Piper Alderman against Trilogy's run for the LMFMIF as in the case of KordaMentha re: LMMPF.  

As least to me, it doesn't look good when lawyers representing one side become part of the mix, and it seems to me that's exactly where Piper Alderman has placed itself, fair and square in the middle of the "Grab for Cash".


----------



## ASICK (16 May 2013)

*LM Fund Litigation*

Bruce application amendment filed today - the amended application and some affidavits not yet published by LM and PA: http://moneymagik.com/lm_investment_management.php


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## ASICK (16 May 2013)

*Will All The Dominos Fall?*

http://s2.webtemplate.com.au/bridgehead/PiperAlderman/media/files/10833.pdf

The $81m claim - para. 5.1.11 (check out the allegations)

75% of income from PFMF - para. 4.2.4

As the PFMF goes, it seems, so goes Trilogy.


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## Taja (17 May 2013)

FTI has posted this 17th May update on its website, regarding the 30th May investor vote (which may be postponed) on Trilogy vs FTI control over FMIF, and giving an opinion on the litigation around FMIF.
View attachment 8974r13_FINAL.pdf


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## ASICK (17 May 2013)

*Trilogy: BEGONE !*



Taja said:


> FTI has posted this 17th May update on its website, regarding the 30th May investor vote (which may be postponed) on Trilogy vs FTI control over FMIF, and giving an opinion on the litigation around FMIF.
> View attachment 52253




Thanks Taja.

It's great how so much information has come available to both LM and PFMF members as a consequence of the present litigation.

http://www.moneymagik.com/ has some information (re: Kosho v. Trilogy) which has been disclosed in an affidavit from the present proceedings.

http://moneymagik.com/lm_investment_management.php has been updated with easy links to Piper Alderman, the court registry, FTI, ASIC, and KordaMentha.


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## ASICK (19 May 2013)

*FEES & OTHER THINGS*

Notes: 
LM (in administration)
All emphasis added

*The Impost of Multiple Fees*

LM says, in Annexure "A", Table, (2) Shotton, "This involves an unnecessary layer of cost" http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

LM says, in Annexure "A", Table, (3) ASIC, "Reasons provided above in Shotton application." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

Piper Alderman, "In Equititrust, the RE remained with liquidators in control and receivers in control of the assets with two sets of fees being incurred and sought to be recovered from that Fund." http://s.webtemplate.com.au/bridgehead/PiperAlderman/media/files/10851.pdf

Interesting spruiks, but is there any validity to them? I don't think there is.  As I understand it from "No Trust", the Equititrust Limited's liquidator (Hall Chadwick) has twice stated that it has no intention to seek its fees from the Equititrust Income Fund (EIF) yet filed an application for directions with the court.  

4 January 2013: David White (BDO), receiver to the EIF says this, "2.3 Claims by the Liquidators of EL - The liquidators of EL, Hall Chadwick, have lodged an application for directions with the Court in relation to the extent to which they are entitled to be indemnified out of EIF's assets for remuneration and expenses incurred by them as Administrators totalling approximately $805,000. Their application is scheduled to be heard in February 2013, however as they failed to meet the deadline to serve the application on me then the hearing is likely to be adjourned.

I have previously queried the basis of their claims and their right to claim against the EIF's assets and bearing in mind:

o I was already appointed to wind up the EIF at the time of their appointment and was the Receiver of the EIF's assets;
o The statements made by Richard Albarran at the first meeting of creditors where he advised investors of the EIF that his costs and expenses would not come out of the Fund;
o The Court Order of 29 February 2012 (which the Administrators consented to) and which clarified the roles of the various insolvency practitioners in order to save the duplication of costs; and
o Richard Albarran's confirmation at the second meeting of creditors that if Halt Chadwick were appointed Liquidators of EL they would not seek reimbursement of any costs from the EIF as Liquidators."

18 April 2013: David White (BDO), receiver to the EIF says this, "2.3 Claims by the Liquidators of EL - As advised in my eleventh report to investors, the liquidators of EL, Hall Chadwick, lodged an application for directions with the Court in relation to the extent to which they are entitled to be indemnified out of EIF's assets for remuneration and expenses incurred by them as Administrators totalling approximately $805, 000. Hall Chadwick has still not filed the application for directions. It is therefore unclear if this will proceed."
http://equititrust.com.au/Pdfs/Receiver/Receivers Reports - 20130418 - 12th Report to Investors.pdf

Piper Alderman, "We do not believe this is a case like Equititrust where the RE cannot be changed without penalty to the LMFMIF accordingly we think that approach is not appropriate in respect of the LMFMIF." http://s .webtemplate.com.au/bridgehead/PiperAlderman/media/files/10851.pdf

Members of LM funds should contact ASIC and seek clarification that any order sought would specifically include the prohibition of costs duplication.  For my part, I'm confident that the court will not permit any manager to draw a fee while a receiver is winding up the fund - to my mind, on the appointment of a receiver to a fund, a manager has no fund to manage, and is no longer entitled to its fees.

My guess is that Hall Chadwick hasn't proceeded in the court because it's unlikely to succeed.

The problem for LM investors receiving this nonsense about duplication of fees is that it's likely to influence their decision making - and I think that such influence is unfair.  ASIC should bring a halt to this immediately else this issue alone has the potential to skew the outcome in the courts (since LM is going to use the outcome of its "Clayton's Meeting" as evidence that LM should win the 'Dash for Cash').

*I think LM members should press ASIC to speak to the issue of "duplication of costs" - don't ignore it, get it out into the open, and get it resolved.*

LM says, in Annexure "A", Table, (2) Shotton, "If the Court appoints a Receiver it is possible that the Secured creditor may appoint their own Receiver, resulting in several Receivers from different firms being appointed – who will all be paid from member funds." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

LM says, in Annexure "A", Table, (3) ASIC, "Reasons provided above in Shotton application." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

scare tactics. keep in mind that ASIC's in the mix now. 

LM says, in Annexure "A", Table, (2) Shotton, "· Secured creditor has authorised capital distributions to members;
· If Receivers were appointed this situation may change; and if Mr Shotton’s submissions were adopted, capital distributions would cease for a significant time, most likely up to 18 months." http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

I think Mr. Shotton's on the right track.  Investors should push which ever entity is in charge to get rid of the bloody bank - Deutsche Bank's influence is too great for it's petty contribution.  Pay the bank out, get rid of it - in any event, the interest being charged is obscene.

If LM stays in control it (and LM creditors, including advisors) will benefit for the facility debt with Deutsche Bank.  Remember, the manager's fee is calculated as a % of FUM (which included debt).   As I see it, if investors are paid back capital, they don't think of the impost of obscene fees on a bank debt, or indeed, the control given the bank by virtue of the debt.  However, if the debt is paid down first, punters will still want capital return - the latter situation will mean FUM will drop faster than the former, and consequently a reduced fee return for LM.

I think LM investors should not delude themselves into thinking they'll be the winners if capital is returned before the facility debt is paid down - actually, it's quite the contrary, they'll lose out.  Further, as has been exhibited by Trilogy's repayments of capital to PFMF investors (prior to repayment of the CBA facility), in the end, the facility provider will eventually pull the manager up and force repayments, and fire sales - there is no other way around it when the value of the fund drops viz-a-viz the value of the facility debt.

*The Meeting*

LM says, "LM has encouraged Trilogy to provide Members with information to assist them make a decision as to whether to vote for the resolutions to see Trilogy replace LM as Manager of your Fund."
http://u.b5z.net/i/u/10199052/f/8974r15__WFMIF__Compiled.pdf

I'm curious to know why LM has purposely avoided speaking to Trilogy's failures (except PFMF) and Trilogy's Philip Ryan's breach of trust:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

LM says, "LM does not believe that the power of the Court to appoint a temporary or replacement manager can or should be exercised in the circumstances relied upon by Trilogy in its Court application."
http://u.b5z.net/i/u/10199052/f/8974r15__WFMIF__Compiled.pdf

Of course not, remember, it's the "Dash for Cash".

In the case of an attempted takeover of Wellington Capital's (WC) Premium Income Fund (PIF), WC had proceedings on foot which were ignored by Castelreagh Capital:
http://www.couriermail.com.au/busin...led-for-thursday/story-e6freqmx-1226079456192
"Castlereagh head of funds management Philip Armstrong yesterday accused Ms Hutson of "*an act of desperation to stop a process*" in which the voting so far has gone strongly against Wellington. ... Mr Armstrong said the likely adjournment of tomorrow's meeting would cost thousands of dollars and inconvenience several hundred investors planning to attend. "They just want to have their say," he said."

Well, the meeting was adjourned, and WC was successful with its court proceedings.  Even if Castlereagh was successful at the meeting, the meeting would have failed because of WC's success in court.  I confess I was stunned (at the time) as to why Castlereagh didn't call off the meeting until the court's judgment.  

Since Castelreagh decided to proceed with the meeting in the face of court proceedings, it seems Castlereagh was the one which caused the "cost of thousands of dollars" as well as the inconvenience to members.

In my view it is a foolish act indeed to ignore court proceedings afoot - I'm sure both WC and Castlereagh are aware of that - is it something LM is about to learn?

LM Says, "I intend to provide the result of the meeting and the votes showing whether Trilogy has support or not, to the Court. I therefore strongly recommend that investors cast their proxies to show whether they are in favour or against Trilogy being appointed as manager of the Fund."
http://u.b5z.net/i/u/10199052/f/8974r13_FINAL.pdf

If there was ever a self-interested act, it would have to be LM's call for a meeting.  Does anyone seriously think that the court will allow a proceedings on foot to be disturbed by a meeting of fund members?  Now you all know my views about Trilogy, but I think Trilogy is right to ignore the meeting - I think the reality is that the meeting is no more than an attempt by LM to influence the court by the result of a meeting of ill-informed members of LM funds.  Just as in the WC/Castlereagh matter, I think it's foolish for a party to persist with a meeting with court proceedings under way.  I would be surprised if LM isn't well aware of the WC/Castlereagh matter.

I  think, just as in the WC matter, any meeting held by a LM fund at this time will be deemed invalid by the court, even if Trilogy did participate, and if so, what a waste of resources and time!

I most certainly hope that the judge slams LM and adds, "Did LM for the meeting? If it didn't, then it should"

Worth a read: http://www.wellcap.com.au/assets/pi...itholdermeetingdeclaredinvalid_13july2011.pdf

[note: I'm not a fan of WC, but the facts are the facts]


----------



## Loiner (20 May 2013)

*Re: The "Dash For Cash"*



ASICK said:


> It doesn't appear (at least to me) that the investors disclosed in Mr. Baltins' affidavit as supporting Trilogy could, to any extent, be regarded as well informed.




So yesterday I received three separate letters regarding LM and RE voting, all by snail mail:

1) Trilogy Update / Piper Alderman Indication of Support for Trilogy form, dated 19th April
2) FTI Circular to Investors / LM Investor Update, dated 25th April
3) LM Voting Direction Form / FTI Circular to Investors, dated 1st May

Whiles I don't doubt my local postal service is responsible for some of the delays, why are these parties communicating by letter? It's not as if they don't have email addresses for investors. As this issues should be more important to the poor investors, rather than the vultures, why don't they communicate in a more efficient method which would allow investors to have a say, particularly as many investors are based overseas.

It's almost as if they didn't want investors to become involved in the issue, or to be properly informed about other options, thereby possibly thwarting their dash for our cash. Anybody else get the same feeling?


----------



## ASICK (20 May 2013)

*Court File: The File Has Been Trimmed*

Seems the court file for the Bruce application has been trimmed from about 7 May 2013.

There was an amended application and a number of affidavits listed - all of which did not make it to either of LM's or PA's websites - those documents are no longer listed on the court file.

http://moneymagik.com/lm_investment_management.php
(see the table headed "Current Litigation")

I wonder if there's some cracks showing up somewhere?

Maybe just some court housekeeping going on?


----------



## ASICK (20 May 2013)

*Re: Court File: The File Has Been Trimmed*



ASICK said:


> Seems the court file for the Bruce application has been trimmed from about 7 May 2013.
> 
> There was an amended application and a number of affidavits listed - all of which did not make it to either of LM's or PA's websites - those documents are no longer listed on the court file.
> 
> ...




nope .. they're there .. just out of order ... dates all over the place
although the amended application doesn't seem to be there any more.
(now why didn't I think of that?)


----------



## Mysteryman (25 May 2013)

As a third voice, I'm with you both all the way and have voted accordingly.


----------



## Taja (26 May 2013)

Let me be a 4th voice on this issue - I have also voted Yes to getting rid of LM/FTI and No to Trilogy. 

But I too am worried that many investors will have been persuaded my the plausible-sounding but hollow arguments being out out by the two interested parties. And - as ASICK has pointed out - ASIC's passive role throughout the recent saga is a real concern.

Aren't there any Aussie journalists out there who are interested in putting out a story about all this - but a more probing and honest one than some of the stuff recently published ..?

Regards.


----------



## Gers (26 May 2013)

TAJA, I also invested in LM Australia through a Financial Advisor in Bangkok. I invested in the MPF and like yourself gutted by the whole outcome. I am glad that our fund at least went from FTI to KordaMentha, I do believe we are in safer hands. I like yourself am a resident of Thailand and if you would like to make contact through e-mail or telephone to discuss any issues where we may be able to help each other let me know.


----------



## sht4branes (27 May 2013)

YES to getting rid of LM.
NO to trilogy.

Many thanks to ASICK for the tremendous amount of work and time he has put into supporting the thread. 

I suspect that there are alot of very elderly investors that read the thread but prefer not to contribute. Like many others, I was a complete neophyte when I was advised to invest with LM. Many, myself included, have no knowledge or technical expertise or ability to understand the complexities of court proceedings or  financial reports so other than say "Go ASICK" it's difficult to add any value to the quality of discussion.

Please continue ASICK as this thread has become compulsory lunch time reading for many.


----------



## ASICK (27 May 2013)

*Thanks*



sht4branes said:


> YES to getting rid of LM.
> NO to trilogy.
> 
> Many thanks to ASICK for the tremendous amount of work and time he has put into supporting the thread.
> ...




Thank you Sht4branes, your words bring a tiny weeny tear to one of my eyes  - It is my nature to be opinionated, but my motivation is not to see your fund suffer from Trilogy as the PFMF has.  Yes, I know I'm repetitive about many things Trilogy, but I'm one who learned by rote and know its true value.

I guess I'll take a listen to those audio clips on LM : http://moneymagik.com/lm_investment_management.php and comment after I've put some land aflame (yes, I have other things to do).

I've been impressed by other posters on this thread  - I've gained the impression that every one of you (that is, LM members) is earnestly seeking a better outcome for what's left of your respective investments by looking to the facts.

I don't believe there'll be any good outcome, but I do believe it's possible to have an outcome worse than others.


----------



## Cbrady (27 May 2013)

Gers said:


> TAJA, I also invested in LM Australia through a Financial Advisor in Bangkok. I invested in the MPF and like yourself gutted by the whole outcome. I am glad that our fund at least went from FTI to KordaMentha, I do believe we are in safer hands. I like yourself am a resident of Thailand and if you would like to make contact through e-mail or telephone to discuss any issues where we may be able to help each other let me know.




I also invested in the MPF through a financial adviser from Bangkok who was in turn recommended by an established well known company. I went in thinking (and demanding) it was low risk, thought it was guaranteed/protected, and was told it 'was like a bank'. First and last time I'll ever use a fund, would have been better off putting my money in one of the big four in Australia. In retrospect I just cant believe how gullible I was. This whole experience has been upsetting to say the least, and the lack of concern from the financial adviser who placed us in the fund in the first place compounded the issue. 

I am surprised that few MPF investors have said or done anything in regards to this whole debacle. Given that every investors email address was posted in one of the court documents, I had been expecting to be contacted to join an advice group/forum. That all is so quiet makes me wonder whether investors are afraid of making too much noise and upsetting the apple cart or whether the silent majority are just waiting and hoping that Korda Mentha does the right thing and recoups our money. I'm not expecting miracles and all my money back (most of our life savings btw), but I can only hope that Korda Mentha acts with decency and a moral compass. 

I do wonder why no mention can be found on the director of LM- he seems to have just disappeared (though a cpl of articles on his house being sold), and I also wonder after all the negative publicity on LM by one Australian journo that he hasn't followed up on the story. Job done and move on? 

I would encourage more investors to share any information they have on MPF. I don't know the first thing about Korda Mentha, nor what to expect either in the short or long term.


----------



## seamisty (28 May 2013)

http://www.goldcoast.com.au/article/2013/05/28/452350_gold-coast-business.html
Judge rules against LM administrators


----------



## ASICK (28 May 2013)

*"An Agenda of Their Own"*



seamisty said:


> http://www.goldcoast.com.au/article/2013/05/28/452350_gold-coast-business.html
> Judge rules against LM administrators




yes ... 

"While they sought the appointment of another independent trustee, they proposed a cooperative regime where they would retain the assets in LMIM. ... They were in that way pursuing an agenda of their own."

FTI just couldn't let go !

I look forward with bated breath for comment from the bench re: the LMFMIF Clayton's meeting (that is, the meeting you have when you're not having a meeting).

What a disaster for investors - a disaster even including Trilogy:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

In the end, it's all about $$$$$$$ ... and KordaMentha, it's on a winner ... a % of FUM .. 

ah .. The Frozen Fund, A Manager's Delight !

I particularly like this excerpt:

"Justice de Jersey dismissed FTI Consulting's application and in ordering the firm to pay costs, said "the conclusion that (FTI) were pursuing their own agenda itself justifies indemnity costs"."

and when should fund members pay for the self-interest of those in control?  NEVER !


----------



## ASICK (28 May 2013)

*The Frozen Fund - A Manager's Delight*

I think that investors (collectively) in frozen funds do not realize how valuable such funds are to managers, receivers and the like - it's really quite a gold mine for them - it could be a one-in-a-lifetime opportunity to make a million (or two, or twenty, or more).

Even if there's not much for investors, there's heaps for others.

If the LMFMIF remains in the hands of a responsible entity, then keep in mind all those spruiks about double costs from Trilogy and FTI(LM), and see if receivers are appointed, or alternatively, see if extra fees are charged for receiving security assets.  I can't imagine a responsible entity receiving assets for a management fee of 1.5%.

After all, where's the motivation? The 1.5% is for management, no need to do extra for free !

Remember, a management fee is paid for MANAGEMENT, nothing more.  That's how LMIML was able to rack up fees for receiving various security assets - investors were already being charged twice (and of course, it was legal, otherwise the auditors wouldn't have permitted it).

The more some things seem to change, the more they stay the same.


----------



## RODENT69 (28 May 2013)

The Latest Trilogy Doc sent to Investors earlier Today

View attachment Circular to LM Investors.pdf


----------



## ASICK (28 May 2013)

*Wellington Capital's PIF*

http://www.nsxa.com.au/ftp/news/021727044.PDF

[as you'll all see, Wellington Capital isn't pleased with the outcome - but I'm guessing the pre-existing punters are pleased]

I most certainly hope that ASIC is as successful in the current LMFMIF matter as it's been with the PIF.

What's in the best interests of investors is coming up a lot of late - and it's about time !


----------



## ASICK (29 May 2013)

*Re: Wellington Capital's PIF*



ASICK said:


> http://www.nsxa.com.au/ftp/news/021727044.PDF
> 
> [as you'll all see, Wellington Capital isn't pleased with the outcome - but I'm guessing the pre-existing punters are pleased]
> 
> ...




Just like you good folk in certain LM funds have been called to a, well, ... ehhh ... ummm... meeting?  So have the good folk in Wellington Capital's PIF - WC says that despite the adverse outcome for WC (as PIF RE) in the Federal Court of Appeal, WC is pressing along with a meeting early in June for punters to give it the green light to transfer most of the remaining units to this entity named Asset Resolution Limited (ARL):

http://www.nsxa.com.au/ftp/news/021727045.PDF

Imagine all the costs piling up on PIF members.

With the original shares/units in PIF for shares in ARL trade in doubt (subject to the High Court), WC presses on, but this time it's not so cocky about just "doing the deed", this time, it's seeking investor approval - WC is seeking support from 75% of members voting to okay the transfer:

http://www.wellcap.com.au/assets/pif/updates/2013/pif_notice_of_meeting.pdf

Still WC presses on .. ah ! aren't those punters lucky to have an entity working in their best interests?

note: at last call in with a PIF member, no info about the value of their shares in ARL, and no info about any of the properties transferred over along with the unit/shares from the PIF.   Poor beggars seem to be mushroomed big time - and just to make the thing complete, WC, acting in investors' best interests, are asking investors to consent to transfer what's left (or most of what's left?) over to ARL.

I'll bet PIF/ARL investors will be pleased to get free of both WC and ARL - and we haven't even got around to speak about the IMF backed litigation - that's a whole other story where pre-existing PIF investors could just become more than a tad peeved.

Some PIF members hold a view that they'll lose 10% of any proceeds from litigation to new investors in the fund, although WC says otherwise - WC says the new investors in the fund will not be entitled to a share of the proceeds of any legal claim by the PIF.  However, if the units/shares are compelled to stay in WC, then PIF investors will find out about the litigation issue sooner or later.   

I think they'll lose 10% because the new investors will necessarily share in any litigation proceeds - investors must be treated equally after all, there's no way around it. [It's also my view that it'll be the same outcome as shareholders in ARL, because shareholders must also be treated equally - the directors can't say, "ok, more for you guys, less for the rest of you" - that is not going to happen.

And the news never stops :

http://www.stuff.co.nz/business/opinion-analysis/8728056/Investors-stiffed-and-mums-the-word

Please, Please, Please - let them RIP:

PIF
PFMF
EIF
LM

(just to name a few)


----------



## ASICK (29 May 2013)

*"The Narrowing"*

Trilogy has just released a spruik which calls the discontinuance of a substantial claim against a number of ex-Citypac directors a "narrowing" and categorizes same as not being a win for the ex-directors.  Of course, no mention of a costs award in favour of the ex-directors.

Read more: http://moneymagik.com/federal_court_litigation_comment.php
(the link to Trilogy's spruik is provided)


----------



## Taja (29 May 2013)

*Trilogy backs out so why the meeting ?*

FTI/LM posted a Q&A notice under the FMIF page on their website the other day.  

See Answer to Question 2: 

_""2. *Has Trilogy consented to being appointed as responsible entity of FMIF*?
As the notice of meeting was sent out after the application made to Court to have Trilogy
appointed as temporary responsible entity of FMIF, LM assumed that Trilogy would (if
members voted to appoint them) consent to be appointed as responsible entity of FMIF.
On 23 May 2013 (some 4 weeks after the notice of meeting was posted out) Trilogy has
advised LM that it does not consent to being appointed as responsible entity by members at
the meeting scheduled for 30 May 2013.
The reason that Trilogy has provided for not consenting is that they believe that the matter
should be determined by the Court. Trilogy states that each member of FMIF is entitled to turn
up to Court to make their views known to the Court and that this makes the Court the
appropriate forum to determine who should manage their fund.
It seems that Trilogy prefers to put both you (should you elect to put your views to the Court)
and your fund to the significant costs associated with the Court proceedings rather than allow
the matter to be determined in the more usual and democratic manner in a meeting of
members. This is particularly so given the Court adjourned the proceedings till 15 July 2013 in
part to allow the meeting to run its course.""_

So the Investor meeting looks to be a waste of time and money.  Or am I missing something ?


----------



## ASICK (30 May 2013)

*Trilogy in Action*



ASICK said:


> Trilogy has just released a spruik which calls the discontinuance of a substantial claim against a number of ex-Citypac directors a "narrowing" and categorizes same as not being a win for the ex-directors.  Of course, no mention of a costs award in favour of the ex-directors.
> 
> Read more: http://moneymagik.com/federal_court_litigation_comment.php
> (the link to Trilogy's spruik is provided)




http://www.pressdisplay.com/pressdisplay/viewer.aspx

http://www.pressdisplay.com/pressdisplay/viewer.aspx


----------



## ASICK (31 May 2013)

*Re: Trilogy in Action*



ASICK said:


> http://www.pressdisplay.com/pressdisplay/viewer.aspx
> 
> http://www.pressdisplay.com/pressdisplay/viewer.aspx




Sorry for the inconvenience, but as those of you who clicked on the Press Display links, the expected information wasn't immediately available.  I've put an excerpt from one of the links here: http://www.moneymagik.com/

With Press Display, it's necessary to make a detailed selection (as shown at the link on moneymagik).


Here's what Trilogy's blunders in relation to JUST ONE PFMF SECURITY ASSET, "King Tide" (loan to "Bullish Bear")  have cost PFMF investors:

(1) The legal costs of Perry & Hartnett in relation to the "Bullish Bear" claim in the Supreme Court, Sydney:
http://tinyurl.com/nfvoxv4
*PLUS*
(2) Sullivan's legal costs in relation to the "Bullish Bear" claim in the Federal Court, Brisbane. 
http://moneymagik.com/P_NSD604_2012_340302.pdf
(as I understand it, Sullivan intends to claim HALF his legal costs to date)
*PLUS *
(3) The Fund's legal costs in relation to the "Bullish Bear" claim in the Supreme Court, Sydney.
*PLUS *
(4) The Fund's legal costs in relation to the "Bullish Bear" matter in the Federal Court, Brisbane 
[estimated total cost of both claims (including the Saddleback matter), about $1m, about $500k spent up to February 2013]
*PLUS *
(5) The $260,684 LOSS (-62%) on initial investment of the so-called "investment" property. 

TOTAL COST TO INVESTORS = $ ? 

See: http://moneymagik.com/federal_court_litigation_comment.php
[links to PFMF financial documents in relation to the -62% loss on the purchase of a "King Tide" are provided]


----------



## ASICK (2 June 2013)

*WC PIF*

We shouldn't let the "66,666" counter go without a posting.

While everyone's waiting for the outcome of the meeting, here's another meeting in play:

http://moneymagik.com/well_cap_pif.php

These badly damaged managed funds sure give rise to heaps to new issues to learn about.


