LM Investment Management - Lack of confidence

[RODENT69]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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?

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?

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]

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]

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​

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]

Re: LM Investment Management Limited - Receiver Appointed

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.

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]

Re: LM Investment Management Limited - Receiver Appointed

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]

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]

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?