Doomed mortgage fund operator founder's passport seized, assets frozen

by AB30 Sep 2013

The Supreme Court of Queensland has ordered LM Investment Management (the company in charge of doomed LM First Mortgage Income Fund) founder, Peter Drake, to surrender his passport and has frozen his assets as ASIC’s investigation into the collapsed Gold Coast-based fund manager continues.

LM Investment Management went into administration in March, 2013, with the company responsible for managing at least $750 million on behalf of almost 12,000 investors in Australia and overseas.

The Supreme Court of Queensland made interim orders on Friday, which include preventing Drake from selling his assets, though they do not extend to the intended sale of his Mermaid Beach, Queensland home.

William Fletcher and Tracy Knight of Bentleys, who have been appointed as joint and several receivers of Drake’s property, will be required to identify and secure all assets held by or on behalf of Drake and to report to the court.

The matter will return to the Supreme Court of Queensland on October 9, 2013, when the court will decide whether to maintain the interim orders that have been made.

ASIC’s investigation into the collapse of LM Investment Management is looking at the conduct of the directors and the management of the various managed investment schemes and transactions with related companies.

The surplus of the sale proceeds from the sale of Drake’s home will go to his solicitors' trust account and cannot be used or dealt with unless by order of the court or agreement with ASIC. If the property does not sell, this asset will be further dealt with by the court on October 9, 2013.

ASIC is unable to comment further at this time.