----------



## gismo (6 June 2013)

Cbrady said:


> I also invested in the MPF through a financial adviser from Bangkok who was in turn recommended by an established well known company.
> 
> I would encourage more investors to share any information they have on MPF. I don't know the first thing about Korda Mentha, nor what to expect either in the short or long term.




I'm another caught up in the MPF. 
Most probably the advisers were none the wiser or the handsome commissions would have been enough for many to advise without due diligence or with clouded judgment.

I feel KM is doing a thorough job of keeping investors informed with progress, thankfully they've been able to continue. 

I’m interested to know how others feel in regards to the 8th update from KM. As outlined in the update, would you be willing to add more capital? 

As for me I'm not so sure! Have any discussed this with their advisors (could you trust their opinion!)? 

P.S. would it be better for MPF related investors if a new thread was opened?


----------



## ASICK (6 June 2013)

*LMMPF - Up & Away (Again)?*

It seems like it'd be the best thing to start up a new tread - I'm sure you guys have a lot to talk over.

It's interesting from the eighth update that Maddison has some merit after all - it just needs more $$$$$.

I don't blame KordaMentha for pushing the issue, I'm sure the fees would be very attractive.  

I'm sure you're all aware of it, but I'll say it anyway, "debt is debt is debt" (it matters not where it comes from).

If your new investment is part of the debt, then it seems it'll have priority over your pre-existing investment - a nice edge for those with extra $$$$ - but, at what %? 10%?  (that'd be nice).


----------



## ASICK (7 June 2013)

*Trilogy - in the news*

http://journlaw.com/2013/06/04/repo...argeted-in-subpoena-served-direct-on-sources/

"The sources of at least three journalists investigating a collapsed fund manager have been ordered by the Queensland Supreme Court to hand over all correspondence with the reporters."

Yes, use the phone:
http://www.glennbeck.com/2013/06/06...&utm_content=24598190&utm_term=_225651_225658


----------



## gismo (7 June 2013)

*Re: LMMPF - Up & Away (Again)?*



ASICK said:


> I'm sure you're all aware of it, but I'll say it anyway, "debt is debt is debt" (it matters not where it comes from).
> 
> If your new investment is part of the debt, then it seems it'll have priority over your pre-existing investment - a nice edge for those with extra $$$$ - but, at what %? 10%?  (that'd be nice).




Yes in deed. Thanks ASICK for your reply...actually by starting a new post - we'd miss your insightful commentary! 
I wasn't able to attach the 8th update yesterday so here it is.http://www.kordamentha.com/docs/au_109_lm/130605-u-eighth-update-to-investors-crs-jv-(final).pdf?sfvrsn=2


----------



## ASICK (7 June 2013)

*Pre-Existing Investors ALWAYS Last in Line*



gismo said:


> Yes in deed. Thanks ASICK for your reply...actually by starting a new post - we'd miss your insightful commentary!
> I wasn't able to attach the 8th update yesterday so here it is.http://www.kordamentha.com/docs/au_109_lm/130605-u-eighth-update-to-investors-crs-jv-(final).pdf?sfvrsn=2




oh.. you won't be so lucky as to get to miss me .. but thanks anyway.

I really only got involved to warn about Trilogy - and it was only after realizing that many posters were 'way back there' where we used to be that I decided to post somewhat profusely.  

We now find that Trilogy, instead of returning money to investors has gone ahead and bought more land at Martha Cove, and this is after stating (in 2010) that any cash would be returned immediately to investors.- see http://www.moneymagik.com/

Thanks for posting the update - you'll all note that KordaMentha can't help itself other than to attempt to carry on the scheme as manager in order to rake in all those millions in fees.

It's the nature of managers to see all these schemes continue on, sometimes at all costs, because they've got no 'skin in the game' (so to speak) - managers are winners, even if investors are losers, and in many cases, if they're able to engage with a relative to make more $$$$, then they're able to.

KordaMentha's proposed scheme necessarily retains investors LAST in line, regardless of whether investors get to put in extra $$$ into a more protected class of unit, which most probably will rank BEHIND the JV partner.  The whole scheme will be suspended on the back of the pre-existing investors.

KordaMentha is really proposing a whole new investment - there doesn't seem to an offer to let investors out, it seems to me to be more about keeping them in.


----------



## Taja (7 June 2013)

I think there is great value in keeping the LM discussion - whether on MPF or on the FMIF and its feeder funds - all on this one thread.  By staying on this same thread not only do we all benefit from ASICK's wisdom but there are simply too many common issues straddling all funds which might get missed if the discussion was split into two.

I also attach FTI's circular released today on the status of FMIF.

The FMIF investor meeting is now to be held on 13th June - to vote on FTI or Trilogy (even though seemingly Trilogy now say they don't wish to be the RE so one wonders at the purpose of the meeting .. !) or, preferably, to vote on neither of them ..

View attachment FTI-FMIF-report-07-06-13.pdf


----------



## RODENT69 (7 June 2013)

Taja said:


> I think there is great value in keeping the LM discussion - whether on MPF or on the FMIF and its feeder funds - all on this one thread.  By staying on this same thread not only do we all benefit from ASICK's wisdom but there are simply too many common issues straddling all funds which might get missed if the discussion was split into two.
> 
> I also attach FTI's circular released today on the status of FMIF.
> 
> ...




I also believe in keeping this thread going as is.  The doc that Taja has JUST attached should be read by ALL LM investors not just in the FMIF but ALL its feeder funds including the WFMIF where good old Trilogy is the RE


----------



## ASICK (7 June 2013)

Taja said:


> I think there is great value in keeping the LM discussion - whether on MPF or on the FMIF and its feeder funds - all on this one thread.  By staying on this same thread not only do we all benefit from ASICK's wisdom but there are simply too many common issues straddling all funds which might get missed if the discussion was split into two.
> 
> I also attach FTI's circular released today on the status of FMIF.
> 
> ...




Thanks for posting the attachment Taja - there documents are not always identified on LM's site by readers.

I should point out, it's not my wisdom I try to impart, it's my experience - it's a matter of having 'been there, done that'.  I know it's difficult because members are subject to the 'tyranny of the (ill-informed) majority' just as voters are in any democracy-like structure.

FTI uses all the right words, but investors should focus on the limiting features of statements, the disclaimers.  For example:

"2.8 Distribution of Capital to Investors - We are cognisant of the desire for investors to receive regular capital distributions as the FMIF is wound down. To this end, we are expecting that after the June capital distribution is processed there will be a further distribution in early August and thereafter, capital is expected to be distributed to investors on a quarterly basis, subject to cash flows, as the wind down progresses."

The whole spruik is subject to two words, "cash flows", and so, everything else is irrelevant.  Actually, it's subject to surplus monies and the bank's consent.

I'd sum up the whole document as ... a spruik, except that LM says that they're not going to engage in long term situations.

I'm stunned that so much can be spruiked about so little. I guess it's all designed to make punters feel 'warm and fuzzy'.

Crikey, they're going to pay the outstanding income distributions from the fund with such capital losses?

Wow! The "quick wins" should have got punters' ears up and tuned in - I haven't heard this sort of terminology since I last put a few bucks into a pokie.

"However, following further analysis and review overseen by the Administrators, it was identified that that there are a number of assets where the provisioned loan values (i.e. the current FMIF book values) are still higher than a reasonable assessment of current valuation would suggest and further asset write-downs can be expected."

Crikey, what a surprise - only a "number of assets", when ALL loans were at 100% LVR !!!!

Remember, LM (FTI as administrator) is raking in a management fee based on FUM (funds under management).

This is really good (if they stick to it), "In potentially progressing with development options, we are also very conscious of time – we are not looking to engage in outcomes that will take many years to conclude as this introduces:
• Longer timeframes increases the potential for uncontrollable / unforseen risk elements (e.g. potential for commodity prices, currency instability, overseas government debt issues or the like) impacting on the domestic economy;
• Delays the return of capital to investors; and
• Unnecessary increases in the costs incurred through continued charging of management fees to the fund as long term projects are worked through."

That's a good point.

Trilogy/BT told a PFMF investor just recently that the fund's asset at Broadbeach (Grande Pacific) where nothing was sold for about three and a half years (except for one sold by Citypac and settled by Trilogy) will take two or more years more to resolve - millions in fees - no doubt about it, a frozen fund is a manager's delight.

BT said back in 2009 that Grande Pacific was a 'business as well as real estate' - certainly has been a good business for Trilogy (and BT) for all the fees over these past years will be for the years to come. Don't forget there's a receiver down there too --- $$$$$$ for all, but not for investors.

"Balmain Trilogy joint chief executive Andrew Griffin described the completed Broadwater tower as 'a business as well as real estate'. He said receivers were called to ensure the business was 'managed properly' and to maintain the continuity of rights for existing occupants.

"It is a considerably valuable business asset (that) has been devoid of management," he said. He said a fire sale of the property was not on and Balmain Trilogy would hold the property for the long-term benefit of First Mortgage Fund unit holders.""

http://www.goldcoast.com.au/article/2009/10/05/143895_gold-coast-business.html

What Trilogy told investors about Grande Pacific : http://moneymagik.com/grande_what.php

Here's some spruiks from Trilogy: http://moneymagik.com/yardy_yardy_yah.php


----------



## Vibe (7 June 2013)

*Re: LM Investment Management  -  MPF*

Hi Guys, 

It is interesting to read all the stuff. I'm one investors in MPF .And I would like to have your opinion ( ASICK) about KM proposal to add extra cash into this fund in order to ensure ME development. I'm really surprised that KM came back with this proposal and why they are not pressing Peter Drake to return his personal loan?? It will cover Suncorp loan in full...


----------



## ASICK (7 June 2013)

*LMMPF - The New Deal*



Vibe said:


> Hi Guys,
> 
> It is interesting to read all the stuff. I'm one investors in MPF .And I would like to have your opinion ( ASICK) about KM proposal to add extra cash into this fund in order to ensure ME development. I'm really surprised that KM came back with this proposal and why they are not pressing Peter Drake to return his personal loan?? It will cover Suncorp loan in full...




Hi Vibe, I just have some experience as an investor in what was the City Pacific First Mortgage Fund, since July 2009, the Trilogy Pacific First Mortgage Fund.  I hold a degree in law, but I don't practice law (I don't hold a practicing certificate) - so while I'm able to give an opinion (as a member of this forum), it's not anything you're able to rely on - I also point to the forum's disclaimer.

I really haven't looked at the document in depth, but it seems to me that KM intends to proceed along with either Option C or D.  The only difference I see between the two options ("C" and "D") is the share holding of "NewCo".

For "Option C", the priority units would hold PART of the total shares on issue in NewCo, with the remaining shares held by an equity partner.

For "Option D", the priority units would hold ALL of the shares on issue in NewCo.

I don't see there's a difference, because no matter what happens, whether it's an equity partner holding shares along with pre-existing unitholders (as priority unitholders after dipping in more $$$$$), or whether it's a pre-existing unitholders (as priority unitholders after dipping in more $$$$) along with an equity partner (as a single entity) taking up most or part of the priority unit issues or other new punters taking up most or part of the issue, the result for pre-existing members (as priority unitholders) is exactly the same.

Perhaps, if anything an external equity partner might want to strike a better deal to enter the fray.

I think these sorts of mechanisms are held out to investors to make them feel part of the deal - but sadly, only those new investors will stand to hold decent security (ahead of pre-existing members), but after the facility provider to NewCo - remember,  pre-existing members are at the bottom of the rung, no matter how it's presented.

Investors in NewCo will want (1) security ahead of pre-existing fund members, and (2) a decent return (yes, real money and at an attractive rate).  This means that NewCo (as far as pre-existing members go) is just a massive debt mechanism set up to exploit Maddison, from which exploitation pre-existing LMMPF members seek a return [it's really a new investment - a new deal].

Further, there's the issue of price - how much would Maddison be sold for? After all, the money from the sale would be fed back to the fund as part payment of the $250m debt.  I guess most of that money would then be distributed to LMMPF unitholders as a capital distribution - investors would want to make sure that the sale price is one which they're prepared to accept.  One media spruik said Maddison was worth about $30m - so, why shouldn't the new deal from KM compete in the open market with other developers who might be prepared to pay more?

There's big $$$$$ for KM in this thing, and perhaps also for, as KM says, "another related party controlled by the trustees" - so investors should be mindful of the earning potential for these entities.

I think the unit price in the LMMPF is going to sink like a stone with at least one failed second mortgage (behind the LMFMIF's first mortgage) and the substantially reduced value of Maddison.

This is a new deal, and a meeting will have to be called and a explanatory memorandum sent to each member - you'll all get more details with the memorandum. 

I'm a little confused about the $250m debt - where will it go? will it be written off when the only security asset is sold?  As I see the structure of NewCo, NewCo will own the land - the fund doesn't seem to have a lien over either NewCo or Maddison.

Pre-existing members get (1) a share of the proceeds of the sale of Maddison, and (2) a share of development profits after (1) the developers share is taken out, (2) the directors of NewCo make a nice earner (perhaps from KM or Calibre), (3) NewCo's expenses, (4) the facility provider earns a nice $$$, (5) the shareholders (as disclosed as under Option C or Option D) make their nice earner, (6) KM's fund management fees, and (7) LMMPF expenses.

and to boot, the security of Maddison seems to have gone (or at least at this time, this issue hasn't been spoken to).

I'll reserve the right to reassess this posting and amend it later if necessary.
The posting may contain errors.
The good ol' disclaimer - do not act without advice from a licenced financial advisor.


----------



## ASICK (8 June 2013)

*LM MPF*




Property development is a risky business.

Here's a graphic I did in relation to risk / contribution / income (as I see it):
http://www.moneymagik.com/km_mpf_proposal.jpg

Also, in relation to the sale price of Maddison being returned to LMMPF investors, that should be less the facility debt to Suncorp which I understand to be about $20m.

IF the value of Maddison is about $30m (as spruiked in the media), then LMMPF investors will get LESS than $10m from their (about) $250m investment. I note KM says that the principal is $113m with the remainder being interest - sadly, both principal and interest (at impaired value) represent unitholder equity.

Couple this with the potential loss of an (about) $48m second mortgage (behind the LMFMIF), then it all makes for a dire future for LMMPF investors.

Could LMMPF return be more or less than about $0.10/unit?  I think it probably could be.


----------



## ASICK (8 June 2013)

Correction.

Okay, I've had time to read the document more carefully.

It's the fund that buys shares (via Option C or D) in NewCo by way of the proceeds of the issue of priority units in the fund.  

It is not the priority units which hold the shares in NewCo. 

I'll amend this graphic to comply with that:

http://www.moneymagik.com/km_mpf_proposal.jpg


----------



## ASICK (8 June 2013)

I think the graphic is okay now - if you see errors, let me know, I'll fix them up pronto.
http://www.moneymagik.com/km_mpf_proposal.jpg

It's interesting to note that KM says that if Suncorp appoints a receiver to Maddison, then the return may be zero.  To me, that sounds like KM don't have much confidence in the market value of Maddison exceeding the $20m Suncorp facility (plus costs).

Perhaps Maddison isn't even worth $30m?

Like many of you, I'm still getting my head around the KM document.

It seems that the fund's equity in Maddison will determined by  the proportion of share holding in NewCo held by the fund (subject to higher priority lenders to NewCo).

Since monies would be paid by the fund to NewCo - NewCo would then proceed to buy the land from its present owners, and any surplus proceeds (after costs such as those of a receiver (if one has been appointed)) would be directed to the fund.

As I see it, everyone else will make money, with any overflow going to investors.  If Maddison is really worth $0 to the fund, seems pre-existing members have nothing to lose so the choice is (1) permit KM and others to make money (if KM is able to get the deal up and going) and hope for sprinklings on the other side, or (2) let Suncorp appoint a receiver and sell Maddison in a competitive market and see what happens, geez, it might attract a decent price.

I'm curious about:

1. If there are surplus proceeds of the sale of Maddison paid to the fund, will those proceeds be solely paid back to pre-existing members? or split in some way between the two classes of unitholders? (working on KM saying that a receiver would return $0 to the fund on the sale of Maddison, then it's probably the case  that there would be zero return to investors if Maddison was sold to NewCo).
2. How will monies returned from NewCo (once it's up and going) be directed between the different classes?
3. How do pre-existing investors escape the fund? and if they're able, at what price?

It seems to me that the $250m debt would be paid down with proceeds from the deal, but whether that would help pre-existing members is another thing altogether, especially if such proceeds were directed to priority unitholders.

We should keep in mind that KM notes that the options are INDICATIVE ONLY.


----------



## ASICK (8 June 2013)

*SOMETHING IS REALLY ROTTEN*

Something is really rotten with a system that allows a manager to crank a loan up to $250m on the back of  an asset which reportedly could be worth not much more than $20m.

Geez, Maddison could have caught Suncorp with an LVR of 100% !!!!


----------



## ASICK (9 June 2013)

*Frozen Funds - an opportunity for some*

*Some information about how investors in the WC PIF are faring. *

Wellington Capital Supplementary Explanatory Memorandum dated 1 June 2012:
http://www.wellcap.com.au/assets/pif/updates/2013/021727065.pdf

On Page 14, "Previous experience with similar assets and relatively superior outcomes: The Board of Asset Resolution Limited have significant background in the key issues of workout situations. In addition, Asset Resolution Limited has retained FTI and Castlereagh Capital to provide professional services to assist it in the realisation of value for the assets held by Asset Resolution Limited. FTI Consulting Inc. is a New York Stock Exchange listed company, headquartered in New York. FTI has a market capitalisation of approximately $1.0 billion and annual turnover of approximately $1.6 billion. As a global business advisory firm, FTI provides multi‐disciplinary solutions to complex challenges and opportunities."

Some background on Castlereagh Capital (CC):
CC ran for the WC PIF - a meeting was called: http://cascap.com.au/admin/include/...stlereagh_Announcement_-_Bid_May_11_FINAL.pdf
The meeting was declared invalid: http://www.wellcap.com.au/assets/pi...itholdermeetingdeclaredinvalid_13july2011.pdf
CC made it into the game: "Asset Resolution Limited has retained FTI and Castlereagh Capital to provide professional services to assist it in the realisation of value for the assets held by Asset Resolution Limited."
http://www.nsxa.com.au/ftp/news/021727065.PDF (see page 4)

Wellington Capital NSX Release dated 5 September 2012:
http://www.wellcap.com.au/assets/pif/updates/2012/nsx release-sale-of-assets-to-arl-5-sep-2012.pdf

"Wellington Capital Limited as responsible entity of the Premium Income Fund is pleased to announce that Asset Resolution Limited (ARL) has today acquired $90.75 million in assets from the Premium Income Fund (Fund)."

[Note: on page 5 there's comment about FTI & KMQ - but since then KMQ and FTI split - FTI survives with ARL]

Asset Resolution Limited audit reviewed accounts as at 31 December 2012:
http://www.wellcap.com.au/assets/pif/updates/2013/021727060.pdf

See:

{*assets transferred to ARL on 5 September 2012 (see above) - so, these figures represent FOUR MONTHS OF TRADING BY ARL - Assets transferred totalled $90.75m*]

Page 10, Expenses, Consultancy Fees: $930,810
Page 10, Total Comprehensive (loss) attributable to unitholders: $14,550,941
Page 11, Total Equity (equivalent to "Assets Attributable to unitholders): $40,854,059
Page 11, Percentage Loss (calculated as Retained Losses / Owners Capital) = - 26.3%
Note 4, Page 20: Impairment loss $13,226,220 off $50,465,000 + $3,940,000 
[$90.75m revalued as $50,465,000, and $ ?  revalued (?) as $3.94m]
It seems to me that the loss, looking through to the value as assessed from the WC PIF is more like  -67%.
Note 6, Page 20: $257,248 spent with a business in which a director of ARL (Jenvey) is a partner. 

WC PIF investors must be in shock.

Please read all the referenced documents in full to get a glimpse of Wellington Capital, FTI, and Castlereagh Capital in action.

Yes, life is fun for some  in a frozen managed fund (or whatever form it morphs to), just not for investors.

Does anyone think it'll be any different for LM investors?


----------



## Vibe (9 June 2013)

*LM MPF*

Thanks ASICK,

So what are gathered from your valuable feedback is that that no matter what is the outcome for ME , the existing unit holder will remain with big 0... This sounds like one big mastermind Ponzi scheme by Peter Drake and his directors.. I'm really wondering how Australian authorities can allow something like that.and which actions will be taken.. Most probably none... As majority of foreign investors (like me )have very little influence on the scenario which is happening in Australia ..


----------



## ASICK (9 June 2013)

*Re: LM MPF*



Vibe said:


> Thanks ASICK,
> 
> So what are gathered from your valuable feedback is that that no matter what is the outcome for ME , the existing unit holder will remain with big 0... This sounds like one big mastermind Ponzi scheme by Peter Drake and his directors.. I'm really wondering how Australian authorities can allow something like that.and which actions will be taken.. Most probably none... As majority of foreign investors (like me )have very little influence on the scenario which is happening in Australia ..




As far as the LM MPF's equity in "Maddison", that's the case.  The (about) $48m second mortgage behind the LM FMIF (in my view) is gone.  I haven't put any effort to looking at the rest of the fund, but as you'll note in the PIF's assets shuffled off to ARL (my previous posting), costs and impairments simply shatter unitholder equity.  

I wouldn't feel too bad about being a foreign investor, locals don't fare any better in these schemes.

I think the best thing investors in a damaged fund can do is form a group and communicate with each other - until this happens, management most definitely has the upper hand.  Frankly speaking (and please forgive me for saying it) managed fund investors as a group are really quite stupid by not coming together and giving themselves power. I think Storm investors did well to form a group, and the achieved results speak for themselves.

And again, frankly speaking, I agree wholeheartedly with you, the loss at "Maddison" is breathtaking - I think that even if a claim is made, there's no more to recover from LM than $20m in insurance (and as I understand it, the $20m would have to be shared if claims are made by other LM funds).  Of course, I suspect valuations will come under scrutiny.  Any class action claim made by Piper Alderman would further substantially diminish unitholders' share of any litigation proceeds (viz-a-viz the fund bringing an action without a litigation funder)

So many of us have lost money in these schemes - the Federal Government, in my view, has a lot to answer for in relation to the legislative structure of same.


----------



## Loiner (9 June 2013)

*Re: LM Fundless*



ASICK said:


> I wouldn't feel too bad about being a foreign investor, locals don't fare any better in these schemes.
> 
> I think the best thing investors in a damaged fund can do is form a group and communicate with each other




There is a very small but growing group of mainly Thailand based investors trying to do that. However it is vastly under represented when compared to the large number of investors believed to have been signed up by LM even locally. With various LM funds involved and various different IFAs it's not so easy to formulate concensus on what next, but there is still the overriding commonality of LM to discuss. It is unusual that there aren't similar groups springing up around Asia and the Middle East with other scammed investors. Has any forum reader heard of other groups, or forum threads?

Formation of groups by some other interested parties however, are raising some concerns. I understand that there are also various groups being formed by IFAs trying to become involved in some of the funds. Some of these guys also claim to be investors too. My personal opinion is that IFAs as creditors have different interests to those of investors and should therefore be viewed with some degree of suspicion. Remember - they are the ones who got us into this mess in the first place.

What still baffles me is the lack of hue and cry from the thousands of domestic Aussie investors. Is there nobody in Australia, except this thread's No.1 poster ASICK, who is overly concerned about the whole sorry situation? The business journo Michael West from the SMH kept some publicity going, but appears to now be cowed by a 'defo' suit from Drake & Co. The BFCSA webite (http://bfcsa.com.au/)  specialises in financial services fraud but has little about LM in there, although lots of other Aussie investment and property scams. It's a very popular pastime down the Gold Coast way.

With the execption of a few respectable firms already involved, I'm surprised the ambulance-chasing lawyers haven't started already. _" Have you had an accident at work or been mis-sold a LM Investment fund? Start your Claim now and call us now on Freephone......"_

Overall, it really needs a consolidated approach to the situation. From the way LM have obviously tried to keep investors divided and poorly informed, it's clear that a major company or institution working on behalf of the investors is necessary. What a pity that the ASIC haven't been required to do anything like that.


----------



## ASICK (10 June 2013)

*Communications & Opportunities*

Good morning Loiner.




I think the way forward is to start off an account and ask for contributions to buy the register.  Once the register is in hand, attempt to contact the larger unit holders by mail or phone.  Try to gain further contributions in order to reach out to all investors.  Seek members' emails in order to provide timely and cost-free communications on an ongoing basis.   Open a website - its' cheap ..  for example, go to: http://au.godaddy.com/  Point members to the website.

Until then, alternative sources :

For Equititrust EIF: http://moneymagik.com/equititrust.php
For LM funds : http://moneymagik.com/lm_investment_management.php
For Wellington Capital: http://moneymagik.com/well_cap_pif.php
For Trilogy Funds Management: http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
(http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf - to be updated)




It always stuns me as to how these managers can act, both in their own best interests, and investors' best interests.  The recent spruik from KM about the (indicative) proposal is a great example.  If the deal goes ahead, KM would stand to earn no matter what happened (as would others - facility provider, developer, equity partner, and perhaps, priority unitholders) by taking advantage of investors' misfortune - All KM has to do is hold out a "carrot" that pre-existing investors might get a sprinkling from the deal.

Simply put, why couldn't KM strike a deal for unitholders *directly* with a developer able to buy out the debt and develop the land?  But then I guess KM isn't going to be on a big earner (both from the development and management fees from new investment into the LM MPF), and that's not helping KM's bottom line. 

While my experience in managed funds is limited, it seems to me that these managers are very opportunistic and do what's (legally) permitted to be done to enhance their own (and/or a relative/s) bottom line.


----------



## ASICK (11 June 2013)

*More on ASIC*

A snippet, "It was not a pleasant week for the corporate regulator. As if the revelations of the 16-month delay to investigate the cover-up in Commonwealth Bank's financial services division were not harrowing enough.

Then there came news that more than 100 low-doc loan victims who had filed formal complaints of fraud last July had been advised to ''get a lawyer''. Their supporting evidence was ignored."

Read on: http://www.smh.com.au/business/more-fuel-for-the-asic-fire-20130607-2nvqv.html


----------



## am262327 (11 June 2013)

I am an investor in LM and am looking to take legal action. Please contact me amorris@mistermorris.com


----------



## ASICK (12 June 2013)

*News about FTI & ASIC*

*Re FTI: *

"FTI was unavailable for comment."

Read more: http://www.businessday.com.au/business/kagara-creditors-in-the-dark-20130609-2ny3d.html

*Re ASIC: *

""ASIC had a golden opportunity to act quickly and send a clear message that misconduct won't be tolerated, but it didn't. If it acted quickly how much money would have been saved?'' Senator Williams said."

Read more: http://www.canberratimes.com.au/opi...al-failures-20130610-2o097.html#ixzz2VxcYvfR4


----------



## PJSUAE (12 June 2013)

Hi,

I am yet another overseas investor who has seen their pension evaporate, I’m conscious that advisors give the health warning that investments can got down as well as up, but by “can go down” I didn’t think this included total extinction! 

I’m pleased I have found this forum, because it’s somewhere to go to get up to date information and translation for non-financial literate folks, like me (thanks to ASICK).

I, like hundreds or even thousands of fellow investors out there, now face the very real and painful prospect of starting my retirement with less money in my pocket than when I started work some 40 plus years ago. 

Reading all of the rhetoric and hundreds of column inches on the nefarious activities of LM and even if the courts throw this guy Peter Drake in to gaol and lose the key, what I’m trying to understand in layman’s terms are:

What are the realistic chances that I will ever see “any” of my money again? (me thinks I know the answer to this one)
If the chances are slim, but possible or probable, is it likely to be in my lifetime? (I plan to live a good couple of decades after retirement, albeit begging on street corners) 
What recourse, if any, do I and the hundreds of other unsuspecting investors have against the IFAs that convinced us to invest our pension money (only last year in my case) in this seemingly “low risk” fund? 
Clarification of the term my IFA used in breaking the news to me that my pension had de-materialised, as if by including the words they abdicate any professional responsibility: _“Our bond and platform providers have done their *due diligence *and accepted these funds into their portfolio of funds.” _In legal, financial, accountability or responsibility terms, what does “due diligence” really mean to the investor?
I’d also like some views on a proposal my IFA is running past us, the out of pocket investors. Their idea is to generate a fund of around AUS$ 22M, to take to Suncorp, to buy out the first rank charge on Maddison Estate venture. On top of the first mortgage, Mr Drake and his organisation managed to secure a further AUS$ 113+M as a second mortgage. Now, I’m no mathematician, and I might be missing something here, but according to some valuations being touted, Maddison Estates is worth AUS$ 30M, at best. So what benefits would investors gain from “investing” a further AUS$ 22M? Isn’t it merely throwing good money after bad?

Last point, and I apologise if some of my questions have been addressed elsewhere in the forum, or that some of my questions appear naÃ¯ve, but you’ll have to bear with me, it’s the first time I’ve lost my life’s savings. I class myself as an optimist and fighter, I just need to understand what I have to do to get some or all of my pension back.


----------



## ASICK (12 June 2013)

Hi PJSUAE,

I'm sincerely sorry that you've lost money in the LMMPF, but you are in good company.  Probably a hundred thousand (or even more) good folk have lost likewise in these types of schemes.  I'm pleased you made your posting.

I recommend you read all of KM's updates, especially the eighth.  I think the eighth update makes it quite clear that whether NewCo comes into existence or Suncorp appoints a receiver, pre-existing investors have *no equity *left in the loan to "Maddison".

Yes, KM mentioned the $250m loan to Maddison comprised capital of about $113m and interest (accrued interest) - but accruals are assets (unless impaired/written off).  Whatever the impaired value of the loan (including accrued interest) was, that is value that is now, for all practical purposes, lost.

As I understand it, there's also an (about) $48m second mortgage behind an LMFMIF first mortgage.  If the first mortgage can't be recovered (which seems to be the case), then the MPF second mortgage of $48m will be lost if the FMIF causes the disposal of the security asset. Surprisingly, LM disclosed much about the MPF second mortgage in its recent RG45 and financial statements for the LM FMIF - these documents are worth a read too.

Whatever the value of the fund prior to KM's appointment, that value (without regard to other MPF loans), could immediately drop by as much as $300m (plus costs). 

I hope other MPF members will post their views and answer some of your questions.


----------



## TuftyDXB (12 June 2013)

Hi,

I've digested most of the information in this thread, in particular PJSUAE's reply and questions 3 & 4.

My IFA/Broker advised me at the eleventh hour to seek financial and legal advice (not withstanding the latter, can someone remind me what IFA stands for!!!?) PJSUAE, I guess you are with a different broker to me. 

I can stomach the facts and figures but the shunning I have faced is leaving a bitter taste! Is anyone else in a similar situation? If so what course of action in seeking advice (collective?) are you taking?


----------



## ASICK (13 June 2013)

*ASIC Getting Tougher*

http://www.timebase.com.au/topics/2...13-fcafc-52-responsibile-entities-and-managed

http://www.wellcap.com.au/assets/pif/updates/2013/021727095.pdf

http://www.asic.gov.au/asic/asic.ns...dings against Wellington Capital?opendocument

Meeting Cancelled: http://www.wellcap.com.au/assets/pif/updates/2013/021727096.pdf


----------



## am262327 (13 June 2013)

*Wishing to take collective action*

I'm an investor who is also about to lose everything. I would be keen to see what options are available to me to sue their pants off. 

* Can I sue the financial advisors who recommended it as a conservative option?
* Can I sue Peter Drake himself?
* Can I sue the government for not enforcing its own protections?

Please if someone could explain or else contact me privately I would be interested in taking action and LM.


----------



## Taja (13 June 2013)

*The Investor Vote today on RE for FMIF*

Notice on the FTI/LM website on the investor vote today on the FTI vs. Trilogy resolution, posted very very promptly .. I wonder why .. ?!   They have been very slow to post updates on most other things:

_""Resolution 1:

 “That, subject to the passage of Resolution 2, LM Investment Management Limited (Administrators Appointed) ACN 077 208 461 be removed as the responsible entity of the LM First Mortgage Income Fund ARSN 089 343 288.”

In respect of this resolution, 1.26% of the fund were in favour of the resolution, 23.51% of the fund voted against the resolution and 20.04% of the fund were recorded as an abstention.

Accordingly, Resolution 1 was lost and LM Investment Management (Administrators Appointed) remains the Responsible Entity of FMIF and its Feeder Funds.

Resolution 2:

“That, subject to the passage of Resolution 1, Trilogy Funds Management Limited ACN 080 383 679 be appointed as the responsible entity of the LM First Mortgage Income Fund ARSN 089 343 288.”

In respect of this resolution, 1.03% of of the fund were in favour of the resolution, 23.74% of the fund voted against the resolution and 20.04% of the fund were recorded as an abstention.

Accordingly, Resolution 2 was lost and Trilogy Funds Management Limited was not appointed Responsible Entity of FMIF and its Feeder Funds._""

The actual vote tallies are on  http://u.b5z.net/i/u/10199052/f/Voting_Poll_2013_06_13.pdf

FTI will no doubt be emboldened by this seeming vote of confidence in them (due I suspect to a lot of lobbying by IFAs with the investors on their books) and will hope that at the 15th July Court hearing it may persuade a decision by the judge in their favour ..     But, as an FMIF investor I really hope the Court has more sense and opts for wind-up by an independent entity.


----------



## Taja (13 June 2013)

*Investor Vote on RE for FMIF*

Quick follow up:  let me hasten to add that I am also very happy that Trilogy did not get a vote in their favour.  Trilogy of course has gone on record as questioning the whole FTI-managed meeting and voting process, and has said that it would not accept an Investor vote nominating them as RE (nor the opposite ..!) - hoping no doubt that they might still get a verdict in their favour at the next Court hearing.


----------



## ASICK (13 June 2013)

*The Vote*

As I understand it, to abstain, one has to vote YES and NO for each resolution.

There are a large number of abstainers, and while LM (FTI) made it across the line with more than 50% of the units voted, less than 50% of the fund actually voted - that could represent a protest.

A Greek Example, "Compared to the last elections, PASOK lost about 1 million votes and New Democracy about half a million ”” a rather unpleasant outcome for both parties. It’s also quite worrying for them not knowing the political meaning of the high abstention rate and what the huge feelings of discontent might lead to." (emphasis added)
http://www.greenleft.org.au/node/46205#sthash.VGewTpNU.dpuf

I think, so goes the LM vote - "a rather unpleasant outcome for both parties (LM and Trilogy)".


----------



## Taja (13 June 2013)

*Re: The Vote*



ASICK said:


> As I understand it, to abstain, one has to vote YES and NO for each resolution.
> 
> There are a large number of abstainers, and while LM (FTI) made it across the line with more than 50% of the units voted, less than 50% of the fund actually voted - that could represent a protest.
> 
> ...




The voting form has a YES, NO and ABSTAIN box for each resolution.  Although I did wonder whether those who voted YES and then NO (ie neither FTI nor Trilogy) have also been put in the Abstain box !   That aside, some 75% of investors (investor units) have NOT voted for either FTI or Trilogy.  Let's hope the Court takes notice in July.


----------



## ASICK (13 June 2013)

*The Absenters Hava it.*



Taja said:


> The voting form has a YES, NO and ABSTAIN box for each resolution.  Although I did wonder whether those who voted YES and then NO (ie neither FTI nor Trilogy) have also been put in the Abstain box !   That aside, some 75% of investors (investor units) have NOT voted for either FTI or Trilogy.  Let's hope the Court takes notice in July.




Thanks Taja.  I went hunting for the voting form after reading your post, but the form had been removed from LM's site.  Yes, I agree with your conclusions - seems a manager (Trilogy or LM) isn't the favoured path to take.  

I think the absenters have it.


----------



## ASICK (13 June 2013)

*Correction*



ASICK said:


> ... There are a large number of abstainers, and while LM (FTI) made it across the line with more than 50% of the units voted, less than 50% of the fund actually voted - that could represent a protest.




The statement should have indicated that *neither *of the proposals made it across the line of 50% (plus one vote) of all units on issue (not units voted).


----------



## am262327 (13 June 2013)

I don't understand the vote that took place here, any background?

Also, I really want to help get the investors together. Any update on obtaining the register?

I'm an investor based overseas (currently in China) and would need to keep in contact mostly electronically.


----------



## Taja (14 June 2013)

am262327 said:


> I don't understand the vote that took place here, any background?
> 
> Also, I really want to help get the investors together. Any update on obtaining the register?
> 
> I'm an investor based overseas (currently in China) and would need to keep in contact mostly electronically.




There are several LM Funds, all in trouble.  This vote concerns the First Mortgage Income Fund and its feeder funds - the vote was whether to change FTI to Trilogy as the Responsible Entity, or not.  In the end most people abstained, but of those 45% who actually voted the majority was for FTI.  This is probably of not much importance since on 15th July the Queensland Supreme Court will decide what is to be done - and whether the Fund should no longer be "managed" but instead be wound up - which many of us feel is the best option.


----------



## am262327 (14 June 2013)

If I were to create a website for people affected by LM, for them to register so that we can start a community, what would the questions be on the sign-up form?

How much did you invest?
Was the investment advertised as conservative?
What's the ID number of your investment? (I'm thinking for later in case an official registrar is obtained)

The website aspect I'll host and maintain (I'm a sysadmin by day), but I could use some help in knowing what sort of content to put up there.


----------



## ASICK (14 June 2013)

am262327 said:


> If I were to create a website for people affected by LM, for them to register so that we can start a community, what would the questions be on the sign-up form?
> 
> How much did you invest?
> Was the investment advertised as conservative?
> ...




For starters, you're welcome to copy as much of the LM content as you like, and of course, reformat it as you please:
http://moneymagik.com/lm_investment_management.php


----------



## seamisty (14 June 2013)

http://www.propertyobserver.com.au/...-of-lm-investment-mortgage-fund/2013061362221
Consulting to seek winding up of LM Investment mortgage fund 


By Larry Schlesinger  
Friday, 14 June 2013


----------



## am262327 (14 June 2013)

Does that mean that we'd be able to use those funds and and return investors' original investments?


----------



## ASICK (14 June 2013)

*LMFMIF*



am262327 said:


> Does that mean that we'd be able to use those funds and and return investors' original investments?




If you're referring to the media article : yes, it means that if the court orders FTI (LM) to manage the LMFMIF, then LM will be winding the fund up in the short term.  Further, it means that FTI(LM) is (in effect) necessarily winding up the fund (in order to manage the fund) even though it's given the court an undertaking that it won't.  I don't want my language to infer in any way that FTI(LM) is disregarding the court, I mean that it simply has no other choice other than to do as it has to do.

LMFMIF is only able to derive cash from assets sales, but there's a bank debt, and there's management fees and other fees and charges to be paid.   By way of example, in Trilogy's PFMF from 1 July 2012 to 30 May 2013 (11 months), Trilogy sold $27.1m in assets.  Only $0.0075/unit ($6.6m) was returned to investors. After bank facility repayments, only $4.4m remained. Fund expenses including management fees would be paid out of the $4.4m - nothing more for investors.

Unless there's a later financial statement for the LMFMIF, the unit price is $0.55 - remember, that price has been assessed with the LVR for each loan at 100% - in my view, as a result of the 100% LVR expect a substantial drop in unit price.

It means investors will get back somewhere between a few cents a unit to $0.55/unit - in my view, closer to the few cents a unit than the $0.55/unit, perhaps between $0.10/unit - $0.20/unit (just a guess).


----------



## am262327 (14 June 2013)

*Re: LMFMIF*



ASICK said:


> It means investors will get back somewhere between a few cents a unit to $0.55/unit - in my view, closer to the few cents a unit than the $0.55/unit, perhaps between $0.10/unit - $0.20/unit (just a guess).




In other words, probably not more than half our money, correct?

I've contacted a class action suit that I found via google searches and also contacted the trustee by email given on our updates. The latter said that they were also prepared to pursue legal action in order to maximize returns to investors. Is there then any downside to pursuing independent class action lawsuit? (I mean strictly financially speaking, I'll take care of the 'is it worth it' angle.)


----------



## PJSUAE (14 June 2013)

*Re: LMFMIF*

Hi,

I've read the article and ASICK's synopsis. The references are predominantly LMFMIF, what impact, if any, does this have to investors in MPF?


----------



## ASICK (15 June 2013)

*LMFMIF / LMMPF*



am262327 said:


> In other words, probably not more than half our money, correct?
> 
> I've contacted a class action suit that I found via google searches and also contacted the trustee by email given on our updates. The latter said that they were also prepared to pursue legal action in order to maximize returns to investors. Is there then any downside to pursuing independent class action lawsuit? (I mean strictly financially speaking, I'll take care of the 'is it worth it' angle.)




As I understand it, there's a maximum total claim of $20m against LM by way of the directors' indemnity insurance.  That would mean that the total claim available to all LM funds (including the LMFMIF and LMMPF) would be limited to $20m - if only one fund brings a claim, that claim would be limited to the total ($20m), if more funds sue, then each claim will be limited to a pro-rata share (according to the value of respective claims) of the $20m.

If a class action is commenced, up to half of any claim could go to a litigation funder (including the lawyers).  

Whether there's any claim/s will depend on whether a cause of action (the evidentiary base to bring a claim) can be found. Even if successful against the directors, success against the insurer may very well be another issue altogether.  *Members should not think that a cause of action arises out of mere loss*.  There has to be a breach of statutory duty, or negligence, or the like: loss is the starting point on a journey of inquiry into the cause of that loss.

LMMPF members and LMFMIF (and feeder funds) interests are (in my view) not the same.  LMMPF and LMFMIF members should seek advice from KM and LM (FTI) respectively in preference to advice from Piper Alderman.  Don't sign ANYTHING or do anything in relation to your investment until you obtain independent legal/financial advice to all of KM, LM(FTI), and Piper Alderman - Don't limit your rights.

Be mindful that class actions are actions brought outside the fund by a collection of individuals of the same class (fund members) normally funded (and driven) by a litigation funder takes all the risks for a substantial slice of the action, not actions brought by the fund itself wherein individuals are members and where the costs and risks are borne by the fund.

Here's Piper Alderman's link: http://www.piperalderman.com.au/firm/lm-investment-management-limited



PJSUAE said:


> Hi,
> 
> I've read the article and ASICK's synopsis. The references are predominantly LMFMIF, what impact, if any, does this have to investors in MPF?




Yes, these are only my personal views - LMFMIF and LMMPF outcomes depend on the circumstances for each fund.  I think that the outcome for LMFMIF members will be better than for LMMPF members.  I base this view on the fact that there's probably no equity in the loan to "Maddison" (not accounting for any sprinkings from a deal such as KM's indicative proposal) and potential complete loss of the (about) $48m second mortgage behind the LMFMIF's first mortgage (which is unlikely to be recovered).

LMFMIF members and LMMPF members have a common purpose in recovering as much as possible of their respective investments.  However, if there's a potential claim for one or both of the LMMPF and LMFMIF (and feeder funds), (which I'm not suggesting there is), then such claim/s will arise out of the particular facts relating to each of the fund/s itself/themselves.  In other words, as I see it, a cause of action for the LMMPF must be found in LMIML's management of the LMMPF, and so it goes for the LMFMIF.

I think it's best to wait for the information as it comes from KM and LM (FTI) first, but also look in on what Piper Alderman has to say from time to time -  if I was an investor in an LM fund (which I'm not), I wouldn't be making Piper Alderman my first port of call.  Get independent professional advice and make considered decisions about your individual actions.

Don't forget, there's ASIC: http://www.asic.gov.au/asic/asic.nsf/byheadline/LM+Investment+Management+Limited?openDocument


----------



## am262327 (15 June 2013)

*Re: LMFMIF / LMMPF*

AMASICK, thank you for your time and words.


----------



## RODENT69 (15 June 2013)

Dear All-  I am advised that the next capital payment from LM to investors in the FMIF and its feeder funds will be completed during next week -  commencing 17 June 2013


----------



## ASICK (15 June 2013)

*ASIC in the Supreme Court Proceedings*



RODENT69 said:


> Dear All-  I am advised that the next capital payment from LM to investors in the FMIF and its feeder funds will be completed during next week -  commencing 17 June 2013




Hi Rodent, any idea how much (per unit)?

I just noticed a heap of new documents listed on LM's site re: ASIC (bottom of page):
http://www.lminvestmentadministration.com/litigation 

and the grounds? 
http://u.b5z.net/i/u/10199052/f/Statement_of_Grounds__ASIC_.pdf

A substantial and interesting affidavit:
http://www.lminvestmentadministration.com/litigation
(see page 44 - )

Read the letter at page 81 - wow!

and page 101 - wow!


----------



## am262327 (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



ASICK said:


> Read the letter at page 81 - wow!
> 
> and page 101 - wow!




What what what???

I can't seem to find any letter that is more than a couple of pages long....

Ah... found it. 
http://u.b5z.net/i/u/10199052/f/Affidavit_-_Hugh_Copley_swon_11_June_2013__ASIC_.pdf
ASIC is going after ... the trustees? Am I reading that right? Is that good for investors?? Too many new terms for me to digest it fully. Help?


----------



## ASICK (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



am262327 said:


> What what what???
> 
> I can't seem to find any letter that is more than a couple of pages long....




Of course you can't .. . I posted the wrong link !

Here's the correct link: http://u.b5z.net/i/u/10199052/f/Affidavit_-_Hugh_Copley_swon_11_June_2013__ASIC_.pdf

ASIC letters at:
Page 81 
Page 101 
Page 108
Page 110
Also note replies.

Sorry .. I had a number of windows open & picked up the wrong link.

Actually the whole Affidavit is a good read.

ASIC is really playing hardball.  I suspect the meeting is going to get a good run in court next month.


----------



## am262327 (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



ASICK said:


> ASIC is really playing hardball.  I suspect the meeting is going to get a good run in court next month.




So how is this good for investors? I do get how ASIC is basically a watchdog and them playing hardball is good for the public, and therefore investors, but can anyone spell this out in financial terms? What if the administers are found to be in violation of some law or something? I don't understand!!


----------



## ASICK (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



am262327 said:


> So how is this good for investors? I do get how ASIC is basically a watchdog and them playing hardball is good for the public, and therefore investors, but can anyone spell this out in financial terms? What if the administers are found to be in violation of some law or something? I don't understand!!




In order to gain an understanding, I think you should take the time to read the documents I referred to.


----------



## am262327 (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



ASICK said:


> In order to gain an understanding, I think you should take the time to read the documents I referred to.




Oh I am. I'm a techie, not much of a lawyer. I do appreciate your help.


----------



## Taja (15 June 2013)

*Re: ASIC in the Supreme Court Proceedings*

Dear ASICK - thanks again for bringing this ASIC Affidavit to our attention (on the previous Page of this thread) at http://u.b5z.net/i/u/10199052/f/Affidavit_-_Hugh_Copley_swon_11_June_2013__ASIC_.pdf

In addition to the documents and pages you have highlighted, I think the letter from ASIC to FTI's lawyers on *page 31* of the Affidavit is very important.  Basically ASIC is highlighting the various areas where FTI has been *wilfully misleading investors* before the Vote in regard to the pros and cons of options to steer the Vote in its favour ...  And I know at least one IFA that bought this line and was spreading it around amongst the investors on its books.  Of course, the whole Vote of 13th June has now been revealed as a charade and waste of time and money. 

Regards.


----------



## ASICK (15 June 2013)

*Money, Money, Money.*

http://u.b5z.net/i/u/10199052/f/Affidavit_-_Hugh_Copley_swon_11_June_2013__ASIC_.pdf

pp. 101 - 103

As it goes (in my view):

FTI (as administrator of LMIML) caused a feeder fund to call the meeting via the fund's custodian (s. 252B).  

ASIC alleges the meeting is void because there is no evidence that members of the feeder fund (the members whose votes may be cast) were consulted.  

The "see through voting" provisions would be defeated if the manager (LM(FTI)) did not consult investors.  

The votes of the custodian do not satisfy the meaning of "votes that may be cast" (s. 253E).

Corporations Act 2001:
s. 601FL: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fl.html
s. 252B: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s252b.html
s. 253E: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s253e.html
s. 1322: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1322.html

Yes, even ASIC recognizes that it's about $$$$$ (affidavit p. 102, document page 2, paragraph 1.)

"a process likely to generate significant professional fees for the persons or entity so involved"

Could be that FTI might have some trouble in court over the meeting - golly, another costs order won't be pleasant.

Hi Taja,  yes, the whole affidavit is worth reading. Thanks for pointing out that particular document.


----------



## ASICK (15 June 2013)

*Financial Advisors*

Taja, you have to keep in mind that it's in the advisors' best (financial) interests to see FTI(LM) stay as RE of the LMFMIF - the advisors are creditors of LM and so the income stream from the LMFMIF is the ONLY way that LMIML is able to derive an income to repay creditors.  I think that investors should seek alternative professional advice (on a fee for service basis) to that of any "free" advice from an advisor who is a creditor of LMIML.


----------



## am262327 (15 June 2013)

*Re: Financial Advisors*



ASICK said:


> I think that investors should seek alternative professional advice (on a fee for service basis) to that of any "free" advice from an advisor who is a creditor of LMIML.




Okay, you see this is why I need you guys. I read everything cover to cover ”” sometimes several times ”” and didn't pick up AT ALL the stuff you're going on about. Maybe all my contributions to Open Source forums is paying off in some weird karma equation...

This professional, independent advice I should be seeking. I would appreciate any and all pointers. I'm an American and live in China; I don't know diddly about Australian law nor have any such contacts.



> another costs order won't be pleasant




What's a costs order? Unpleasant to whom? I don't understand the implications (esp to investors).


----------



## ASICK (15 June 2013)

*Re: Financial Advisors*



am262327 said:


> Okay, you see this is why I need you guys. I read everything cover to cover ”” sometimes several times ”” and didn't pick up AT ALL the stuff you're going on about. Maybe all my contributions to Open Source forums is paying off in some weird karma equation...
> 
> This professional, independent advice I should be seeking. I would appreciate any and all pointers. I'm an American and live in China; I don't know diddly about Australian law nor have any such contacts.
> 
> What's a costs order? Unpleasant to whom? I don't understand the implications (esp to investors).




Some helpful links - other than these, search Google for any particular subject.
Legislation: http://www.austlii.edu.au/
Wiki (Law of Australia): http://en.wikipedia.org/wiki/Law_of_Australia
ComLaw: http://www.comlaw.gov.au/

A costs order (from Google): http://www.qpilch.org.au/resources/factsheets/Costs_Orders.htm

A costs order is unpleasant for the party which loses a legal case.


----------



## am262327 (15 June 2013)

*Re: Financial Advisors*

In tech, the saying goes is never use stuff in production software you don't understand how to maintain. I was a complete idiot and invested stuff I have no idea about, although I was thinking the financial advisor would abstract this stuff away from me. He hasn't replied to my emails in a while....


----------



## ASICK (16 June 2013)

*Scuttling its Boat*



am262327 said:


> ...  I was a complete idiot and invested stuff I have no idea about, ....




You're not alone ... when I invested in the PFMF, I didn't take the time to really suss it out - I thought it was a safe investment. More fool me too.  It's been a sharp learning curve for all of us. 

The Trouble with No Independence




http://u.b5z.net/i/u/10199052/f/Affidavit_-_Hugh_Copley_swon_11_June_2013__ASIC_.pdf

The letter at p. 44 is most illuminating, especially "ASIC CONCERN #8", that the "see through voting" provisions had not yet been granted ASIC's relief to be utilized.  

The feeder funds over which LM(FTI) had control seem to have been used as a mere tool in an attempt to accomplish what LM(FTI) as manager of the LMFMIF was not prepared to do.  

If members wanted an example as to why independence is important, then (to my mind), this is such an example.  It seems to me, that by calling the meeting in the way it did, FTI has "scuttled its own boat" (so to speak) - see pp. 101 - 103.

I should add - I'm impressed with ASIC on this one, and with the WC matter.  While I feel that ASIC didn't act promptly to appoint a receiver to each of the LM funds (which may have avoided the present fight over the carcass of the LMFMIF), and further feel that ASIC hasn't given PFMF investors a decent feeling of "comfort" over the past four years, it's pleasing to see ASIC take a firm stance in regard to the WC and LMFMIF meetings.


----------



## RODENT69 (16 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



ASICK said:


> Hi Rodent, any idea how much (per unit)?
> 
> I just noticed a heap of new documents listed on LM's site re: ASIC (bottom of page):
> http://www.lminvestmentadministration.com/litigation
> ...




ASICK-  and other interested parties

Based on the fact that WFMIF should receive $844,695.05 and there are 89,722,301 units in the WFMIF as at 30 June 2012 then if my calc is correct  the cents/unit will be 0.00941455.  That should be the base amount BEFORE Trilogy takes any fees. I will not be able to  confirm actual CPU amount in about 10 days time.  

Triology has previously advised it may take additional fees OR it may not, we never know what to believe with what they say!! Either way this payment will not clear the outstanding Income Distribution catchup payment of about $1.2mil.  Trilogy will again pay this as Income Distribution to WFMIF investors, not effectively as  a "capital payment" which is how investors in the FMIF will actually receive it.


----------



## am262327 (16 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



RODENT69 said:


> Based on the fact that WFMIF should receive $844,695.05 and there are 89,722,301 units in the WFMIF as at 30 June 2012 then if my calc is correct  the cents/unit will be 0.00941455.  That should be the base amount BEFORE Trilogy takes any fees. I will not be able to  confirm actual CPU amount in about 10 days time.




Hear anything about the LMPF?


----------



## RODENT69 (16 June 2013)

*Re: ASIC in the Supreme Court Proceedings*



am262327 said:


> Hear anything about the LMPF?




Sorry simple answer is no-  I am not invested in the MPF, hence not following everything about it with the same interest.


----------



## ASICK (16 June 2013)

*MPF Information*



am262327 said:


> Hear anything about the LMPF?




Here's the best place to go for the MPF: http://www.kordamentha.com/creditor-information/australia/109
Next best: This forum


----------



## RODENT69 (16 June 2013)

re  LM  Australian Income Fund

On the FTI website under AIF is an interesting doc regarding this fund. Its an RG 45 Update  and it covers both the fund update and the return of Capital Process

A statement in the doc is interesting it says that based on current assumptions for the fund a full return of Capital can be achieved by the 4th Qtr of 2014

If that's true, and actually happens  then investors in this fund will achieve a much better outcome than others in the FMIF, Feeder funds and the MPF.  I wonder how this is possible?


----------



## am262327 (16 June 2013)

RODENT69 said:


> If that's true, and actually happens  then investors in this fund will achieve a much better outcome than others in the FMIF, Feeder funds and the MPF.  I wonder how this is possible?




Is this because MPF is closer to the debt? When I bought I was under the impression that there were a number of properties held by the fund instead I find now that it vast majority was in the Maddison Estate. I was specifically looking for a conservative, near-term bet that wasn't based on stocks. Imagine my surprise to find that it has been structured the way it was. 

I'm just really curious that if the outcome for those in the MPF looks so bleak, why aren't there more crying out in anger?? Maybe because we're all just waiting for the official word to come through?


----------



## ASICK (16 June 2013)

*LM AIF*



RODENT69 said:


> re  LM  Australian Income Fund
> 
> On the FTI website under AIF is an interesting doc regarding this fund. Its an RG 45 Update  and it covers both the fund update and the return of Capital Process
> 
> ...




The AIF isn't a feeder fund to the LMFMIF: http://u.b5z.net/i/u/10199052/f/8974r20_AIF_RG_45.pdf


----------



## ASICK (16 June 2013)

*MPF / FMIF / AIF*



am262327 said:


> ... I'm just really curious that if the outcome for those in the MPF looks so bleak, why aren't there more crying out in anger?? Maybe because we're all just waiting for the official word to come through?




No outcry? What can they do? Maybe most MPF members don't even understand what KM has told them about "Maddison" - time will tell, reality will set in sooner or later.

I think the LMFMIF is better off, but it's still not a good look - time will tell.

Neither fund has anything to do with the LMAIF - there's no way that the AIF would have such a good outcome if it had been a feeder fund to the LMFMIF.


----------



## am262327 (16 June 2013)

*Re: MPF / FMIF / AIF*



ASICK said:


> No outcry? What can they do?




I'm in the process of contacting lawyers. There just has to be something that can be done. Reviewing the sequence of events, it's clear to me that investors were misled and that negligence contributed to the loss of money. They publicly fought back against the meme that there wasn't any value in Madison and look at what we have here, the trustees saying just that. I just refuse to believe that I'm done.


----------



## ASICK (17 June 2013)

*Loss is Difficult to Accept*



am262327 said:


> ...  I just refuse to believe that I'm done.




Yes, I know.  Time will heal.

I'm sure KM will do all it can to recover what it's able to.

Please be careful about putting good money after bad. Remember, Piper Alderman's in there somewhere looking to get a slice of the action.


----------



## am262327 (17 June 2013)

*Re: Loss is Difficult to Accept*



ASICK said:


> I'm sure KM will do all it can to recover what it's able to.




There isn't much (anything?) there to recover though, such was the state of affairs in the way the fund was structured. Last time I read through everything it seemed as if the plan to attract funding is really all about making sure that Maddison doesn't go into receivership, in hopes that you build it back up and then sell when it's maybe worth something. But don't those new investors have to pay off the $320 million loan, therefore making the bet that Maddison will someday be worth much more than $320 million?


----------



## ASICK (17 June 2013)

*Re: Loss is Difficult to Accept*



am262327 said:


> There isn't much (anything?) there to recover though, such was the state of affairs in the way the fund was structured. Last time I read through everything it seemed as if the plan to attract funding is really all about making sure that Maddison doesn't go into receivership, in hopes that you build it back up and then sell when it's maybe worth something. But don't those new investors have to pay off the $320 million loan, therefore making the bet that Maddison will someday be worth much more than $320 million?




Good morning am262327, I think you should take the time to read KM's eighth update very carefully indeed.  

The indicative proposal, which is a sure-fired one for KM and heaps of others (developers, facility lenders, partners, priority investors), is not so sure-fired for LMMPF investors.  LMMPF investors will only get sprinklings (if anything at all).  




Pre-existing investors (eg. you) are on the VERY  bottom of a substantial drip feed.  It might be worth while having a looking at the "4 Corners" episode re: the sales rate of land on the gold coast.  The longer it takes to sell the subdivided  land, the more $$$$ goes to all those further up the totem pole than yourselves.

http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm


----------



## RODENT69 (17 June 2013)

*Re: LM AIF*



ASICK said:


> The AIF isn't a feeder fund to the LMFMIF: http://u.b5z.net/i/u/10199052/f/8974r20_AIF_RG_45.pdf




ASICK   I am fully aware that AIF is not a feeder fund but a stand alone fund. I posted what I did so that others may be aware that an Updated RG-45 existed for that fund, so that investors in the fund could read it for themselves, and form their own conclusions regarding likely capital return.

After reading the interchanges between the ASIC  and FTI's legal people in the latest postings at FTI , (commented on by several forum members) really hard going, I read the following on page 94  from FTI Legal Norton Rose Fulbright  to ASIC  -Copley

" FTI Fees as Administrators of LM are NOT payable by the FMIF  but are recovered from the assets of LM itself

What do you suppose that means.    

When FTI lost its recent court challenge re Korda Mentha/MPF the court awarded costs against FTI said to be about $500k.  When I asked FTI where would that money come from they would not specify, but said it was less than that amount anyway!!


----------



## ASICK (17 June 2013)

*Re: LM AIF*



RODENT69 said:


> ... " FTI Fees as Administrators of LM are NOT payable by the FMIF  but are recovered from the assets of LM itself."
> 
> What do you suppose that means.




A mere technicality Dear Rodent.   

The fund ----> LM ----> FTI [technically FTI receives money from LM which in turn receives money from the funds]

Interestingly Trilogy spoke in similar turns, about a company (PSA) not receiving money directly from the fund but rather from a receiver to a fund security asset.  Technically, PFMF ----> Receiver ----> PSA [and so it goes]

More importantly for LM fund members, is what LM expenses in relation to the meeting & litigation been repaid to LMIML by LM funds.



RODENT69 said:


> When FTI lost its recent court challenge re Korda Mentha/MPF the court awarded costs against FTI said to be about $500k.  When I asked FTI where would that money come from they would not specify, but said it was less than that amount anyway!!




From the judgment (as I understand it), FTI is to bear its own costs and can't recover from the fund - but it's probably open for them to charge the costs to LMIML as administration costs, which in turn (again, as I understand it), can't be recovered by LMIML from the fund.  

in the end, it's not a concern for fund members because those costs won't be paid by LMFMIF members.


----------



## am262327 (17 June 2013)

*Re: Loss is Difficult to Accept*



ASICK said:


> Good morning am262327, I think you should take the time to read KM's eighth update very carefully indeed.




I did read it, again and again, but it's like playing catch up to something I didn't understand in the first place while having my emotions clouding the ability to digest it all. I did understand that there are risks to be taken if I joined the NewCo venture but I'm not about to get intertwined into that... besides not having liquidity _now_. Now I understand what's in it for KM, though, because they are positioning themselves to reek the benefits of actually forming NewCo.

By the way, I received an email from KM saying they are contacting solicitors on a variety of matters. Do they have recourse to get refunds to investors by pursuing legal action, and if so, where does that money come from?

I think I should change my handle to something like 4phuksake.


----------



## ASICK (17 June 2013)

*Re: Loss is Difficult to Accept*



am262327 said:


> I did read it, again and again, but it's like playing catch up to something I didn't understand in the first place while having my emotions clouding the ability to digest it all. I did understand that there are risks to be taken if I joined the NewCo venture but I'm not about to get intertwined into that... besides not having liquidity _now_. Now I understand what's in it for KM, though, because they are positioning themselves to reap the benefits of actually forming NewCo.
> 
> By the way, I received an email from KM saying they are contacting solicitors on a variety of matters. Do they have recourse to get refunds to investors by pursuing legal action, and if so, where does that money come from?
> 
> I think I should change my handle to something like 4phuksake.




am262327 (aka 4phuksake), I think you're getting the gist of it.  While KM has spoken about the fact that there's really no guarantee for pre-existing investors in the indicative proposal limited explanation, they haven't spoken to how much they'll make out of it, either as KM or as a relative.  

No individual investor would join NewCo as a shareholder - the fund would hold all or some of the shares according to the $$$$ amount of priority unitholders who might sign up for the deal via the LMMPF.  If all of the shares in NewCo were held by the LMMPF, the value of that shareholding to pre-existing LMMPF members (as LMMPF unitholders) would be BEHIND the LMMPF priority unitholders (both for income and capital distributions).

I'd guess there's not too much left in the LMMPF and not too much in management fees for KM - if new punters (the priority investors) came into the LMMPF, then up goes the management fees in the LMMPF - then there's the directorships in NewCo, another fine source of income - and perhaps even more  from other opportunities that arise.

All the while pre-existing investors would be hoping for just a few dollars falling past all the "fingers' above them on the distribution totem pole. 

Would you mind posting the document you received from LM (if it isn't on LM's website)? It's not possible to comment on documents which aren't available.


----------



## Vibe (17 June 2013)

*LM MPF*

Dear am262327, may I ask who was your financial advisor in China? I done my investment with Equity Asia , however since weeks they  are not replying or picking up the phones. It appears that they were operating in China illegally and misguiding investors that LM MPF is regulated by ASIC .. Which , what we learnt was not the case.furthermore ( as per  my knowledge)  LM didn't have any approval from Chinese authorities to sell their funds in China. I know that we have been stupid and naive to place the money into LM MPF ... But , I would like to ask ASICK if it make any sense  to place any class action from China side against LM and advisors who were selling this product in China illegally ( it seems like one big mastermind Ponzi scheme)


----------



## am262327 (18 June 2013)

*Re: LM MPF*



Vibe said:


> Dear am262327, may I ask who was your financial advisor in China? I done my investment with Equity Asia , however since weeks they  are not replying or picking up the phones. It appears that they were operating in China illegally and misguiding investors that LM MPF is regulated by ASIC .. Which , what we learnt was not the case.furthermore ( as per  my knowledge)  LM didn't have any approval from Chinese authorities to sell their funds in China. I know that we have been stupid and naive to place the money into LM MPF ... But , I would like to ask ASICK if it make any sense  to place any class action from China side against LM and advisors who were selling this product in China illegally ( it seems like one big mastermind Ponzi scheme)




I didn't use those guys, but it seems to me with that many things been done wrong it sounds like you have quite a lot of leverage to sue their asses off. Not sure how liable financial advisors are, though.

These are the two emails received from KM:

We will take action on behalf of all unit holders. We are already briefing solicitors on a number of matters. Accordingly, no specific action is required from yourself at his stage. 

And 

We are doing everything we can to maximise the return to unit holders. You should be aware from our reports we are aware and pursuing those related party transactions.

All investors, as individuals, can form a group or take legal action as they please. That is their inalienable prerogative under the Australian legal and democratic system. However doing so will be done at their own expense. However subsequent to our investigations, the trustee may decide in the future to undertake recovery action against 
parties for the benefit of all unit holders. Please bear in mind the Court delivered us a mandate to protect and maximise unit holder value. Clearly any legal action that agrees to this mandate will be considered by the trustee.


----------



## ASICK (18 June 2013)

*One Man's Journey*

I received this in my morning delivery from Top Documentary Films - If readers have spare time, it's worth watching:


----------



## ASICK (18 June 2013)

*Re: LM MPF*



am262327 said:


> I didn't use those guys, but it seems to me with that many things been done wrong it sounds like you have quite a lot of leverage to sue their asses off. Not sure how liable financial advisors are, though.
> 
> These are the two emails received from KM:
> 
> ...




Yes, KM makes sense - after all, KM is in the best position to make decisions based on evidence, evidence that probably would not be available to a privately engaged lawyer.  Please don't confuse mere loss with a cause of action.  

Another point, KM is independent to LMIML.

It might be a good idea for you to go back and read all the previous updates from KM - and if I may suggest, read each of them as many times as it takes to fully understand the contents of all of them.

I hope KM brings an action/s with fund resources so there's no need to engage a class action lawyer/litigation funder - after all, you've lost enough already: There's no point giving up a substantial slice of any litigation proceeds if it's not absolutely necessary.

However, giving it some thought, KM may not take an interest in financial advisors -  that is any area which you might have to get together with other clients of your particular advisor and together, head off to get some legal advice.  

KM says that it would bring actions for the benefits of all investors - to my mind, that's not going to include any actions against various financial advisors.

I wonder, have you asked KM about the potential liability of your financial advisor? or about the liability of financial advisors in general?


----------



## am262327 (18 June 2013)

*Re: LM MPF*



ASICK said:


> I wonder, have you asked KM about the potential liability of your financial advisor? or about the liability of financial advisors in general?




I've just emailed KM asking just that. I also have copies of the contract (signed with the financial planner) that I signed and the Information Memorandum (written by LM) that the contract references. There is never any mention about the kind of loss I'm preparing for:

"Capital Risk
The investments of the Fund are not capital guaranteed, and there is a risk that the value of the investment might decline. No losses have occurred, or are expected to occur at the date of this Information Memorandum."

The other delineated potential risks are things like currency risk, property market risk, etc.

I could easily set up a website in order to find other investors who used the same financial planners, and thereafter engage a lawyer respectively.


----------



## ASICK (18 June 2013)

*Claims Against Directors*

http://www.jonesday.com/class-action-drivers-in-australia-do-insurance-and-access-to-deep-pockets/

"Claims Against Directors

Central to the applicant's reasons for seeking a discontinuance was that the directors' and officers' liability policy which responded to the claims was capped at a confidential figure but that the policy was, or would soon be, exhausted.

The policy had been used to meet defense costs of the settling respondents in defending the present proceedings. The policy also responded to other claims, including a civil penalty proceeding brought by the Australian Securities and Investments Commission in the Supreme Court of Queensland against three of the settling respondents. Consequently, upon the basis of estimates of anticipated future legal costs, no insurance moneys were expected to be available to meet a judgment in the current proceedings. Further, evidence established that each of the settling directors had insufficient assets to meet a judgment."


----------



## am262327 (18 June 2013)

*Re: Claims Against Directors*



ASICK said:


> http://www.jonesday.com/class-action-drivers-in-australia-do-insurance-and-access-to-deep-pockets/Central to the applicant's reasons for seeking a discontinuance was that the directors' and officers' liability policy which responded to the claims was capped at a confidential figure but that the policy was, or would soon be, exhausted."




In other words, that's another protection out the window.


----------



## ASICK (18 June 2013)

*Re: Claims Against Directors*



am262327 said:


> In other words, that's another protection out the window.




The MFS PIF class action sued a number of MFS directors - IMF was the litigation funder.   

The insurer advised the court that certain court costs had reduced the insured amount to such an extent that there wouldn't be any monies available to satisfy a judgment.  Given the directors had no assets, IMF discontinued because there was no $$$$ to recover from either the directors or the insurer.

After spending $2m on the public examination of certain individuals relating to losses in Trilogy's PFMF, IMF pulled out and did not contribute to the present Federal Court proceedings against certain Citypac officers and directors. Trilogy battles on: http://moneymagik.com/federal_court_litigation_comment.php

Each fund's fact scenario is different - the MFS case highlights that there isn't always a benefit from suing directors (even with insurance).  My guess is that the PFMF Federal Court matter will fall on barren ground in a somewhat spectacular and costly fashion.


----------



## RODENT69 (18 June 2013)

Re next Capital Distribution  from LM to investors in the FMIF and Feeder funds

FTI has published the CPU figures for these funds on its website today.

FMIF  and the CPAIF  = 0.0079 CPU
ICPAIF  = 0.0059 CPU

The actual CPU for WFMIF  figure will come after Trilogy discloses it,  but the GROSS amount that Trilogy is receiving this time is $844,695.05 

The Trilogy Figure for Units held in the WFMIF is 89,722,301


----------



## PJSUAE (18 June 2013)

*Re: LM MPF*



ASICK said:


> It might be a good idea for you to go back and read all the previous updates from KM - and if I may suggest, read each of them as many times as it takes to fully understand the contents of all of them.





BTW, has anyone got copies of KM updates 5 thru 8? They seem to be classified as "commercially in confidence" and have been withdrawn from the website. Is this normal?


----------



## ASICK (18 June 2013)

*The Proverbial "Closing the Barn Door After ..."*



PJSUAE said:


> BTW, has anyone got copies of KM updates 5 thru 8? They seem to be classified as "commercially in confidence" and have been withdrawn from the website. Is this normal?




The link from Gismo's post # 795 still loads up the eighth update - if the links on the LM investor page on KM's site are gone, the documents certainly aren't.   If you use a similar pattern with Google search (ie, same link with different update number) you'll probably be able to bring up the rest of them.  

I'm surprised that commercially sensitive documents (as they're now called) remain on KM's site without any protection whatsoever.  No need to go thru the index page and give an undertaking.   If you want it, you'll have to grab it quick before KM wakes up.


----------



## ASICK (19 June 2013)

*"Maddison": The Ellusive Dream?*

The "4 Corners" episode, "A Betrayal of Trust", at about 34:12.

http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm

In the interview, the Brisbane-based Gold Coast specialist with Colliers international said "the market is currently trading at 35% of the ten-year average in terms of volumes of land sales across the Gold Coast"

The episode stated that there were 800 land sales across the entire Gold Coast during the 12 months preceding the episode and that there were 800 lots in "Maddison".

Collier's specialist said it would be "unusual for a single development to achieve a market share greater than 8% to 9% - 10% would be outstanding."  He added, "in the current market to achieve 60 sales (per annum) would be very good indeed".

And, as the episode says, "It might be a long time coming", so without regard to any other variable,  the longer any development drags out, the greater the costs of keeping the whole show afloat.

I might have missed it, but I don't recall reading any of this publicly disclosed information in KM's eighth update to investors.


----------



## ASICK (19 June 2013)

*"In Confidence"*

http://www.goodreturns.co.nz/article/976500973/one-of-lm-s-biggest-assets-worthless.html

Google turned up update 5:
[Google search = 
https://www.google.com.au/#q=kordam...n.2,or.&fp=e0d5d32b4e4c3dbd&biw=1920&bih=911]

http://www.kordamentha.com/docs/au_109_lm/fifth-update-to-investors.pdf?sfvrsn=2

http://www.propertyobserver.com.au/...led-$15-billion-maddison-estate/2013061660656

Good old Google: https://www.google.com.au/#sclient=...78,d.dGI&fp=e0d5d32b4e4c3dbd&biw=1920&bih=911


----------



## am262327 (19 June 2013)

*Re: "Maddison": The Ellusive Dream?*



ASICK said:


> http://www.abc.net.au/4corners/stories/2013/03/04/3700673.htm




I noticed that there is movement for class action against financial advisors. I contacted this Slater & Gordon firm that apparently is pursuing this.

http://www.slatergordon.com.au/media/news-media-releases/LM-Investments-Clock-Ticking

I haven't heard anything though.


----------



## ASICK (19 June 2013)

*"Commercial-in-Confidence"*

shhhhh ... don't tell anyone ... 

http://www.stuff.co.nz/business/industries/8796608/Another-hit-for-frozen-mortgage-fund


----------



## am262327 (20 June 2013)

*Reported to ASIC*

It took a few days, but after submitting my complaint to ASIC they got back to me. I've provided them all the documents and emails that I could. The basis of my complaint is that it was sold to me as a low-risk, conservative fund to invest in when in fact it's clear now that this was never the case.

I have to wonder how difficult it would be to prove this in court, though. I realize ASIC probably won't go after my individual claim, but hopefully the information will be helpful to their going after LM for all unit holders.

Or am I just holding my breath?


----------



## ASICK (20 June 2013)

*Re: Reported to ASIC*



am262327 said:


> It took a few days, but after submitting my complaint to ASIC they got back to me. I've provided them all the documents and emails that I could. The basis of my complaint is that it was sold to me as a low-risk, conservative fund to invest in when in fact it's clear now that this was never the case.
> 
> I have to wonder how difficult it would be to prove this in court, though. I realize ASIC probably won't go after my individual claim, but hopefully the information will be helpful to their going after LM for all unit holders.
> 
> Or am I just holding my breath?




No, you're not "holding your breath", you're actually doing what you can - and that's the best you can do.

As you're aware, ASIC isn't a prudential regulator - ASIC isn't bothered by outcomes, providing such outcomes are lawful.   ASIC doesn't care if a manager loses some or all of investors' money in an investment/s.   http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

I think you've done what you can - you can only put your case to ASIC and hope that the person who assists you really cares and gives you the best he/she is able to. 

It's very difficult to progress alone - I still maintain that the greatest hurdle for investors in badly damaged managed funds to overcome is the lack of cohesion amongst the investors themselves

Why don't you post the name of your financial advisor? If other readers invested in LM thru that same advisor, then they'll be able to get in contact with you privately.  Otherwise, how would you know who followed the same path to LM as you did?


----------



## am262327 (20 June 2013)

*Re: Reported to ASIC*



ASICK said:


> It's very difficult to progress alone - I still maintain that the greatest hurdle for investors in badly damaged managed funds to overcome is the lack of cohesion amongst the investors themselves
> 
> Why don't you post the name of your financial advisor?




I used Scigroup (http://www.scigroup.org) I'm open to being contacted privately if you went through the same path.


----------



## am262327 (20 June 2013)

*Re: Reported to ASIC*



am262327 said:


> I used Scigroup (http://www.scigroup.org) I'm open to being contacted privately if you went through the same path.




Although I have to point out that from what I've seen from them and from my own records, and from records provided to me, that this group did its due diligence. So I'm of the position that it was LM who were aggressively selling it. That doesn't mean that these financial advisors were unbiased, but I knew that. I knew they were getting a commission, et cetera.


----------



## PJSUAE (20 June 2013)

*Re: LM MPF*

This may well be of interest. Today I received an update from my IFA and the associated ACI. The update contained a report by the ACI covering the meetings they had with all parties, presumably with the man himself (PD). 

Additionally, my IFA (Mondial Dubai) is proposing an interesting next step, which is aimed at buying out Suncorp's first mortgage, ironically asking us to stump up more cash. Any thoughts?
_
"*Immediate Next Steps*

The immediate call is to resolve the loan repayment of some AUD20 million to SunCorp, a large Brisbane based bank, that falls due on 30 June 2013.  This date has been known to LMIM for one year and may have contributed to seeking insolvency protection. The loan is secured on the largest asset, the Maddison project, and a forced sale would likely result in lower value than an orderly development with a third party.

As a consequence, we wrote to you that we suggest that investors should agree to provide some additional 10-15% of their LMIM investment to allow the ACI to negotiate with SunCorp for a commercial resolution.  We received favorable reactions so far. Our preferred approach is to buy the first mortgage on the land and first charge on all assets of the land owner company through a new legal entity or a Trustee. Korda, the fund manager, has equally proposed additional funding but through the MPF vehicle.  We do not think that this a secure or appropriate avenue – a dedicated vehicle under the sole control of investors seems highly preferable and legally protected. We are taking legal advice.

We hardly have a choice – if the loan is not repaid, the likelihood is that SunCorp will force sale the land.  The resulting proceeds could be very low indeed, it is a big risk. The law is on their side and we do not see any effective legal challenge to prevent their action. On the other hand, if we raise some funds, we have a negotiating position and can propose a purchase, a phased pay out, a stand still or any other form of extension that would give Korda, the fund manager, time to conclude a joint development agreement on more favorable terms with a major property developer in Australia.  SunCorp is willing to consider proposals but we need to know if we have funds.

We will provide you with an outline of the proposed approach by the end of this week (22 June) and will ask you for commitments by 27 June to allow us to negotiate before the end of June."_


----------



## am262327 (20 June 2013)

*Re: LM MPF*



PJSUAE said:


> This may well be of interest. Today I received an update from my IFA and the associated ACI. The update contained a report by the ACI covering the meetings they had with all parties, presumably with the man himself (PD).




I think the only thing that made me feel better is that, yeah, they do seem well on top of it, and talk about personal bankruptcy for Peter Drake. And clearly there is not much in our favor, including assets and time.


----------



## ASICK (21 June 2013)

*Opportunity*



PJSUAE said:


> ... We will provide you with an outline of the proposed approach by the end of this week (22 June) and will ask you for commitments by 27 June to allow us to negotiate before the end of June."[/I]




"The ACI is being formally established with representation from several offshore Independent Financial Advisory (IFA) firms and legally advised by Shane Roberts (Holman Webb), an experienced commercial litigation lawyer. Only IFAs will be allowed as members.", all, it seems, with "no skin in the game", and fees too .. or, are they working for nothing?

"This avoids new management fees and a mingling of old and new investment." - yes, it does, but the management of ACI hasn't disclosed that they'd be working for nothing, and I'd be surprised if they were working for less than a handsome prize.

"ACI members would act as the board and provide a check and balance of Korda efforts.", and of course, since investors have no more control over ACI than KordaMentha, where's the benefit of having  ACI in the mix? I don't see one.

"It also gives investors the strongest voice in evaluating proposals." - isn't it 50 of one, or 50 of the other? - KordaMentha or ACI? there's no investor representation on either. Seems to me that ACI takes investors no where from where KordaMentha takes them: but then, you can't blame lawyers and advisors for wanting to make $$$ from an opportunity.

"The first mortgage position looks fairly secure since the land should under most any circumstance yield close to the value of the mortgage – depending on any reduction SunCorp may agree to.", SunCorp agree to a reduction? Wait, is that pigs I see flying backwards?  

"The main objective of the ACI is to have a voice in legal proceedings but also to motivate, energize, monitor and foster the work of FTI and Korda, possibly the government.", oh, dear, "a voice in the legal proceedings", that's nice.

It seems to me that it is the interested parties (not investors) who will comprise ACI are certainly setting themselves up with an opportunity, and investors should NOT think otherwise, this is a NEW INVESTMENT OPPORTUNITY, with (as I understand it), the same advisors who led investors to LM's door in the first place. 

As I understand it, ACI (with the interested parties as its board) proposes to buy the First Mortgage from SunCorp, yet is still  bothered with dealing with KordaMentha - that's a tad odd to me.  Why wouldn't the entity simply buy out the first mortgage (for the same money) and go about its business for the sole benefit of the new investors? Why share anything with anyone?

It seems to me that it'd make sense for pre-existing investors who want to re-invest in this new venture to share ALL the profits amongst themselves, rather than see a spill over of surplus profits (if any) to pre-existing investors who don't contribute in the new venture.

I wonder, why share? 

If ACI bought the first mortgage, and "Maddison" remained a MPF loan (with second mortgage), how would the existing fund support the management fee? and if no longer a fund loan security asset, what's the motivation for Korda to keep the fund going?

The MPF fades into the distance, yet all eyes continue to be firmly focused on "Maddison".

As a siren calls from the deep, so does "Maddison" creak and groan, "more, more, more, bring your $$$$$s"


----------



## am262327 (21 June 2013)

*4phucsakes*



> All parties are investigating but even with the benefit of hind sight, there is no clarity on how this went largely undetected. The developments towards the latter part of 2012 and early 2013 came far too late for any investor to react since most investors were locked into one, two and three year terms and pending redemptions were slow.
> In fact, the inflow of fresh investor money allowed LMIM to continue. To this effect, presumably interest payments (for the regulated FMIF schemes) were made from new investor monies and the MPF (unregulated scheme) provided development finance for FMIF. This will all be clarified by the investigation.




My read of this is that there were two primary "calculations" in the value of the fund:

*) Future "on-completion" value
*) Further monies coming in from investors

This is the thing: How is this a "low-risk" scheme? It's actually high-risk, because there is not an infinite number of investors and loans accrue interest and the property which the loans sit on may go down in value, and probably won't go higher than the interest.


----------



## Loiner (21 June 2013)

*Re: Opportunity*



ASICK said:


> "Only IFAs will be allowed as members.", all, it seems, with "no skin in the game", and fees too .. or, are they working for nothing?
> 
> "




'Only IFAs allowed as members.' This rings alarm bells with me. 
Remember: They are the ones who got us into this mess in the first place.

I don't think they will be doing any of this for nothing. While they probably all had hefty up front commissions, they must also have some commission while their investors remain in the fund, or at roll overs. I don't know their agreements but can't believe otherwise. Their interests are therefore similar to the REs, in 'We must protect the funds at all costs.' 

If IFAs don't want funds to be wound up, or receivers appointed, I'm sure this is only to prolong the running of their gravy train.

Does anyone know what IFAs commissions would be calculated on? Would it be the original $$$$ invested, or on the current units values? Even the latter is still a huge value for not actually doing anything. I think that's their incentive for setting up their ACI.


----------



## ASICK (21 June 2013)

*Re: Opportunity*



Loiner said:


> ... If IFAs don't want funds to be wound up, or receivers appointed, I'm sure this is only to prolong the running of their gravy train. ...




Any commission which were coming from LM probably won't be coming from KM - that'd be a stock to the advisors. I guess they're looking around for their next gig.

Yep.. always the bottom line .. $$$$$$

As investors you should seek independent advice as to whether you'd invest with those who led you to LM's door in the first place - but don't get advice from those who are now clearly conflicted.


----------



## scc (21 June 2013)

The following is just my opinion, I'm not an investor in LM but am concerned by the possibility of people investing good money after bad.  Although I do appreciate the alternative is most likely total loss.

Having worked in property development and seen feasibilties change over time, sometimes dramatically, any investors considering putting more money into Madison should consider, regardless of the price paid for the estate, the structure of the ownership, it appears any investment is still subject to all the risks associated with property development.  Property development is a high risk activity, you need to be very confident in the skills of the development team involved.  Even in good markets, which in my opinion, the Gold Coast is currently not, but seems to be improving, developers loose money.


----------



## Boston2202 (21 June 2013)

I have been visiting this forum for some time now, to see what type of investors have been caught up with LM Investments.
Before I go any further, I will fully disclose that I am employed as a Portfolio Manager for a licensed Financial Firm based in Bangkok.......... and BEFORE angry LM investors get on the forum & tell me to 'go forth & multiply', I will also disclose that our firm is NOT a creditor of LM (we are *not* paid on a commission basis) and that our firm since I have been managing this department from 2009 have NOT recommended LM to investors. Also, the company I work for is legally registered in Thailand and I hold a valid Thai work permit. 

The reason for me looking through this forum is that I have inherited clients from other IFA firms in Thailand that have unfortunately had substantial allocations of their portfolios to LM and I am trying to assist them with on-going information on the status of LM. As our firm had been quite (re: very) negative on LM over the past 4 years or so, our firm was not 'kept in the loop' with information. This is not to say that LM did not try very hard to induce me with very favorable business terms (i.e. commissions) to recommend their funds, especially the Managed Performance Fund, but after 3 years of me telling them they did not meet our 'approved fund' fund criteria, they sorted of gave up trying as hard.......but that also resulted in a lack of ongoing information.

*I would like to respond to a few comments made by various people on this forum. *

The first is addressed to the member that stated that LM was a substantial allocation of his pension portfolio, which I believe was invested through a Life Company Personal Portfolio Bond.

If the 'advice' to invest in LM was given by an IFA in Thailand, as has been said on this thread already, there is not much (if anything) that the Thai authorities can do about it, if you are not a Thai citizen. I am not sure how legal action initiated by an Australian legal firm against a Bangkok based IFA would be successful, as there are no formal regulations on 'Offshore' investment managers in Thailand.

However, as the members investment is through a pension, then there is the trustee of the pension that is involved. Now, how I understand it is that it is the trustees responsibility to ensure that the investment strategy of the pension is in accordance with the pension member's risk profile, investment objectives etc etc (i.e. basic financial planning) but more importantly, that the underlying investments of the portfolio have also been reviewed AND ACCEPTED by the trustees. The trustees have a duty of care to the member of the pension fund, so if for example 50% or more was allocated to LM, it could be argued that the Trustees of the pension have failed in their duty of care (i.e. insufficient diversification).

Now, this is where you may (emphasis on may...) have a legal case against the trustees, as in most cases these trustees are based in jurisdictions that DO have a financial regulator and Ombudsman. I would suggest that any effected LM investors that hold the investment through a pension structure, get the contact details of the Trustee of their pension plan and request what their 'duty of care' represents. Lodge an official complaint through the trustees complaints procedure and then take it to the regulatory body that governs that trustee, stating that while 'advice' was given to you by an IFA, it is still the trustees responsibility to ensure that the investments made are appropriate (irrespective of my opinion of LM, if an allocation is 30% or lower within a portfolio, it probably could be argued that allocation was justified.........not my opinion though).

Someone else wrote that their IFA came back & said that due diligence had been done on LM by the Life Companies that provide the Personal Portfolio Bonds and as such, was a reason why it was recommended.

Now, I am NOT going to defend the life companies (main ones here are Skandia, Friends Provident, Generali, Royal London 360) but that comment by the IFA is the biggest cop out........... The life companies do NOT choose / recommend the various investments, that is the role of the IFA. The life companies will look at certain investment funds to review whether they can be accepted on their platforms and I know that they have their own due diligence that they conduct. Obviously they do not want to approve that a Ponzi Scheme type fund can be held on their platforms, BUT if they happen to approve such a fund, they do NOT advise IFA's to put clients money into it.

Skandia, who I think are the largest did stop accepting LM on their platform a year or so ago, due to the way LM were paying IFA's commission (if anyone wants to know the levels of commission LM would pay, let me know as this was a major selling point LM would use to 'encourage' IFA's to use them....... I have the e-mails from them..!!). 

Anyway, I know I may be seen as the enemy by many investors, but please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.


----------



## am262327 (21 June 2013)

Boston2202 said:


> I have been visiting this forum for some time now, to see what type of investors have been caught up with LM Investments ... please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.




I don't have any expletives aimed at you, Boston, but can you help ME???

I have to take a break from this forum for a while.


----------



## ASICK (22 June 2013)

*Farangs in Faradise*



Boston2202 said:


> ... If the 'advice' to invest in LM was given by an IFA in Thailand, as has been said on this thread already, there is not much (if anything) that the Thai authorities can do about it, if you are not a Thai citizen. I am not sure how legal action initiated by an Australian legal firm against a Bangkok based IFA would be successful, as there are no formal regulations on 'Offshore' investment managers in Thailand. ...




And with no formal regulations in Thai, why bother even walking thru the front door of a Thai-based financial advisor.   I guess there'd be a BIG sign out front "Farang (guava/westerner (generally)), we take no responsibility for anything we hook you up with in Australia" - nah, just kidding - The sign would probably spruik "We give wonderfully reliable and responsible service - COME IN - sit down, massage?" (just kidding again -- it's Saturday, and for the first time in a while, it's not raining).



Boston2202 said:


> ... Anyway, I know I may be seen as the enemy by many investors, but please understand before firing off any expletives at me, I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist.




What? With no disclaimer? ah! but then you probably wouldn't need a disclaimer when you're advising an Australian in Thailand, but how about an Australian in Australia, say in a public forum (you being in Thailand)?  (just curious)


----------



## Loiner (22 June 2013)

Boston2202 said:


> (we are *not* paid on a commission basis) .




So what's your angle then? How do you make your money from the investors?


----------



## Loiner (22 June 2013)

*Re: Farangs in Faradise*



ASICK said:


> And with no formal regulations in Thai, why bother even walking thru the front door of a Thai-based financial advisor.




I'm afraid it's not like that Asick. I don't think many of our investors actually approached their IFAs with a wad of cash, looking for somehwere to stash it. They are usually stalked by the IFAs, sometimes even over a number of years. The IFAs usually try to build up a relationship and trust through various networks etc. The current favourite seems to be LinkedIn. They're in it for the long game.

The IFAs are salesmen, essentially selling themselves as 'good guys' who are only here to help expats. They want to assist with our finances and they would never knowingly sell us something a bit dodgy???? But they still have those small print disclaimers at the bottom of the page...

Any sneaking suspicions are smoothed away with claims of "LM is just like a bank. The funds are all based on Aussie property mortgages, safe as houses. The Aussie financial services are heavily regulated by ASIC."

As you are investing in Australia, the land of "Fair goes mate!", the lack of Thai regulation doesn't really come into consideration until times like this.


----------



## am262327 (22 June 2013)

*Re: Farangs in Faradise*



Loiner said:


> They are usually stalked by the IFAs, sometimes even over a number of years. The IFAs usually try to build up a relationship and trust through various networks etc. The current favourite seems to be LinkedIn.




It's pretty simple, just don't use them. None of them. ASICK is right, they aren't independent.


----------



## ASICK (22 June 2013)

*Re: Farangs in Faradise*



am262327 said:


> It's pretty simple, just don't use them. None of them. ASICK is right, they aren't independent.




I don't recall saying that, but I would avoid like the plague, investment advisors who:

1. offer to do work for nothing [yes, I'm a sceptic]
2. would benefit from a trailing commission on your investment/s.
3. otherwise gain a benefit from your investment/s other than a mere fee for service


----------



## am262327 (22 June 2013)

*Re: Farangs in Faradise*



ASICK said:


> I don't recall saying that, but I would avoid like the plague, investment advisors who:
> 
> 1. offer to do work for nothing [yes, I'm a sceptic]
> 2. would benefit from a trailing commission on your investment/s.
> 3. otherwise gain a benefit from your investment/s other than a mere fee for service




What do you think if they have a holding in the same thing they are recommending? This was one of the main things that convinced me, since you know, "I treat your money like mine". I really do need to get away from this forum though, so depressing.


----------



## ASICK (22 June 2013)

*Re: Farangs in Faradise*



am262327 said:


> What do you think if they have a holding in the same thing they are recommending? This was one of the main things that convinced me, since you know, "I treat your money like mine". I really do need to get away from this forum though, so depressing.




If the _Flintstones _were created after your advisor invested in LM (which is obviously not the case), then I'd say that's where the creators got the idea for "Bam Bam" - could never be just "Bam".

If the advisor holds units, that might be used as comfort punters walking thru the deal - but disclosing investments does no more than show your advisor's choices, it doesn't speak to the quality of those investments.   

It seems to me that it was known to local pundits that "Maddison" wasn't worth very much, but perhaps no one simply put the MPF's loan value against with market guesstimate of the property.  Remember, LM valued the property "as complete" - I wonder where all the money went? mostly in fees I'd guess.

Some issues:

1. debt
2. how the asset was valued
3. cash flow
4. term
5. % management fee
6. other funds under management 

I think to invest in a MIF/MIS, one has to look beyond the PDS to at least a couple of years of accounts and do a bit of research via Mr. Google.  Phoning a local agent/s is a necessity if the asset/s is/are known.  Because these funds use the accruals accounting method, profit is not necessarily an actual profit, it may be no more than an accounting profit (and that could be very risky indeed - as it has been in the PFMF, and here in the MPF).

There issues are not of any use now, but just in case you're tempted to try another fund ... 

Here's some more gratuitous advice, "fear the worst, but hope for the best". If you think you'll get nothing, then anything in excess of nothing is a bonus.

It works for me, I hope it works for you.

Take a rest, you've been hard at it - it'll all be here if and when you come back, and of course, you'll get your updates from KM anyway.


----------



## gardie (24 June 2013)

ASIC have known for years that a number of mortgage schemes are lending based on gross realisable value.

So if I have a block of land that can be subdivided into 10 lots each worth 100,000 ie GRV is $1 million.

Now clowns will lend me depending on there approved loan of upto 80% upfront $800,000.

They choose to ignore a small issue that I need build roads, water sewerage etc 

Now when you apply the same approach to a high rise development or a large estate like Maddison it gets worse as what the "rules" of the fund allow is a massive loan based on end value which is not tied back to what the site is worth right now if they are forced to sell it.

I bet the $280 million ??? sunk into Maddison will have gone into the LM machine with little actually spent on the ground. Each raw lot already owes $140,000 before you start putting development costs on top of this.

Now the question for ASIC is given that already they had seen massive losses from other schemes based on this dodgy lending approach why was the door left open for more cowboys to exploit investors in this matter.

The compliance committee as LM will all put their hands on their hearts and say that the lending was within scheme rules. I thought their duty of care would have overridden this excuse but to date ASIC has sat on their collective hands.


----------



## Boston2202 (24 June 2013)

*Re: Farangs in Faradise*



ASICK said:


> And with no formal regulations in Thai, why bother even walking thru the front door of a Thai-based financial advisor.   I guess there'd be a BIG sign out front "Farang (guava/westerner (generally)), we take no responsibility for anything we hook you up with in Australia" - nah, just kidding - The sign would probably spruik "We give wonderfully reliable and responsible service - COME IN - sit down, massage?" (just kidding again -- it's Saturday, and for the first time in a while, it's not raining).
> 
> I was expecting to get comments like this...... after all, Thailand does have a number of IFA's that are as dodgy as they come & it may even be the majority, but not all should be tarred with the same brush (by the way, I am NOT an IFA).
> 
> ...





I think you have completely missed the point of my post....... I am NOT here making recommendations, but after reading the many many posts of investors caught up with this LM, and especially the member who had a substantial percentage of his pension allocated to LM MPF, I suggested going to the trustee of their pension provider, as it appears that the trustee has not followed their duty of care in response to risk controls & the benefits of the member.

No advice given....... just a suggestion. Or would you prefer that I don't use the 21 years experience of mine (9 as a ASIC licensed adviser in Australia & 5 in the offshore industry.......where I have seen some stuff that would make anyone with a financial background squirm in horror.


----------



## Boston2202 (24 June 2013)

Loiner said:


> So what's your angle then? How do you make your money from the investors?





The firm that I am employed with charges clients a 'fee for service' which is fully disclosed upfront, as per Portfolio Management firms in Australia, UK, Singapore. NO commission (either upfront or trail) is received & the very rare event that an investment does pay a commission, 100% is rebated back to the client.

Anyway, I am not here to spruik business but to maybe provide some suggestions on how effected LM investors (especially investments in pensions) may be able to take action instead of lengthy & expensive class actions in Australia.


----------



## ASICK (24 June 2013)

*Just a Bit of Harmless Fishing?*



Boston2202 said:


> I think you have completely missed the point of my post....... I am NOT here making recommendations, but after reading the many many posts of investors caught up with this LM, and especially the member who had a substantial percentage of his pension allocated to LM MPF, I suggested going to the trustee of their pension provider, as it appears that the trustee has not followed their duty of care in response to risk controls & the benefits of the member.
> 
> No advice given....... just a suggestion. Or would you prefer that I don't use the 21 years experience of mine (9 as a ASIC licensed adviser in Australia & 5 in the offshore industry.......where I have seen some stuff that would make anyone with a financial background squirm in horror.




Maybe I missed something, but you lead off your initial posting with this, "Before I go any further, I will fully disclose that I am employed as a Portfolio Manager for a licensed Financial Firm based in Bangkok....." 

and you said this, "Also, the company I work for is legally registered in Thailand and I hold a valid Thai work permit."

you disclosed your interests, why did you do that? If you take the time to look at the ASIC notice below the box you compiled your posting, take a look at NOTE 4. "(4) It is not permitted for any member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor."   While NOTE 4 may not apply to you because you don't hold an AFSL and you're not a representative of an AFSL holder, the intention of NOTE 4 is quite clear, that advisors or representatives should not post on this forum.    

And you advise LM investors, "The reason for me looking through this forum is that I have inherited clients from other IFA firms in Thailand that have unfortunately had substantial allocations of their portfolios to LM and I am trying to assist them with on-going information on the status of LM." and, "I did NOT recommend LM but I do now have clients with LM investments that I am trying to assist."

You say you've read the forum ("after reading the many posts"), so you'd be aware that a number of Thai-based investors read/post on this forum.  I see your posting as a bit of a fishing expedition, and as far as I'm concerned, you picked up at least one - almost immediately from am262327, "*I don't have any expletives aimed at you, Boston, but can you help ME*???" (emphasis added)

good one .. !


----------



## ASICK (24 June 2013)

*The Clayton Spruik*



Boston2202 said:


> The firm that I am employed with charges clients a 'fee for service' which is fully disclosed upfront, as per Portfolio Management firms in Australia, UK, Singapore. NO commission (either upfront or trail) is received & the very rare event that an investment does pay a commission, 100% is rebated back to the client.
> 
> Anyway, I am not here to spruik business but to maybe provide some suggestions on how effected LM investors (especially investments in pensions) may be able to take action instead of lengthy & expensive class actions in Australia.




Well, if that's not a spruik, then what is?


----------



## Boston2202 (24 June 2013)

*Re: Farangs in Faradise*



ASICK said:


> I don't recall saying that, but I would avoid like the plague, investment advisors who:
> 
> 1. offer to do work for nothing [yes, I'm a sceptic]
> 2. would benefit from a trailing commission on your investment/s.
> 3. otherwise gain a benefit from your investment/s other than a mere fee for service





100% agree with you on the above.

The term IFA I think is flawed because they can not be completely independent. They will always be tied to a range of Life Companies / platform providers and as such, can not be independent.

- - - Updated - - -



ASICK said:


> Well, if that's not a spruik, then what is?





Well you are entitled to your comments & opinions...... but I honestly did think that my comment for pension investors in LM to approach the trustee of their pension fund was valid and delivered for the benefit of others...


----------



## Boston2202 (24 June 2013)

*Re: Just a Bit of Harmless Fishing?*



ASICK said:


> Maybe I missed something, but you lead off your initial posting with this, "Before I go any further, I will fully disclose that I am employed as a Portfolio Manager for a licensed Financial Firm based in Bangkok....."
> 
> and you said this, "Also, the company I work for is legally registered in Thailand and I hold a valid Thai work permit."
> 
> ...






ASICK....... yes, I am very aware that there many Thailand based investors of LM read this forum, which is why I made the point of approaching the trustee of the pension fund, as you & many others have pointed out, that there is NO regulation here in Thailand and I have yet to see anything else presented that may benefit Thailand based investors caught up with LM apart from potentially joining class actions in Australia.

Would you have agreed with my original post if I had not disclosed my role..?

On a business sense, why would I want to 'spruik' to get clients that have their portfolios tied up in frozen funds..?? 

Anyway, I have obviously underestimated the complete negative attitude & distrust of people in the financial industry by others.......


----------



## ASICK (24 June 2013)

*Re: Farangs in Faradise*



Boston2202 said:


> ... but I honestly did think that my comment for pension investors in LM to approach the trustee of their pension fund was valid and delivered for the benefit of others...




I think it was a spruik and directed to those resident in Thai.   I was not surprised to see am262327 respond so quickly, in fact, I expected something like that to happen (on or off forum).

I know many LM investors are vulnerable and willing to grasp as straws ... one only has to look at am262327's response to your posting.    I spend a decent amount of my time in Bangkok and fully understand how extra difficult it is for foreigners - a loss of a substantial amount of one's savings for an ex-pat could be more than frightening, it's bad enough losing the money, but being so far from the locus of the loss increases the anxiety.

It's clear (at least to me) that Thai investors best opportunity is with KM and KM's best endeavours - There's no need for them to do anything more at this time - and there's no need (ever) to spend good money after bad.

- - - Updated - - -



Boston2202 said:


> ASICK....... yes, I am very aware that there many Thailand based investors of LM read this forum, which is why I made the point of approaching the trustee of the pension fund, as you & many others have pointed out, that there is NO regulation here in Thailand and I have yet to see anything else presented that may benefit Thailand based investors caught up with LM apart from potentially joining class actions in Australia.
> 
> Would you have agreed with my original post if I had not disclosed my role..?
> 
> ...




I think that ASIC purposefully draws a line that postings on these forums should not be made by AFSL holders and representatives for a good reason, because it doesn't want investors to be influenced by self-interest.   I understand you're not a licence holder which is required to comply with the law, but you are an employee or agent of a licence holder in a foreign jurisdiction, and I think that the tenor of the law includes folk such as yourself.

If I accept that it is the case that you had no intention to tout, the result was that you had a member (based in Thai) seeking your help, help for which you say you charge on a "for fee" basis. 

Setting intention aside, the outcome speaks for itself.


----------



## Boston2202 (24 June 2013)

*Re: Farangs in Faradise*



ASICK said:


> I think it was a spruik and directed to those resident in Thai.   I was not surprised to see am262327 respond so quickly, in fact, I expected something like that to happen (on or off forum).
> 
> I know many LM investors are vulnerable and willing to grasp as straws ... one only has to look at am262327's response to your posting.    I spend a decent amount of my time in Bangkok and fully understand how extra difficult it is for foreigners - a loss of a substantial amount of one's savings for an ex-pat could be more than frightening, it's bad enough losing the money, but being so far from the locus of the loss increases the anxiety.
> 
> ...





OK......point taken. Obviously nothing i write, you will believe anyway.

KM - yes I think that is the best option for individual investors that has been presented at the moment. BUT, I still stand by my suggestion that anyone invested via their pension fund (I am talking predominately through a UK SIPP, or a QROPS) get in contact with the trustee of the pension fund........ this not through an IFA but direct to the trustees. There is NO cost to register a complaint against the trustees and if it needs to be taken further i.e. Ombudsman in financial regions such as Isle of Man, Guernsey, Malta, Gibraltar where a lot of these pension trustees are based.

Also, if KM is the course of action that needs to be taken, it is the Trustees that need to set the wheels in motion with KM as they are the legal owners of the investment (the members are technically the beneficiaries). 

So rubbish me all you want, all I have tried to do is provide a possible alternative approach for certain investors.


----------



## am262327 (24 June 2013)

*Can't seem to stay away*

I got an update (just to me via email after hounding them with questions I knew they couldn't answer) from KM:

"The capital raising being mooted at the moment regards the Maddison loan only. There are 18 other loans in the Fund which we are working on securing the Fund's position."

That prompted me to check this forum, and I see that my reply to a post from Boston may have distracted from his contribution. I do think what he said was fairly clear and helpful to that other poster. However, my request for help was said with tongue firmly planted in cheek: I'm an idiot investor for having put money into LM when, although I'm a bigger idiot for not having done more research before having done so. Had I put it into a bank, which me and my conservatively-minded wife are want to do given the fact that we work very, very hard for our earnings, I would still have it, plus 0.5% interest or somesuch. So, you know, I'm not really going to listen to anyone pitching anything.

And, for what it's worth, no one has contacted me privately that isn't a fellow LM investor. But it seems to me that a forum with that sort of policy, what is is doing with a private messaging feature? Anyway...

I am an international school teacher who does things like builds communities. I helped raise money for various charities, and volunteer to do a bunch of other crap like proms and special events (this on top of the usual teaching duties, and no, not for any extra money or any form of compensation), and I'm finding myself calling such work "crap" because I'm wondering why I bothered, because six years of me and my wife's savings are in LM. I am on my current school's staff association so I get to hear my fair share of horror stories about things happening to expats that, if it happened in their home countries, there would be protections in place. Not available to us, which, yes ASICK, means we're more vulnerable. And because I'm so busy, I was hoping I could rely on a financial advisor to do the due diligence stuff.

So, as an expat, if I go to a company in Thailand or somewhere else, and if the worse happened and the funds got frozen and administrators are appointed, and now you're telling me that there is no legal recourse for me whatsoever.... I gotta ask what the hell are you doing using them? (I'm talking to two-year-ago-self...)

Hopefully this bit of info is a bit of context for any other individuals wondering about the kinds of people who are hurting from all this.


----------



## ASICK (25 June 2013)

*Re: Farangs in Faradise*



Boston2202 said:


> So rubbish me all you want, all I have tried to do is provide a possible alternative approach for certain investors.




It's not a personal issue, it's Rule 4 of the ASIC Notice,  "(4) It is not permitted for any member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor."

It was you who gave the disclosure - if you'd said nothing about your business interests in the investment sector then none of the previous discussion would have taken place. 

If investors do contact you, I hope you'll take them on _pro bono_ - reports about such good deeds might filter back to this forum and bring hope to those who (without doubt) stand to lose a substantial part of their respective investments with LM.

Of course, if you seek to charge, such efforts may be alternatively disclosed herein.


----------



## ASICK (25 June 2013)

*Re: Can't seem to stay away*



am262327 said:


> ... And, for what it's worth, no one has contacted me privately that isn't a fellow LM investor. But it seems to me that a forum with that sort of policy, what is is doing with a private messaging feature? ...




If a member receives a private email/s, that member is free to accept or reject it/them- but if the member is offended by such mails, then a complaint may be made to the moderator. If the moderator deems fit, the sender might be blocked from the forum, or in lesser cases, admonished.

I'm sorry for the mess you're in, but please keep in mind that many of us have "been there, done that" (actually, many of us are still going thru it).

I think it's best for you to wait to see what KM discloses about future actions - you might be pleasantly surprised, or you might be disappointed, but you really won't know which way to go until you know what KM is doing.


----------



## sht4branes (25 June 2013)

*Grief*

The five stages, denial, anger, bargaining, depression and acceptance are a part of the framework that makes up our learning to live with the cash we lost. 

I am a doctor that has been taken for a ride. I'm not angry or embarassed or ashamed any more, which I was initially.

When you get to acceptance, it gets better. Most of our investment has been lost. Let the court decide who should be the RE for the LMIF. We should get something. 

For those in the Performance Fund, leave it with KM or contact the trustees maybe. 

It's not your fault you trusted an IFA and try not to let it negatively affect your life too much. It's difficult but the sun will still rise in the morning. As soon as you accept what it is, you will be able to more on to brighter things.

Sht happens!


----------



## Loiner (25 June 2013)

*Good Grief - what a winner for LM and the IFAs*



sht4branes said:


> I am a doctor that has been taken for a ride. I'm not angry or embarassed or ashamed any more
> 
> Most of our investment has been lost. Let the court decide who should be the RE for the LMIF. We should get something. For those in the Performance Fund, leave it with KM or contact the trustees maybe.
> 
> It's not your fault you trusted an IFA




Don't know about you doc, but I am still very angry and will not just accept it. 

Letting the courts decide which RE can milk the remainder of the funds is not the way. There is a very real chance that we will be left with nothing at all. Haven't you followed the thread and ASICK's experiences with Trilogy and the rest of them? Even leaving the MPF with KM is also a very dubious option.

You're damn right it's not our fault that we trusted IFAs - it's all their fault for deceiving so many of us for so long. It wasn't all just an accident. Someone must pay for this.  

You sound like you are taking your own happy pills. I hope I never have to go under your knife anytime, I might not get up again because some **** happened. Maybe one of us should see a different doctor?


----------



## DUBAI (26 June 2013)

*Re: Good Grief - what a winner for LM and the IFAs*



Loiner said:


> Don't know about you doc, but I am still very angry and will not just accept it.
> 
> Letting the courts decide which RE can milk the remainder of the funds is not the way. There is a very real chance that we will be left with nothing at all. Haven't you followed the thread and ASICK's experiences with Trilogy and the rest of them? Even leaving the MPF with KM is also a very dubious option.
> 
> ...




I was conned into the LM Performance Fund by a trusted friend and I have lost over $250,000 which
happens to be my retirement and this FA is now hiding on his yacht in Canada and hides in Panama
to avoid taxes. I will probably be working until I am 80 yrs old and this FA will screw more people
with his other scams.


----------



## ASICK (28 June 2013)

*www.moneymagik.com*

Hi Guys, 

A threat to institute legal action by Trilogy has caused me to close www.moneymagik.com tomorrow at 10:00am. 

The audio recordings of the info session meetings were made by fund members and not copied from any Trilogy document, but in order to settle the matter, those recordings will be brought down from the site. Also the conversations between Steve Menzel and Rodger Bacon will be taken down. 

There is little point continuing along by myself to take all the risk - I'm not prepared to do that. 
I am mindful that my ex is also a director of the company - to involve her in protrated risky litigation would be totally unfair to her.

I didn't get much thanks from PFMF members for it anyway. 

The facts are all around - they won't change.

Best of luck.

Allan


----------



## Taja (28 June 2013)

*Re: www.moneymagik.com*



ASICK said:


> Hi Guys,
> 
> A threat to institute legal action by Trilogy has caused me to close www.moneymagik.com tomorrow at 10:00am.
> 
> ...





Dear ASICK/Allan - I hope this isn't a sign-off from ASF.  I, and I am sure many others, have profited immensely from reading your analyses and insights and would be very sorry if you were to stop posting - especially with so much more yet to unfold on the LMIM front.  That aside, very best of luck in dealing with Trilogy.  Best regards.


----------



## ASICK (29 June 2013)

*Re: www.moneymagik.com*



Taja said:


> Dear ASICK/Allan - I hope this isn't a sign-off from ASF.  I, and I am sure many others, have profited immensely from reading your analyses and insights and would be very sorry if you were to stop posting - especially with so much more yet to unfold on the LMIM front.  That aside, very best of luck in dealing with Trilogy.  Best regards.




Hi Taja, 

Discretion is the better part of valour.   The facts are all out there, and as I said, those facts will not change.  I will most certainly speak to facts.   

Some time ago I was involved in a protracted legal matter and it cost me about $1m in costs - I (and my business partner) had an opportunity to settle for some, but we wanted all: that wasn't a good move. 

They say "when principle comes in the front door, common sense jumps out a side window", and so it did for me on that occasion. In the end, taking into consideration tax benefits and a deal here and a deal there, the outcome was a slight profit.

I don't mind a tussle, but I'm not single-minded anymore and I'm willing to allow common sense to over-ride principle.

www.moneymagik.com is still active and I'll be seeking (legal) advice as to what content I'll put back - for sure it will be factual - I have no desire to spend my treasure in a courtroom determining what the word "and" means.  

Because of the intermingling of factual documents, audio, and comment, I removed all of the content on the site to ensure I complied with my undertaking. 

Also, I'm mindful of the integrity of this forum, and that's why I used links to www.moneymagik.com.  In the event of a problem, all I would have to do is the remove the content at the link - which I done.


----------



## am262327 (29 June 2013)

*Linkage?*

Can anyone provide source information (reference) on how the various LM funds are linked to each other? I've seen a lot of information coming out that they are linked but I don't understand it, and was hoping I could see for my own eyes what people are talking about...


----------



## Loiner (29 June 2013)

*Re: www.moneymagik.com*



ASICK said:


> Hi Guys,
> 
> A threat to institute legal action by Trilogy has caused me to close www.moneymagik.com tomorrow at 10:00am.




Asick, it's a real pity about your threats by Trilogy but I hope it won't affect your invaluable contributions to this thread. I think you have been through the mill enough before to know when to stop, but it's a sickener when they can suppress the truth and freedom of information like that.

You must be hitting a nerve with all those details that they wouldn't want the punter to be aware of. Those Trilogy guys really are a bunch of bastards, but it appears that's the whole of the Gold Coast's financial and property conmen for you.


----------



## ASICK (30 June 2013)

Hi Loiner,

Thanks for your kind words.  Everyone is entitled to assert rights they feel they have.  I complain not.  I made my choice, but in saying that, I think it would be a foolish individual who believes that truth can be stifled by gagging one puny individual.  The internet is a new battleground which has more twists and turns than most of us could ever fully understand.

At this time I'm looking forward to the LMFMIF matter going to court and looking forward to seeing either one of FTI or ASIC herald a convincing win.


----------



## sht4branes (30 June 2013)

*Re: Good Grief - what a winner for LM and the IFAs*



Loiner said:


> Don't know about you doc, but I am still very angry and will not just accept it.
> 
> Letting the courts decide which RE can milk the remainder of the funds is not the way. There is a very real chance that we will be left with nothing at all. Haven't you followed the thread and ASICK's experiences with Trilogy and the rest of them? Even leaving the MPF with KM is also a very dubious option.
> 
> ...




And your plan?


----------



## Loiner (1 July 2013)

*Grieving, but not out of it yet.*

Well firstly, I plan to register with these people:

The Banking & Finance Consumers Support Association 

They have taken up our case. If you visit their website (http://bfcsa.com.au/index.php/action/ag-lm-investments) there's a page for LM Investment Victims under the Action Groups drop down. It's early days for them, but they are trying to drum up support for some sort of Class Action. It may be worth registering with them. I will be, if only to see what their plan is.

Secondly, I'll be creating as much **** as possible for Drake & Co; those Irresponsible Entities; and the IFAs.


----------



## ASICK (1 July 2013)

*Gagged*

My friend gave me his legal opinion - gagged.   I think I'll give it all a miss and go back to my retirement.  Good luck to you all.


----------



## RODENT69 (1 July 2013)

*Re: Linkage?*



am262327 said:


> Can anyone provide source information (reference) on how the various LM funds are linked to each other? I've seen a lot of information coming out that they are linked but I don't understand it, and was hoping I could see for my own eyes what people are talking about...




ASICK   did a picture chart that shows the relationship between most funds. Its available through  this forum on his earlier postings.  The chart is helpful, but to understand more you will have to read each of the Audited Returns, and RG45's


----------



## sht4branes (1 July 2013)

*Re: Gagged*



ASICK said:


> My friend gave me his legal opinion - gagged.   I think I'll give it all a miss and go back to my retirement.  Good luck to you all.




Hi Allan,

Thanks for all of your support and advice. 
Enjoy your retirement.
In the words of Kenny"you gotta know when to walk away and know when to run"

Best Wishes

Sht4branes


----------



## Guitariman (1 July 2013)

I'm an LM investor who has been watching these forums for a while. I am in the same boat as a lot of you and thought I should throw my hat into the ring.

Two trains of thought.

One. 

I made a bad choice. Me. The only way to move on from this is to accept that, and to radically change my relationship with money. These IFA told us about LM, but who chose the amount we put in ? We did. I could have put in £1000 but I didnt. Why? My greed! I got my calculator out, did the maths and my eyes burst.  Isn't that what we all did? If I had invested £1000, well I wouldn't be on here would I? To some extent (and ASICK's revelations prove it) we are banging our heads against a wall. A big one. We put our chips on red and we lost. You want to blame others. Fine. But you can't move on until you get over that.

My relationship with money clearly cannot be the same as before. Firstly because I don't have it anymore and acceptance might help me live with my new financial position. Second, because it might help me deal with this in terms of my health. 

No one has really mentioned that on here. Maybe its not the place. Whilst I thank ASICK for his contributions, people need time to come to terms with their situation and ASICKs revelations might have come too soon for many. Only now, after nearly 4 months, have I accepted it. Being told early on I might get 10p/£1 back might be true, but it was not helpful at the time as part of the process. You might want to inform us ASICK, but is it also about feeling better yourself ? About what happened to you ? If that's your process, fine.  I'm not angry at you, you clearly know what you are talking about. Just asking that you let people reach a certain stage in their own process, their own "journey" before you tell us (as Puss in Shrek 4 so perfectly put it) that we are "Royally f&£ked".

Second.

So, the MPF invest millions in projects. LM takes fees that make your eyes bleed (have you actually seen the amount LM charged us - from update 7 I think?) but these fees have actually been paid for the incredibly poor management of these millions. Our money! Wow. That's genius isn't it ? Charging us fees from our money for such a poor job with our money? Where's  Drake risk in that deal?

And to top that, whatever us investors do, we get little from Maddison unless we pour money into the new entity, NewCo. How did that happen? I mean why do we have no part of the deal anymore? SunCorp leave, fine, but why is that so bad for us? Do we not own any of it? How could Drake put us on that position? That risk?

Oh yeah, Drake, as the owner of the Developers, makes money regardless. He owns the developer so of course he wants the project to continue. Is any of his profits from his house sale, from his developer business, coming back to poor me and you? That money he lent from the fund? The huge cash movements just prior to March? Have you actually seen and studied those figures?

Regardless of Part One of my rant, I am interested in f@&king Drake from behind. Hard!  I just dont know how. I'm not immediately interested in dragging this out with lawyers. Those that do, keep me in the loop but let's not get into lawyers unless it's in our favour. S£&t, is everyone else but us making money here?  What do these lawyers want? Are they feeling sorry for us or in need of a generous dose of Good Karma? I doubt it. 

For the sake of your helath, come to terms with what you have done and what has been done to us in your own way and your own time. Once that's done. Well, who knows?


----------



## Cbrady (3 July 2013)

Any news on the Suncorp decision for MPF? What is KM doing as it is past the deadline?


----------



## DUBAI (4 July 2013)

*Expats from Dubai*

I am looking for investors of the LM Performance Fund from the Middle East
between 2007 and 2009. Please email me bapple_2001@yahoo.com so we
can discuss our situation.


----------



## sht4branes (4 July 2013)

*Re: Grieving, but not out of it yet.*



Loiner said:


> Well firstly, I plan to register with these people:
> 
> The Banking & Finance Consumers Support Association
> 
> ...




I'm sure if someone with the time, energy, experience and skill set such as ASICK got taken to the cleaners, I'm sure Drake & Co will be quaking in their boots with your action plan.


----------



## Guitariman (4 July 2013)

*Re: Grieving, but not out of it yet.*

sht4branes, are you going to start in fighting with one of the few people on here (Loiner) who is up for doing something ? 

Loiner, keep at it. You are the type of person I want to converse with.


----------



## sht4branes (5 July 2013)

*Re: Good Grief - what a winner for LM and the IFAs*



Loiner said:


> Don't know about you doc, but I am still very angry and will not just accept it.
> 
> Letting the courts decide which RE can milk the remainder of the funds is not the way. There is a very real chance that we will be left with nothing at all. Haven't you followed the thread and ASICK's experiences with Trilogy and the rest of them? Even leaving the MPF with KM is also a very dubious option.
> 
> ...




Pretty obnoxious. Poorly directed bile never helped anyone. 

I'm awaiting the result from the court case later this month from the ASIC action regarding the LMIF . If this results in selling down the fund, this will provide some return on investment.Something is better than nothing and if this is achievable without all of the added costs of ambulance chasing lawyers, so much the better.

 I have not invested in the Performance fund so you guys will need to decide on your own strategy. I agree entirely with your earlier post about health which doesn't preclude going after LM in some way if possible.

My point:if ASICK was unable to achieve a favourable outcome, what hope have I got other than to vote against Trilogy from taking over the LMIF and hope the courts to sell down the fund ASAP.  However, we all must choose the course that best fits our needs.

Without ASIC's informed opinion, I will not be involved in this forum any further.


----------



## am262327 (5 July 2013)

*Update Number Nine*

I've just now received the ninth update from KM regarding the MPF. The upshot of it is that there is no money in the fund itself (surprise!). They are looking at recovering funds through litigation and suing. They also demanded the loan back from Peter Drake and the millions that the previous trustee took. Definitely a very pointed update. They also published a long itemized list of exactly who is working for KM and how much they are being paid for services.


----------



## Guitariman (5 July 2013)

*Re: Update Number Nine*

Yeah but for all his millions in fees, his developer business and his house, he says he can't pay it back. 

Really ?


----------



## RODENT69 (6 July 2013)

All   there is an interesting new Affidavit from Stephen Russell  (on behalf of FTI) sworn on 4 July 2013  its under the litigation  section. Investors in the FMIF and feeder funds may find this interesting

Can anyone post the Ninth KM update as info please


----------



## Mysteryman (7 July 2013)

Have just plowed through the latest affidavit from Stephen Russell. Can't believe the snapping and snarling that goes on between these Companies in their selfish desire to consume the carcasses of the LM funds. Seems anything goes in an attempt to delay the trial on the 15th July. Roll on the 15th, I say, and let's hope the Judge can see through all this greed and self serving behaviour and arrive at the best solution to return what little remains to the people who put the money up in the first place - the investors.


----------



## am262327 (7 July 2013)

Mysteryman said:


> Can't believe the snapping and snarling that goes on between these Companies in their selfish desire to consume the carcasses of the LM funds.




Agreed, it makes you believe less and less in anyone purporting to try and work for the investors. If there's no money left, then what are they playing for? You know?


----------



## Guitariman (8 July 2013)

Well, after 9 updates from KM, at intervals of about 2 weeks each (although the last one was longer than that) it's pretty clear the MPF is, in laymans terms, screwed. They do appear to have done a lot to be fair. Sadly anything left or salvageable from the carcass will have a dent in it for their fees. By the time this is dealt with, we'll owe them money. 

Actually this update 9 is just about the nail in the coffin of members hopes. How are others reading it ?


----------



## am262327 (8 July 2013)

Guitariman said:


> Well, after 9 updates from KM, at intervals of about 2 weeks each (although the last one was longer than that) it's pretty clear the MPF is, in laymans terms, screwed. They do appear to have done a lot to be fair. Sadly anything left or salvageable from the carcass will have a dent in it for their fees. By the time this is dealt with, we'll owe them money.
> 
> Actually this update 9 is just about the nail in the coffin of members hopes. How are others reading it ?




More like two or three nails, plus the earthworks being scooped on top.

My read of it is that KM aren't actually taking any fees. They are just paying the people who are putting in hours. Isn't that what they were saying? I mean, I'm skeptical that will stay that way, but that is what they said, isn't it?

My read of it is that yes any money that is recoverable from assets in the fund are either not there or negligable at best. The only hope for any recovery for investors is for LM and/or the previous trustee (FTI) to be found  guilty of something and forced to pay us. That's an expensive option, though, isn't it? And that's assuming we get a good verdict in court.

The only upside I can find in this is that KM is obviously a better administrator than was FTI. Also, it sounds like the ACI is working on something that involves refinancing the SunCorp loan. (They didn't say ACI, but they did say that SunCorp was working on something that KM doesn't know much about and there were vague references to "a group of investors").


----------



## am262327 (8 July 2013)

*Peter "I never took a loan" Drake*

After receiving an update from KM, they iterated quite clearly that Peter Drake and others took out personal loans, and demanded that they be repaid.

Look at this:

"LOANS TO RELATED PARTIES

The Fund has not lent money to Peter Drake or to any LM directors."

This is from his own freaking website.

http://www.peterdrake.com.au/news/legal-action-launched-by-lm-investment/

He publicly lied, again and again. What's ASIC doing about this?


----------



## Guitariman (8 July 2013)

Point taken re fees.

The point about SunCorp. I still don't quite understand this section about SunCorp pulling out and what that means for the huge amount of cash the MPF put in. If they want to pull out, where exactly is our money in that? Why, under all the options they gave us, do none suggest previous investors get anything? How can Drake put is in that risk? If Suncorp had wanted to pull out at any point previous to March, would the situation for us have been the same?

What I find appalling is that fees for LM and the movement of money between funds, loans etc. they have f&£ked up and still took fees. The movement of money? Is anyone else thinking what I'm thinking?

I'm not sure how recovery from LM would happen. Our money has been dispersed by now. What about the huge amounts that seem to have evaporated? The other loans seem somewhat similar. 

Drake is either a fraud or an idiot. I'm not sure which.


----------



## Guitariman (8 July 2013)

I'm not sure what FTI has to answer for. The huge movement in fees I can see happened prior to March. When LM was in control.

Also what happens if

1. SunCorp does something with the land, deal, development. What happens for us

2. These new investors. Surely that still results in previous investors getting what? 



Here's an idea Drake. 

Get 400 million in cash. Buy land, employ builders, pay salaries, build houses, lay roads, take a fee, set up sales dept, sell houses, share profits and stop claiming its more completed than that.


----------



## am262327 (8 July 2013)

Guitariman said:


> I still don't quite understand this section about SunCorp pulling out and what that means for the huge amount of cash the MPF put in. If they want to pull out, where exactly is our money in that? Why, under all the options they gave us, do none suggest previous investors get anything? How can Drake put is in that risk? If Suncorp had wanted to pull out at any point previous to March, would the situation for us have been the same?




Anyone else, correct me if im wrong: SunCorp is pulling out because they have realized that there isn't any value in the loans anymore. Yes, if they had done that before, same issue, which is one reason why this fund should never have been considered a part of a pension or fixed income or low risk scheme. As I understand it though, these sort of risks were either papered over somehow but have only come to light after the investigation which was a result of the voluntary administration.



> I'm not sure how recovery from LM would happen. Our money has been dispersed by now. What about the huge amounts that seem to have evaporated? The other loans seem somewhat similar.
> 
> Drake is either a fraud or an idiot. I'm not sure which.




Payment can come from insurance company, although as I understand it there's a 20 million limit to that, can come from Drake himself. But that's after the lawyers.

He both an idiot and a fraud.


----------



## nige (9 July 2013)

Hello all here in cyprus a facebook group(https://www.facebook.com/groups/283560518456035/ ) has been formed as the ifa refuses  to hold a public meeting he does not have professional indemnity insurance  ! This group has been formed so people who have been affected by FMA &/or LM investments can liaise and share information,knowledge, and support.please feel free to join / comment/ share with us.


----------



## am262327 (11 July 2013)

*David Whyte's Affadavit*

Very interesting reading the affadavit. 

http://u.b5z.net/i/u/10199052/f/Affidavit_10_July_2013_David_Whyte.pdf

The guy who wound up Equitrust is saying that LM is the same, and that the relationship between the different funds means that there's inevidable conflict. He's also saying that if he were apointed as RE that he would be investigating some of the same things that KM is said to be investigating.


----------



## RODENT69 (11 July 2013)

Re the most Recent LM Capital Distribution

LM/FTI  previously advised (in writing, more than once) that the WFMIF  would receive $844,695.05  as its part of the approx $4.27Mil Capital Distribution (June/July)

What actually happened is that LM/FTI paid to Trilogy ONLY $766,199.21, and surprise, surprise Trilogy passed this on in full to platforms.  As an Investor on one of those platforms I have received my pittance *today *and it calculates out at $0.009856 CPU

Investors in the FMIF and the other feeder funds CPAIF, AND ICPAIF Funds would be well advised to check to see what they are actually finally receiving as a Distribution


----------



## Loiner (12 July 2013)

*Re: LM Investment Management Limited - Receiver Appointed*

The FTI website for the funds, http://www.lminvestmentadministration.com/fmif_and_feeder_funds today reports:

_On 11 July 2013, Deutsche Bank AG exercised its rights under the Facility Agreement, appointing Joseph David Hayes and Anthony Norman Connelly of McGrathNicol as receivers and managers over LM Investment Management Ltd in its capacity as responsible entity of the LM First Mortgage Income Fund ARSN 089 343 288.

The Administrators and FTI Consulting staff are working cooperatively with the receivers and managers and their staff._

As this is for LMIL, can anyone comment on how this is likely to affect the actual funds:
1) Regarding the Voluntary Administrator FTI, already invited by LM
2) The court decision due on 15th July
3) Those bandits Trilogy, still trying to take over the funds RE position​


----------



## bigheadache (13 July 2013)

Guitariman said:


> The point about SunCorp. I still don't quite understand this section about SunCorp pulling out and what that means for the huge amount of cash the MPF put in. If they want to pull out, where exactly is our money in that? Why, under all the options they gave us, do none suggest previous investors get anything? How can Drake put is in that risk? If Suncorp had wanted to pull out at any point previous to March, would the situation for us have been the same?






Guitariman said:


> I'm not sure what FTI has to answer for. The huge movement in fees I can see happened prior to March. When LM was in control.
> 
> Also what happens if
> 
> ...




I haven't read the update you're talking about, but I'm assuming you mean Suncorp and Maddison Estate. Suncorp is the first mortgagee for Maddison estate so their reported $22m sits in front of the $250m (or whatever it was) that the MPF put in.
From the sound of it, Suncorp want their $22m back, so as first mortgagee they can put the property on the market. The risk to the MPF is that Suncorp only care about recovering their $22m so they aren't exactly motivated to try to sell it for a higher amount than $22m (beyond a "best effort" marketing campaign to try to maximise the sale). Now if you're the second mortgagee (thats you guys in the MPF), this should be concerning, hence the attempts to try and pay out the $22m owed to Suncorp and remove the risk that they sell Maddison Estate from under you. 

As hard as it sounds, I have this sinking suspicion that the MPF will get next to nothing back for their $250m they put in. At a guess, the $22m Suncorp loan was probably taken out to buy the land in the first place, and alot of the $250m put in later has probably been spent on re-zoning and townplanning, moving earth around, and without doubt a massive amount on marketing and paying off celebrities and of course capitalised interest since they wouldn't have any income to pay back the loans until sales start. None of these are tangible value adds to a property. Throw in the costs of teams of adminstrators, liqudiators, receivers, and their secretaries and assistants at $200-$500 per hour per head...


----------



## am262327 (13 July 2013)

bigheadache said:


> I haven't read the update you're talking about, but I'm assuming you mean Suncorp and Maddison Estate. Suncorp is the first mortgagee for Maddison estate so their reported $22m sits in front of the $250m (or whatever it was) that the MPF put in.
> From the sound of it, Suncorp want their $22m back, so as first mortgagee they can put the property on the market. The risk to the MPF is that Suncorp only care about recovering their $22m so they aren't exactly motivated to try to sell it for a higher amount than $22m (beyond a "best effort" marketing campaign to try to maximise the sale). Now if you're the second mortgagee (thats you guys in the MPF), this should be concerning, hence the attempts to try and pay out the $22m owed to Suncorp and remove the risk that they sell Maddison Estate from under you.




I really wish someone had put it in these terms from the beginning. I understood it before, basically, but it took me a while, but but now I really get it. I'm past being mad though, I'm actually feeling better that I understand it, because it makes sense.

Weird feeling, this.

Regarding MPF people not getting much back. If we 'refinance the loan' (meaning, pay 22m and thereby further invest in Maddison) the property itself develops out and we end up making money on the sales. But that means making a new, seperate investment. This is actually what KM wanted us to do. But, yes, we are truly and royally screwed.


----------



## RODENT69 (14 July 2013)

*Re: LM Investment Management Limited - Receiver Appointed*



Loiner said:


> The FTI website for the funds, http://www.lminvestmentadministration.com/fmif_and_feeder_funds today reports:
> 
> _On 11 July 2013, Deutsche Bank AG exercised its rights under the Facility Agreement, appointing Joseph David Hayes and Anthony Norman Connelly of McGrathNicol as receivers and managers over LM Investment Management Ltd in its capacity as responsible entity of the LM First Mortgage Income Fund ARSN 089 343 288.
> 
> ...



Loiner

Sorry   don't know who can answer your questions, but its clear that FTI have again mislead Investors. The recent Report Doc by RE - FTI - had a section on DB, where they believed the loan would not have to be Fully Repaid until  June 2014, and it also had a option to extend to 2015.  Clearly with all the court action-Tomorrow- DB want to get in first with its own receivers to get their $25 Mil back ASAP.  

Just  another good example of poor management by LM when it opted to have the loan in the first place , and then extend it .  Clearly LM has always had a cash flow problem with the FMIF they just would not admit it.  I for one would love to see the Cash Flow projections that FTI -Corbett  (26 June  Affidavit)  has done on the Assets, but of course we never will. 

Like many other investors  I hope the court makes the "right decision" tomorrow and some how these funds get would up ASAP, and Investors get back what we can and that the wind up is at the least cost to investors.


----------



## am262327 (14 July 2013)

*Re: LM Investment Management Limited - Receiver Appointed*



RODENT69 said:


> Loiner
> 
> Sorry   don't know who can answer your questions, but its clear that FTI have again mislead Investors. The recent Report Doc by RE - FTI - had a section on DB, where they believed the loan would not have to be Fully Repaid until  June 2014, and it also had a option to extend to 2015.  Clearly with all the court action-Tomorrow- DB want to get in first with its own receivers to get their $25 Mil back ASAP.
> 
> ...




It really amazes me that they haven't found anything legally wrong with these funds. What do you do when you have a cash flow problem? You try to find more investors. They did so in this case by looking for investors in the MPF. Truly amazing. If Australia can't put these people away, others will follow.


----------



## gismo (17 July 2013)

*Re: LM Investment Management Limited - Receiver Appointed*



am262327 said:


> It really amazes me that they haven't found anything legally wrong with these funds. What do you do when you have a cash flow problem? You try to find more investors. They did so in this case by looking for investors in the MPF. Truly amazing. If Australia can't put these people away, others will follow.




Unfortunately Australia has a long history of this which seems to repeat every 10-20 years. The very unpleasant side is how the principal holder(s) always seems to come out of it pretty much as clean as a whistle thanks to their careful manipulation of funds into family trusts and the like.

Regarding fees, see pages 7 & 8. KM have received $874,337 for the 8 weeks they've been working on the project (current trustees). 

On page 7 it says they are entitled to charge up to 10% of the NAV plus a success fee. LMIM (former trustee) were charging $1.63m/month for the financial year till Feb 2013. 

I'm so far satisfied with KM's management. If it weren't for them, I'm sure the previous management would have just run it into the ground soaking up income through fees till all was gone. The real shame is ASIC should have been more aware of what was going on and acted on it. It took a current affairs program (Four Corners) to bring this to the surface but all too late. Funds had been frozen for quite some time, I had been trying to get my funds out for over 2 years as I wanted to buy property but couldn't. Every time I called, LMIM said there were no problems just they had to be careful to control money out in balance with money in but payment would be made soon. They even tried to convince me to agree to a longer term with a promise of a higher interest rate! I sincerely hope KM can squeeze money (and blood) from these lying sods. In my opinion the employees who knew what was going on but kept quiet (with their very nice salaries are just as guilty).


----------



## Mysteryman (20 July 2013)

While we await the Supreme Court Judgement on the fate of the FMIF and its feeder funds, it is worth taking a look on the FTI site at the last Affidavit (15th July) submitted by John Park.

For those in the funds concerned, of particular interest are points 10, 11, 12, 13 and 19. These points address the issue brought out in the 2012 Financials for the FMIF of approx $16m of paid and payable distributions to class B unit holders and then reinvesting approx $15m back into the fund. It also makes mention of the fact that in reality only $2.4m in distributions was ever paid for that year. 

In reference to these issues John Park says in point 13:

"This is another example of a transaction that, I agree, should be investigated now that it has been (very belatedly) drawn to our attention. As with all other controversial transactions, should a conflict emerge, then we will take appropriate action - independent legal advice and, if the conflict is sufficiently acute, we will approach the Court."

I am astounded to read the words 'very belatedly' in this statement! Where has he been for the last 3 months? He is, after all, one of the administrators of the fund and the issue was there for all to see in the 2012 Financials and highlighted by Ernst and Young in their audit of the Financials. It is truly alarming that a Company that seeks to gain control of the fund in the supposed best interest of investors has only just become aware of these transactions. Heaven help us if this is the quality of their administration and I hope the Judge picks up on this and removes their control.

I also wonder why this issue has only just been brought out, in a last minute affidavit to the court. Can it be that FTI fear losing the administration and so want to appear very responsible by bringing this issue to the attention of the Judge, thus hoping she will award control to FTI to sort this out before the wind up! 

In fact, this issue could have been addressed by FTI long ago, when they were first appointed. It has been brought to their attention by at least one investor that I know of and probably by many more. It has also been very thoroughly addressed by ASICK (who has since been silenced) on this forum.


----------



## am262327 (25 July 2013)

*It's been a week!*

Anybody have any clue why it's taking so long for the judge to give her opinion on this case?


----------



## RODENT69 (26 July 2013)

*Re: It's been a week!*



am262327 said:


> Anybody have any clue why it's taking so long for the judge to give her opinion on this case?




The latest info available is on the LM website, under  FMIF .  Having already asked FTI  how long it may take they only said it could take some time as Judge had a lot of material to consider (refer Affadivits)  I guess we will just have to wait and hope the Judge  makes the best decision for ALL INVESTORS


----------



## Mysteryman (29 July 2013)

Interesting article Sydney Morning Herald today.

http://www.smh.com.au/business/lm-fund-gave-loan-to-drake-20130728-2qsnp.html


----------



## Mysteryman (29 July 2013)

Looks like another court hearing at 9am tomorrow - Wednesday - at Supreme Court Brisbane. Could this be the judgement? Thought FTI were going to let us know on their website but typically, investors not informed. Why am I surprised?


----------



## am262327 (30 July 2013)

*FTI have been busy*

On the back of the depressing news that Drake took a personal loan in March just as the finances were drying up (again, I ask, what is ASIC doing about this!), I hope this court case takes us from the financial side of the story to the brazen criminal one.


----------



## Guitariman (30 July 2013)

Someone arrest this SOB


----------



## Mysteryman (30 July 2013)

More dirt and bad news being unearthed-

http://www.brisbanetimes.com.au/bus...ns-before-client-earnings-20130730-2qw7z.html


----------



## scc (2 August 2013)

Another article that some may be interested in reading, from today's Gold Coast Bulletin.

http://www.goldcoast.com.au/article/2013/08/02/455689_gold-coast-news.html


----------



## Loiner (2 August 2013)

_"... the collapse of the company cast serious doubts on Australia's reputation as a safe haven for investment."_

Not just this cowboy outfit, but so many others too. It's only when you delve into what has been going on with the Gold Coast dodgy developers that you find out that this type of thing has been going on for years.
Shame on the Aussie government and ASIC for allowing it, and shame on the IFAs who were a party to it.

_"...Drake gave himself a $26 million loan before his funds empire collapsed... possibility of untoward activity, saying payments of $157,750 were made to a Hong Kong bank account...  "Peter Drake may have withdrawn some of those funds personally" ...$333,048 had been transferred from LMA to a Fiji bank account..."_

Sounds like Wishee Washee's Chinese Laundry has been busy.

_"FTI said it also had uncovered evidence the company may have traded while insolvent and that some LMIM directors may have committed offences prior to their appointment."_

It's about time they all had their collars felt. But who's going to do it - the Aussie Feds? Go get 'em boys.


----------



## am262327 (3 August 2013)

*Gov't Bailout?*



> The Aussie Feds? Go get 'em boys.




Seeing as though this story is getting a lot of attention in the public, and also seeing as though the financials of this story has pretty much played itself out (or nearly out), I would like to put something out there.

What are the chances of the Australian government taking notice of this problem? LM was a high profile company, the MPF was its flagship, and it has turned out that the optimistic narrative is that they epicly mismanaged the funds, the pessimistic one is that Drake and his Directors are fraudsters.

Yes, I'm asking a serious question, because under either of those two options the gov't is the biggest loser in this.

Because, if this sort of thing happened in my country, the USA, this would get a lot of play from politicians. We also went through a period where oversight was lacking, to say the least, and we bailed them out when the bubble popped. This isn't exactly a bubble popping, but it's worse, because, from where I'm sitting, I should never have been able to buy from MPF.

I'm not an Australian citizen, so I'm not subject to its securities laws. The MPF is not regulated, so it's not subject to any securities laws. By the way, if any of those two statements are incorrect, do tell me.

I mean, this is a crazy story. Why aren't politicians out there taking advantage of it? What's in it for them?


----------



## bigheadache (3 August 2013)

*Re: Gov't Bailout?*



am262327 said:


> What are the chances of the Australian government taking notice of this problem? LM was a high profile company, the MPF was its flagship, and it has turned out that the optimistic narrative is that they epicly mismanaged the funds, the pessimistic one is that Drake and his Directors are fraudsters.
> 
> Yes, I'm asking a serious question, because under either of those two options the gov't is the biggest loser in this.




I'm not sure what you expected the government to do here.
If its fraud, the auditors signed off on all the accounts. How are the rest of us supposed to know if fraud is going on or not if all of the auditors are happy to continually tick the box.
If its incompetence, well you can't ban incompetence. If you could, 66% of CEOs and 90% of politicians would be out of a job.



am262327 said:


> Because, if this sort of thing happened in my country, the USA, this would get a lot of play from politicians. We also went through a period where oversight was lacking, to say the least, and we bailed them out when the bubble popped. This isn't exactly a bubble popping, but it's worse, because, from where I'm sitting, I should never have been able to buy from MPF.
> 
> I'm not an Australian citizen, so I'm not subject to its securities laws. The MPF is not regulated, so it's not subject to any securities laws. By the way, if any of those two statements are incorrect, do tell me.
> 
> I mean, this is a crazy story. Why aren't politicians out there taking advantage of it? What's in it for them?




I'm not sure what you are talking about here. The USA has never bailed out an investment fund. They have bailed out banks and insurers before, but its usually on the grounds that letting a bank or insurer fail would lead to system failure because of all the counterparty exposures they have with each other. In most of those cases, the shareholders got wiped out.

As for you should not have been able to invest in the MPF... while I don't think ASIC is blameless, I think you're largely barking up the wrong tree. LM has always had a very focussed business model that was centred around the financial planner market. Unlike say MFS, LM does not take money from mums and dads directly. If you had money with LM, then your financial advisor put you there. You should be asking your financial advisor questions like:
1. Why have you invested my money in a small mortgage fund manager in the Gold Coast that no one has ever heard of. 
2. Why would you put my money in MPF when LM's flagship, the FMIF, was frozen back in 2009 and is a sorry basket case? 
3. What independent research did you do on LM? 2 day conferences to the gold coast paid for by LM to watch a powerpoint presentation don't count as independent research.
4. What self respecting professional fund manager pays 1%+ trail commissions to advisors?  that's the kind of shenanigans you used to get in the agribusiness sector.


----------



## am262327 (4 August 2013)

*Re: Gov't Bailout?*

Thanks for putting up with my naÃ¯vetÃ©. You're right.


----------



## DUBAI (5 August 2013)

*Re: Gov't Bailout?*

The investors of the LM Performance Fund need to band together and write to the
  Australian Prime Minister and state that the Australian government needs to bail us
  out. 
  I am writing from Canada and the Canadians authority and the Canadian Press will
  definitely be informed and pressure will be put on Canadians from not investing in Austalia
  especially the Ontario Teachers Pension Fund and all other pension funds.

  I can't believe that Drake and the other Directors are not in jail for fraud???


----------



## Guitariman (5 August 2013)

*Re: Gov't Bailout?*

No offence DUBAI, but you need a reality check. That's not going to happen.

There is no doubt this is a disaster and Drake needs to be spoken to by the authorities. No doubt  that we have been cheated out of our money by an idiot or a conman. By someone who has shafted us all and who may well get away with it. If those money movements to bank accounts here and there are true, well, you don't need me to tell you how that will stick in my throat, probably for the rest of my life.

I'm not sure who is going to help us. We have been shafted my friend.

So where are you now Mr Drake? I mean haven't you got the balls to say something as we stare financial ruin in the eye? Are you spending my money as we speak in Fiji or wherever the f*&k you have scurried off to.

Do you realise you have destroyed, I mean DESTROYED people?


----------



## bigheadache (5 August 2013)

*Re: Gov't Bailout?*



DUBAI said:


> The investors of the LM Performance Fund need to band together and write to the
> Australian Prime Minister and state that the Australian government needs to bail us
> out.
> I am writing from Canada and the Canadians authority and the Canadian Press will
> ...




No offence, but that's a pretty stupid post. Would you stop investing in the US because they had Bernie Madoff?

And Australian taxpayers aren't going to bail out an investment fund, especially one that doesn't even have a PDS registered in Australia. Its not a government guaranteed investment. If you wanted a guarantee you should have put your money in a bank term deposit here. They were guaranteed during the GFC.


----------



## Loiner (5 August 2013)

I wouldn't invest in the US precisely because I have heard about Bernie Madoff and his Ponzi scheme. I don't trust the US stock market, the US banks, or any US financial institution anyway.
I also wouldn't invest in land banking in Canada as suggested by my IFA. A title deed to a patch of tundra could easily be worth about a much as a nice plot on the moon. 
I also wouldn't become involved with Multi-Level-Marketing, Pyramid Sales or Timeshare investments. That's because we have long been warned about all of these schemes as rip offs.

The issue must be that the level of bad publicity as got to be raised, to warn other gullible fools (or "unsophisticated investors" in the trade) to not risk investing in Australia in general, Gold Coast property in particular, and unregulated mismanaged funds especially. The whole world should be warned about the high risks involved here, but nobody had done prior to LM's collapse and nobody is doing yet. LM, the IFAs, and the Aussie authorities kept it all quiet and are still largely ignoring the issue. Why did it take from mid-2008 until March 2013 for something to happen, while MPF investors were still being conned?

Although the funds and financial services claim to be heavily regulated,  it's pretty obvious that ASIC are totally useless. How did they permit this whole sorry mess to carry on for so long, then explode and melt down? I agree there is no hope of the Aussie taxpayers bailing out an investment fund and there were no guarantees, but there should still be some serious ramifications to come out of this.

Many investors are expats, just looking for a safe investment somewhere for something that would out perform cash rates. But remember that the majority of early investors were Aussie & Kiwi retirees. The FMIF and it's feeder funds were regulated funds under ASIC rules, and were pushed by LM and their IFAs as very safe and regulated "just like a bank". There are thousands of those Australian investors, with their 'Super' and pensions now gone, who have also been stung by Drake & Co. If they were more vocal and received more publicity, with support from Aussie politicians, perhaps there could be at least some action to sort out the broken Aussie financial system and the sharks swimming in it.


----------



## myassisfried (6 August 2013)

Well that is half the MPF assets gone forever.

Everyone say "goodbye Maddison"!

http://www.goldcoastbusinessnews.com.au/article5618/SUNLAND SNARES MADDISON DEBT.html


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## am262327 (6 August 2013)

myassisfried said:


> Well that is half the MPF assets gone forever.
> 
> Everyone say "goodbye Maddison"!
> 
> http://www.goldcoastbusinessnews.com.au/article5618/SUNLAND SNARES MADDISON DEBT.html




I'm not sure what any of that means, does anybody else?


----------



## myassisfried (7 August 2013)

am262327 said:


> I'm not sure what any of that means, does anybody else?




Suncorp have sold the title deeds for Maddison, as first mortgagee they got their dosh back, as second mortgagee, the MPF fund investment of say $250m is and always was worthless hence my comments.

If I am reading this wrong then please put me right.

The MPF Fund has no assets that are worth anything of real value, certainly  nearer $500 than $500m!

Kordamentha and FTI will be the only winners in this debacle.


----------



## bigheadache (7 August 2013)

Suncorp sold their loan, not the title deed. According to the  weekend newspaper Sunland paid less than 80c in the dollar, so let's say $17.6m for the $22m reported face value. If Sunland take possession of the property and sell it, they would be entitled to the first $22m + expenses with MPF getting anything above that. 

It can't be a good sign for the valuation of Maddison estate if Suncorp are supposedly in the box seat and still willing to take a 20% loss just to get out. Ideally you'd want the second mortgagee (MPF) to take out the first mortgagee to protect their position and maximise a return by further developing the property. However, can you imagine the cheek of a financial adviser going back to their client and asking for more money to put in the MPF.


----------



## Loiner (7 August 2013)

bigheadache said:


> However, can you imagine the cheek of a financial adviser going back to their client and asking for more money to put in the MPF.




Nice 'tongue in cheek' comment.
They have already done that, for a whopping 10 to 15% of your investment more!

For anyone who has not heard of the ACI (Advisor's Committee for Investors), they're here for another bite at the cherry.


----------



## myassisfried (7 August 2013)

bigheadache said:


> Suncorp sold their loan, not the title deed. According to the  weekend newspaper Sunland paid less than 80c in the dollar, so let's say $17.6m for the $22m reported face value. If Sunland take possession of the property and sell it, they would be entitled to the first $22m + expenses with MPF getting anything above that.
> 
> It can't be a good sign for the valuation of Maddison estate if Suncorp are supposedly in the box seat and still willing to take a 20% loss just to get out. Ideally you'd want the second mortgagee (MPF) to take out the first mortgagee to protect their position and maximise a return by further developing the property. However, can you imagine the cheek of a financial adviser going back to their client and asking for more money to put in the MPF.




Pretty much the same thing, they are now in control, the MPF fund is irrelevant to what they want to do.

A second mortgage of $250m or thereabouts, whoever thought that was a good business venture?

Unless it was just about getting your hands on the money, anyone's guess really!


----------



## Loiner (8 August 2013)

*Re: LM Investment Management  -  Drake Cashing In?*

Drake's beach hut is to be auctioned off, according to this link:

http://www.goldcoast.com.au/article/2013/08/06/455858_gold-coast-news.html 

I wonder who put it there and where the proceeds will go? Is there a mortgage on this property from LM?

Would hate to see Drake come back and buy it cheaper at auction, probably with the loan he ran off with shortly before the collapse. Seen similar things happen before......


----------



## Carlosdanger (8 August 2013)

So you can all see the debacle that LM has turned into and who is literally feeding off the carcass, you can read it here in the Supreme Court judgement handed down today: 

http://archive.sclqld.org.au/qjudgment/2013/QSC13-192.pdf

Summary?

Trilogy didn't get the job because it manages things - not winds them up and a winding up is what is needed.

FTI and their lawyers were treated very unkindly - and it is very unusual for such comments to be made by a judge about people who are known as officers of the Court.  A few of the harsher ones:-

Para 86 'In my view it is plain that calling the meeting was a tactic by the first respondent which had the aim of seeing off its rival for control of FMIF.'

About the meeting in para 87 'I cannot understand why a responsible entity acting solely in the interests of members would not attempt to accommodate or moderate its position in light of those arguments and the objective facts.'

In 89 'in my view the conduct of the first respondent in this litigation was combative and partisan in a way which I see as reflective of the administrators acting in their own interests to keep control of the winding-up of the FMIF, rather than acting in the interests of the members.'

Paras 90, 91 and 92 ending with 'It seems an extravagant use of members‟ funds' on an affidavit 

Para 94 on the lawyers work that 'was little more than combative and querulous commentary on the litigation.'

Para 95 which includes this gem 'Ms Muller‟s affidavit ... is characterised by the sort of sniping and argumentative passages which one would hope not to find in any affidavit, let alone an affidavit of someone who is an officer of the Court and a trustee acting on behalf of others'

Para 116 'I do not have confidence that the administrators would adequately identify and deal fairly with conflicts if they were to arise.'

And at least there might be something in it for unit holders at para 128

'Fees to date have not been charged, but it is sworn that as at 27 June 2013 the administrators propose to charge the fund $960,756 and an unspecified part of $1,174,399 they have notionally charged to the first respondent company. There is nothing to show what has been achieved for those proposed charges. The administrators accept their charges must be approved by the company or the Court. I very much doubt that most of the costs of the 13 June 2013 meeting would be approved as necessary and appropriate and I have doubts as to some of the costs of this litigation.'

and David Whyte was appointed.

What an unmitigated disaster this thing is.


----------



## bigheadache (8 August 2013)

Well you gotta hand it to FTI. Its not often you see an administrator get smashed twice in the supreme court for the same gig, first Chief Justice de Jersey in the MPF case and now Justice Dalton in this case. Well done. 

Carlosdanger, thanks for the cliffnotes version.


----------



## Garpal Gumnut (9 August 2013)

This little beastie's mortgage fund is finally to be wound up.

http://www.international-adviser.com/news/products/queensland-court-orders-wind-up

A timely reminder to all ASF members to always avoid any entity with any of the following words " First " "Mortgage" "Income" or "Fund", in it's title, unless it is ASX listed and can be sold with the flick of a mouse.

gg


----------



## myassisfried (12 August 2013)

http://www.dailyrecord.co.uk/news/scottish-news/expat-property-investor-insists-hes-2151284

Read about he losing investor http://cyprusscene.com/2012/10/20/5940/


----------



## bigheadache (13 August 2013)

10% commission eh? ... that guy has some serious balls to get in the press and try to make out as if he's a victim. Clearly didn't do any homework whatsoever given his lack of understanding on what LM actually invests in. Lending to property development has never been considered low risk. 

the amazingly dumb thing about the MPF is that it lent to second mortgages (over 80% of the book). if anyone here wanted to get a second mortgage on a construction deal you'd be charged 12%-18%+ by a proper financier. LM was actually averaging 17%+ across the portfolio, yet MPF only ever paid investors under 10%. Obviously the financial advisers involved didn't care about who was pocketing the difference as long as the commission cheques kept coming.


----------



## am262327 (13 August 2013)

bigheadache said:


> 10% commission eh? ... that guy has some serious balls to get in the press and try to make out as if he's a victim. Clearly didn't do any homework whatsoever given his lack of understanding on what LM actually invests in. Lending to property development has never been considered low risk.




If this group that is gathering, putting in the commission money to get our money back, really wants to prove that they're serious about getting all our money back, would publish a nice spec sheet showing exactly how much this all is. As I understand it, it's outstanding commissions, not those already paid out, that have been signed away to the lawyers... Soooo.... How much money is this anyway, compared to the commissions they already raked in? 

That article makes it sound like he put all the money he ever made. I would rather doubt that. But if they did, just publish a sheet that says so.

- - - Updated - - -



bigheadache said:


> 10% commission




Are you freaking kidding me TEN BLOODY PERCENT UPFRONT!!!!!!


----------



## myassisfried (14 August 2013)

am262327 said:


> If this group that is gathering, putting in the commission money to get our money back, really wants to prove that they're serious about getting all our money back, would publish a nice spec sheet showing exactly how much this all is. As I understand it, it's outstanding commissions, not those already paid out, that have been signed away to the lawyers... Soooo.... How much money is this anyway, compared to the commissions they already raked in?
> 
> That article makes it sound like he put all the money he ever made. I would rather doubt that. But if they did, just publish a sheet that says so.
> 
> ...




That's what the "IFA" said when interviewed see http://www.dailyrecord.co.uk/news/scottish-news/expat-property-investor-insists-hes-2151284

As in my post above.


----------



## bigheadache (15 August 2013)

FTI cop a bit of a roasting in the paper.

http://www.theage.com.au/business/insolvency-duo-raking-it-in-20130814-2rwto.html

it's a real shame that in this whole saga, no one has tried to sell the fund to another "good" mortgage fund manager who could have done a better job. this would give investors another option over winding up the fund in a fire sale (Not necessarily saying its a better option but it would have been an alternative to put on the table). I advocated this back in March when FTI got appointed 

i know ASICK has been on his personal crusade about Trilogy (which is fair enough and I never advocated them), Wellington haven't exactly done a stunning job with MFS, but there are mortgage fund managers who didn't "F up" during the GFC. Sandhurst and La Trobe financial run mortgage funds that never froze. If you read the financial press, La Trobe has been buying other mortgage funds and made a play for Banksia assets. Investors in the Perpetual Mortgage trusts didn't lose any money. they've already got 90% of their cash back from the frozen fund. What have LM investors got back? For FMIF nothing. For MPF, a kick in the teeth from the likes of the ACI by the look of it. There's no guarantee that anyone who has any skill would have said yes. Maybe LM is such a dog that no self-respecting fund manager would approach it. But at least open a data room, invite them in and ask the question. FTI have charged $3.2m for their time so far, and they've done nothing for that money apart from spending time arguing with Trilogy and Piper Alderman.


----------



## am262327 (15 August 2013)

bigheadache said:


> But at least open a data room, invite them in and ask the question. FTI have charged $3.2m for their time so far, and they've done nothing for that money apart from spending time arguing with Trilogy and Piper Alderman.




Interesting point, but it seems to me the wider the door gets opened the more of a dog it seems. I do miss ASICK.


----------



## RODENT69 (20 August 2013)

Information for LM WFMIF investors

Trilogy has just placed some information on its Website regarding the recent court decision and how it may effect investors in the Wholesale FMIF, where Trilogy is still the RE

The  update information is dated 15 Aug 2013   

As an Investor in the WFMIF  I am comfortable that the WFMIF will be wound up by BDO .   

DB, through its Receivers (as a secured creditor) will get their monies back first. With the wind up of the FMIF   the Feeder Funds investments in the FMIF will also in effect be wound up. We all know that this is going to take some time, FTI had estimated approx 3 years.

As an investor who opposed its Platform BT/Asgard, making the decision to replace LM with Trilogy months ago  I am now in the position that  I will be receiving even less than a Direct Investor in the WFMIF, as both BDO and Trilogy will in effect take a Fee  for their work, and I am certainly not happy about Trilogy still being in the process.

If others invested in the WFMIF are concerned about this likely outcome you should voice your concerns with both Trilogy and your Platform provider.   I doubt that any investor will get back very much from their already greatly reduced investment value  (officially at $0.59) - despite other figures often being mentioned

Looking at what happened to Equititrust,  with BDO as receivers, the Unit Price went from a written down $0.44  down further to $0.13 @ July 2013 while the fees charged by BDO were $1.53Mil plus GST, for 17 months 

I am advised that BDO will have its own dedicated website as the information resource for Investors in the WFMIF, and they will post regular Investor updates on that site


----------



## scc (20 August 2013)

In today's Gold Coast Bulletin FYI.
http://www.goldcoast.com.au/article/2013/08/20/456689_gold-coast-business.html


----------



## Mysteryman (20 August 2013)

Rodent69

Have just read the update put out by Trilogy and am amazed to read that Trilogy considers the FMIF to be a SOLVENT fund. They must be living in cloud cuckoo land. According to my trusted dictionary, SOLVENT in accounting terms, means able to pay all debts and liabilities! 

It is quite obvious that the only way FMIF can pay all its debts and liabilities is by selling its assets and this does not constitute a solvent fund. From where I stand in the WFMIF, the FMIF still owes me declared unpaid interest distributions from May 2010 to December 2010, not to mention giving me back all my capital. So if the fund is so solvent, I should be getting these fairly soon, shouldn't I???

I agree with you Rodent69. I am not at all happy about having to pay additional fees to Trilogy over and above what investors in the FMIF will pay. All thanks to various platforms under the control of BT who, in their wisdom back in November 2012, voted on our behalf, without consulting us the investors, to change our RE to Trilogy. We now have them to thank for the additional fees we are paying for no extra service whatsoever. BT reckon it was done 'in the interest of all investors' in the WFMIF. How do they work that out? I have not gained one advantage except to pay additional fees which is a distinct DISADVANTAGE. 

So BT, how about doing the right thing and either removing Trilogy's control or volunteering to pay the extra fees we have incurred through your stupidity.

Would be good if other WFMIF members voiced their opinions on this forum, regarding the extra fees under Trilogy.


----------



## bigheadache (20 August 2013)

Sounds more like tricky wordsmithing by Trilogy to me. I think the Fund is technical solvent. They probably argue that it is within the powers of the constitution to freeze distributions/redemptions so I don't think you could use those to argue they are insolvent. Solvency is a powerful term in legal language. It is illegal to trade while insolvent so if you are calling someone out as insolvent, you're basically saying they are breaking the law. 

I think what you mean is that the fund is illiquid under the corps act rather than insolvent. the issue with the fund is liquidity, rather than solvency. if they were liquid, they could start processing payments.

Back on topic, I'm not sure how much blame you could attribute to BDO. At the end of the day, if you have a liquidator or receivers auction, let's face it - everyone lowballs.  It makes life hard for liquidators to get good recoveries unless they are quality assets with competitive bidders. And bear in mind, the Fund is likely to be either full of rubbish assets in the first place or alternatively, there are some real "pie in the sky" valuations attached - arguably if they were any good the Fund wouldn't be in this position.


----------



## Mysteryman (20 August 2013)

bigheadache said:


> I think what you mean is that the fund is illiquid under the corps act rather than insolvent. the issue with the fund is liquidity, rather than solvency. if they were liquid, they could start processing payments.




Well I would say they are insolvent and illiquid. According to Trilogy's own words in various emails, these interest distributions which were declared and unpaid back in 2010 and 2011 tax years are liabilities to the fund. Their words not mine originally. We were even taxed on them in those years although the payments have never been received. Trading while insolvent? - who knows. What does trading amount to? - the fund was frozen since March 2009 with no money in and no money out. What does trading mean for a fund?

Anyway, it is definitely a fund in need of receivership, so I am happy with the court verdict. Frozen for 4.5 years and no income to investors for over three years. Judging by the amount of capital that people have requested to cash out since 2008, a large number of investors  want out. Most are retirees who need the money. They have done without income from it for long enough and have no interest in going for years more with no income. I, for one, feel that way. Not that I am happy about the fees we may pay in the process, especially the Trilogy addition.


----------



## bigheadache (20 August 2013)

Mysteryman said:


> Well I would say they are insolvent and illiquid. According to Trilogy's own words in various emails, these interest distributions which were declared and unpaid back in 2010 and 2011 tax years are liabilities to the fund. Their words not mine originally. We were even taxed on them in those years although the payments have never been received. Trading while insolvent? - who knows. What does trading amount to? - the fund was frozen since March 2009 with no money in and no money out. What does trading mean for a fund?




Trading for a fund would mean, still charging mgt fees, still incurring expenses like getting valuations, paying audit fees, publishing monthly updates, etc, etc. i'm not here to say they are solvent or insolvent. the liquidators make that accusation. 

I suspect that they aren't insolvent, just illiquid. Why? The only debts the Fund has are the loan to Deutsche. Deutsche didn't call in the receivers until much later. I don't count the distributions as debts because most trust constitutions allow REs to freeze redemptions and change distributions. And besides that, "distributions" are really the equivalent of a distribution of "profits" to the owners (ie the unitholders). If you look at the unit price (when things are normal), they accrue income during the month and only when you get paid does the unit price drops back to $1. Therefore "technically" you haven't lost any value by not receiving your distribution.  (If you don't believe me, download the daily unit price history). of course, in this case its kind of moot because they have remarked the unit price down and the Fund is illiquid to investors.


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## RODENT69 (21 August 2013)

Dear bigheadache, and Mysteryman

The interchange is interesting  and I could easily agree with many comments from both of you in your most recent postings

From my perspective the FMIF was and now still is ILLIQUID-   I am sure you will  both agree?
So is it - to use Trilogy's word SOLVENT -  my view is NO it's not
I believe Trilogy used that word, more than once  to make a point, the points being that THEY believed the LM fund was SOLVENT   -  what total and utter BS-   If that were TRUE then I and may other investors who applied for a Redemption as far back as July 08 would have been satisfied and/or distributions would have continued to be paid, neither of these things happened.

They also used SOLVENT to describe them selves as a SOLVENT RE, where they MAY be referring to themselves as "Trilogy"  or were they attempting to say we Trilogy as the RE for the WFMIF  we are SOLVENT-  makes me wonder

Quite frankly all they are going forward is another leach in the process, draining whats left of my money!!

bigheadache-  not sure why you write about the Daily UP, as far as the LMFMIF it has NEVER varied EXCEPT when LM did a REVIEW and down graded the UP . To say that "Technically" we haven't LOST any money/distributions is simply not correct, and is not supported by the actual evidence.  

Have a read of past postings to see what I mean-   In case you are not fully aware some direct  investors in the FMIF have actually been receiving Distributions in recent years when OTHER investors in the Feeder Funds ie WFMIF have NOT received these SAME distributions, so the reality is we HAVE actually really lost money, certainly compared to other LM investors

And to finish UP  the TWO most recent so called "Capital Distributions" paid via FTI  were paid as Capital to FMIF investors BUT investors in the WFMIF received these as catch up INCOME distributions after additional Fees were deducted by TRILOGY as the RE-  some much for fairness and equity


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## bigheadache (21 August 2013)

RODENT69 said:


> bigheadache-  not sure why you write about the Daily UP, as far as the LMFMIF it has NEVER varied EXCEPT when LM did a REVIEW and down graded the UP . To say that "Technically" we haven't LOST any money/distributions is simply not correct, and is not supported by the actual evidence.
> 
> Have a read of past postings to see what I mean-   In case you are not fully aware some direct  investors in the FMIF have actually been receiving Distributions in recent years when OTHER investors in the Feeder Funds ie WFMIF have NOT received these SAME distributions, so the reality is we HAVE actually really lost money, certainly compared to other LM investors
> 
> And to finish UP  the TWO most recent so called "Capital Distributions" paid via FTI  were paid as Capital to FMIF investors BUT investors in the WFMIF received these as catch up INCOME distributions after additional Fees were deducted by TRILOGY as the RE-  some much for fairness and equity




You are right. It completely slipped my mind that many investors are in fixed term 12 month retail funds, which have always used a $1 unit price. I only look at wholesale rates and the wholesale fund is the one that starts the month at $1.00 and runs up to about $1.0035 at the end of the month. After your $0.0035 of distribution is paid, it jumps back down to $1. (Of course I'm talking about back before the fund was screwed). Apologies for the confusion.


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## scc (24 August 2013)

http://www.international-adviser.com/Profiles-and-Analysis/Analysis/lm-investments-peter-drake-breaks-silence

Peter's answer to ACI. I understand there is also an interview with Peter in today's Gold Coast Bulletin, which is unfortunately not online. So not sure if they are the same.


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## Mysteryman (24 August 2013)

A statement from Mr Drake:

http://www.international-adviser.co...sis/lm-investments-peter-drake-breaks-silence

He will do anything for his investors apparently! How about giving us back all our money!


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## am262327 (25 August 2013)

*Headliners*

The copy for that article could be:

Drake claims he's so good, without him, funds lost

or

Fund loss because no Drake, says Drake


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## RODENT69 (28 August 2013)

More B.S.  from Drake, the man is a complete and utter fraud

Drake breaks silence about LM  by Jenny Rogers  Gold Coast Bulletin   - need to Google it


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## nordrum (3 September 2013)

Just wanted to give a warning to LM investors from my horrible Equititrust experience.

When you see these names be very very careful if you want to see any of your money

Amanda Banton, David Tucker, David Kennedy, David Whyte.

These guys turn up beyond coincidence at distressed funds and as far as I can tell the outcome is always the same. Lots of promises but in the end you only get left with empty pockets.

Hope you all do better than we did.


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## Mysteryman (7 September 2013)

Can you believe this?

http://www.smh.com.au/business/lm-boss-peter-drake-ploughs-a-loan-furrow-20130906-2tavo.html


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## myassisfried (7 September 2013)

Can you believe this......................

http://www.dailyrecord.co.uk/news/scottish-news/expat-property-investor-insists-hes-2151284

Supposedly £11.5 million pounds now, 180 people, now it's 130 people, the figures change like the weather. 

Around 5% of the whole MPF fund was placed there by this one IFA alone (based upon his own figures)!

Frightening statistic when you think about though isn't it, 5% of the whole MPF fund from one source!


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## No Trust (16 September 2013)

*Nordrum*

Just wanted to give a *warning* to this thread about the so called poster Nordrum...

https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=171

Please refer to posts #*3401 - 3404* and make up your *own mind*.

Please also refer to

https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=170


As a poster on the Equititrust thread for over *3 years *I believe David Whyte is doing an *excellent job *with the Equititrust disaster which Mark McIvor created.


The *only guy *who left investors with empty pockets is the now *bankrupt loser *Mark McIvor


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## am262327 (17 September 2013)

That Equitrust thread is such an interesting read. Seems like Nordstrum is this McIvor chap.

I dare Peter Drake to come into this forum. What, Peter, too afraid of us "sophisticated investors" who can afford those financial advisors... oh wait, no YOU paid them those handsome commissions, didn't you?


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## No Trust (17 September 2013)

Yes it does seem like McIvor doesn't it... Being the *gutless coward* that he is he wants to pretend its not him...

Hope Drake takes up the challenge... Don't hold your breath...




am262327 said:


> That Equitrust thread is such an interesting read. Seems like Nordstrum is this McIvor chakp.
> 
> I dare Peter Drake to come into this forum. What, Peter, too afraid of us "sophisticated investors" who can afford those financial advisors... oh wait, no YOU paid them those handsome commissions, didn't you?


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## am262327 (21 September 2013)

*Going Public*

So I've decided to go public:

http://mistermorris.com/blog/life-is-unfair-fundamentally/


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## am262327 (27 September 2013)

*Ding dong*

http://www.asic.gov.au/asic/asic.ns...founders passport freezes assets?opendocument

So glad to see ASIC taking some action!


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## No Trust (28 September 2013)

Today's Gold Coast Bulletin, looks like ASIC have grounded Drake...


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## am262327 (28 September 2013)

No Trust said:


> Today's Gold Coast Bulletin, looks like ASIC have grounded Drake...




Any guesses as to why they are allowing the sale of his home to preceed? Isn't that his most valuable asset?


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## Mysteryman (28 September 2013)

am262327 said:


> Any guesses as to why they are allowing the sale of his home to preceed? Isn't that his most valuable asset?




Could it be because he has a mortgage on it?


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## Carlosdanger (29 September 2013)

Mysteryman said:


> Could it be because he has a mortgage on it?




They are freezing the sale proceeds in a trust account.  So he wont access it. yet


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## am262327 (29 September 2013)

Carlosdanger said:


> They are freezing the sale proceeds in a trust account.  So he wont access it. yet




Am I mistaken when I remember reading that the money goes to his laywers? Or, is that the actual trust account?


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## bigheadache (17 October 2013)

Anyone see the second BDO letter 15 Oct? 27 cents in the dollar for the FMIF. I suppose that's still better than the <5 cents in the dollar the MPF investors are looking at.


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## Invstr (17 October 2013)

bigheadache said:


> Anyone see the second BDO letter 15 Oct? 27 cents in the dollar for the FMIF. I suppose that's still better than the <5 cents in the dollar the MPF investors are looking at.




Yep seen it. That valuation isn't final though, apparently. Its likely to be revised, or so I gather from the letter. Hopefully a bit more, most likely a lot less...


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## RODENT69 (22 October 2013)

As investors in the FMIF  and/or its feeder funds do fellow investors share my concerns re the latest Investor update from BDO

Specifically the estimated return of APPROX 27c in the $  based on a $185 Mil  that may be realised

It needs to be remembered that as at June 2012 the FMIF was valued and Audited at $343,976,757  comprising 488,787,330 UNITS on issue   this figure produced a  figure of 59 CPU. I can fully understand that the value of the fund , based on a SALE would be lower however I don't believe it should be that low. As investors under LM and where FTI was and still is involved, we were promised that we would be advised of the latest VALUATIONS, of course this NEVER happened, so we are in the dark about the true valuations of the funds investments.  

Clearly any so called Valuations were NEVER EVER a true reflection of the Asset value of the particular sites involved

The figures for the FMIF asset values as at 30th June 2011 were $454,724,799  with  476,355,743 UNITS 

LM  and its Directors  and Auditors told us the fund was a going concern in 2011 and 2012, nothing could have been further from the truth.   Based on the results for BDO  as receivers for EQITITRUST I very much doubt we investors will every receive anything like 27 cents in the Dollar from our Failed Investments, I believe it will be much less.  At the same time BDO will receive  $2.1Mil to $2.8Mil in fees (estimated) until the fund is wound up.

If FTI is successful in appealing the Judges decision to appoint BDO who knows what will happen going forward

If BDO  -David Whyte really believes the so called value of the fund is ONLY $185 Mil then he must immediately advise investors of the new corresponding CPU figure  (27 Cents ) so that Investors who are Age Pensioners can advise Centrelink of a revised Asset value for these FAILED investments

Also BDO  needs to indicate to Investors when Capital repayments may commence, how much this/these may be and how often this will occur.


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## bigheadache (23 October 2013)

Given they had Peter Drake's $7.35m house reportedly valued at $37m at one stage (and $20m earlier in the year), I'd say 27c in the $1 is entirely in the realm of possibility. Actually, a finger in the wind has the potential to be more accurate than their valuers at this stage.


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## vjohn (5 November 2013)

Volunteers have established The LM Investor Victim Centre, a public call for investor unity in our struggle against the culprits of the LM Fiasco.

The Centre is at

https://sites.google.com/site/lminvestorvictimcentre/


Please take a look and, if so inclined, support the goal of a 'Fair and Just Resolution for LM Investors' by providing a few basic details.

Victor John.


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## RODENT69 (27 November 2013)

For Investors in the FMIF

It is my understanding that the Third Investor report by BDO will be available by the end of this week. Hopefully it will contain some useful info re Asset Values and resultant CPU figures


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## RODENT69 (5 December 2013)

The third BDO investor report  about the LMFMIF is now available on the BDO  website, it makes very depressing reading!!!


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## dinga (5 December 2013)

RODENT69 said:


> The third BDO investor report  about the LMFMIF is now available on the BDO  website, it makes very depressing reading!!!




After having struggled for what seems a very long time, a suggestion -please make it easier by including the link.....

http://www.lmfmif.com/wp-content/uploads/2013/12/2013-12-04-LMFMIF-Third-Report-to-Investors.pdf


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## RODENT69 (7 December 2013)

dinga said:


> After having struggled for what seems a very long time, a suggestion -please make it easier by including the link.....
> 
> http://www.lmfmif.com/wp-content/uploads/2013/12/2013-12-04-LMFMIF-Third-Report-to-Investors.pdf




Hi  again dinga, are you back in circulation taking an interest in the Forum you created?  Sorry about not posting the link as I am not as computer literate as some others

If back interested  in all this BS that's great, If NO I really don't blame you because there is no Positive news after 5.5 years of frustration and we clearly are going to get very little of our investment back at all (no real surprise)


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## Mysteryman (21 December 2013)

Today's Sydney Morning Herald.

Good old Michael West having another stir of the LM/FTI stinking pot. Keep it up Michael. We need to constantly keep the matter in the public eye, especially ASIC's eye. Thousands of LM investors need justice for the many millions of dollars that have gone missing whilst in LM's hands.

http://www.smh.com.au/business/comm...-year-of-high-achievement-20131220-2zr4q.html


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## Judd (21 December 2013)

A little oddity I noticed in regard to LMI.  The Canberra Times has reported that the Aalto Apartments development has been sold as a result of LM Investment Management, the financial backers, going into administration.

Now from what I can ascertain, and I could have got the entire thing wrong, the previous developer was Aalto Apartments Pty Ltd which was registered on 4 August 2011 and located at SURFERS PARADISE QLD 4217 and I think the sole shareholder and sole director of that company was one...........well I can only make a guess.


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## RODENT69 (31 December 2013)

Judd said:


> A little oddity I noticed in regard to LMI.  The Canberra Times has reported that the Aalto Apartments development has been sold as a result of LM Investment Management, the financial backers, going into administration.
> 
> Now from what I can ascertain, and I could have got the entire thing wrong, the previous developer was Aalto Apartments Pty Ltd which was registered on 4 August 2011 and located at SURFERS PARADISE QLD 4217 and I think the sole shareholder and sole director of that company was one...........well I can only make a guess.




Judd     you are of course correct, the owner/sole developer is a P.D. company, BUT I think its more complicated than that as both the FMIF and the MPF had loans to this development.  Questions have been asked about this and what was the sale price and who got the money from the sale. The answer to this may be in the next BDO report due in late Jan


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## vjohn (31 December 2013)

In attempt to boost the number of investor supporters for the LM Investor Victim Centre's goal of a Fair & Just Resolution for LM Investors we are asking advisors to email their complete investor client list with the web address of the site and include the advisors encouragement for each investor to support the goal.

For advisors / intermediaries complying with our request we will publish their details on a 'Co operating Intermediaries' page at the web site.

If you'd like to help please alert your advisor to the call for co-operation by referring him / her to the 'Co-operating Intermediaries' page at this address

https://sites.google.com/site/lminvestorvictimcentre/co-operating-intermediaries

Thank you
Volunteer Victor John.


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## RODENT69 (12 February 2014)

For the information of investors in the LM Wholesale FMIF  where Trilogy is the RE

Trilogy has this day posted an update  for Investors regarding the Wholesale fund, its dated 12 Feb 2014. I am reliably informed that the next BDO report #4 will be on the BDO website by weeks end


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## Mysteryman (20 February 2014)

Fourth report from BDO, receiver to FMIF, is now out at:

http://www.lmfmif.com

It would be good to see some thoughts or comments on this forum concerning this latest report, or has everyone given up or lost interest?


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## vjohn (22 February 2014)

Support for the LM Investor Victim Centre has passed the 400 mark representing over AU$34m of investors monies. A recent initiative to build unity and strength through a proposal to advisors has brought some growth although we'd like to see much more. Publications in Europe and Asia have featured the LMIVC with more to come. The LMIVC facebook community page has just been created. Its aim is to drive more traffic to the LMIVC site. Visitor posting is currently disabled.

One may visit the LMIVC here to stay connected and support the LMIVC effort and initiatives.


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## RODENT69 (3 May 2014)

I realise that nobody seems interested in this forum much any more, but for information BDO has recently posted its 5th Report on the FMIF.  who knows somebody may find it "interesting"


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## Loiner (27 May 2014)

*BFCSA: ASIC Profit from Crime*

It does not appear that many victims are very interested anymore. At least not on this forum - has everyone moved to another one - LMIVC maybe?

Does anyone monitor the BFCSA website? They have revealed that ASIC may be selling its corporate registry and the value could be between 3 - 6 Billion dollars. BFCSA think that some of this should be used to compensate the victims of the Bankters Low Doc mortgage scams. 
So why shouldn't LM victims demand compensation too? We are also victims of a useless body which did not perform its regulatory duties and protect investors from Aussie (and that bloody Kiwi Drake) financial scams.


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## Pavlos (3 June 2014)

Hi Guys,

LM Victims are not dead yet, my £60K loss says I will fight. I would like to get copies of the LM FMIF and MPF accounts for 2004, 2006, 2008 my take is that without new funding both schemes did not have the cash in to fund the ongoing scheme See .http://www.bfcsa.com.au/index.php/e...-scheme-city-pacific-gc-returns-were-illusory Can anyone help with copies? Just for information other than the Peter Drake (Ekard Loans) 13 of MPF loans were second mortgages most of them to provide FMIF and AIF  with cash to pay fees and supposedly develop assets. Try researching LM Capalabra, Aalto, Rhodes did Wisemans need another Golf Course??? Regards

Pavlos  




vjohn said:


> Volunteers have established The LM Investor Victim Centre, a public call for investor unity in our struggle against the culprits of the LM Fiasco.
> 
> The Centre is at
> 
> ...


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## sht4branes (5 July 2014)

Pavlos said:


> Hi Guys,
> 
> LM Victims are not dead yet, my £60K loss says I will fight. I would like to get copies of the LM FMIF and MPF accounts for 2004, 2006, 2008 my take is that without new funding both schemes did not have the cash in to fund the ongoing scheme See .http://www.bfcsa.com.au/index.php/e...-scheme-city-pacific-gc-returns-were-illusory Can anyone help with copies? Just for information other than the Peter Drake (Ekard Loans) 13 of MPF loans were second mortgages most of them to provide FMIF and AIF  with cash to pay fees and supposedly develop assets. Try researching LM Capalabra, Aalto, Rhodes did Wisemans need another Golf Course??? Regards
> 
> Pavlos




Hi Guys,

Anyone know who is looking after the Lm currency protected fund at present? I have lost track


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## RODENT69 (6 August 2014)

Just in case anybody has not seen it the latest BDO report for the FMIF is available on the BDO link


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