7.30 By Pat McGrath and Kyle Taylor, ABC Investigations
Updated about 2 hours ago
PHOTO: Former Ralan salesman Stanley Xie. (ABC News: Jerry Rickard)
Stanley Xie feels angry and frustrated. Most of all, he feels a sense of guilt.
Key points:
- Property developer Ralan Group's collapse has left thousands of investors facing financial ruin
- Many investors were Chinese-Australian who stand to lose millions on apartment projects — some of which were never built or finished
- The case has raised concerns about the role of legally questionable financing of off-the-plan developments across the industry
"Because of me, they lost their money," he said.
"Because of my sales, because I pushed, Because I allowed such a tragedy to happen."
Mr Xie was a salesman with the property developer giant Ralan Group prior to its spectacular financial collapse that has left thousands of investors in its wake.
As a Ralan salesman, Mr Xie's job was to spruik a form of property investment the company's administrator now says was legally questionable.
He is speaking out about what he saw at the property behemoth in the hope it will help the 2,300 investors who have watched almost $300 million worth of deposits in off-the-plan apartments vanish.
"This is a big tragedy because for many of the clients, their money was not easy to make," he said.
More to collapse than just a bad market
When Ralan Group went into administration in July with debts of $500 million and five unfinished projects, its demise was seen by some as a symptom of the downturn in Australia's apartment market.
But there is a more complex side to this massive corporate collapse.
The ABC has obtained contracts that show Ralan was asking homebuyers to release their deposits as extremely risky loans to the company in return for 15 per cent annual interest.
Because the loans were not secured to Ralan's assets, investors who agreed to release their deposits to the company are unlikely to get any of their money back now it has collapsed.
Accounts released by the administrator reveal only a fraction of investors' deposits remain in trust accounts set up for each development — the rest is believed to have been spent on Ralan's business costs and paying off previous investors' interest.
The case has raised concerns about this method of financing off-the-plan developments being used across the industry.
Said Jahani from administrator Grant Thornton said Ralan could be referred to the Australian Securities and Investments Commission for investigation into whether the loans are in breach of laws designed to protect investors.
"Once you start raising money beyond 20 people, you need to have licenses from ASIC, you need to follow strict protocols in terms of how you produce documents, like a product disclosure statement. None of that was actually done by Ralan," he said.
Mr Jahani is now digging through the Ralan's financial records to find out how long the 21-year-old company has been tapping investors for cash.
"From what we can tell, they've been doing this right from the beginning," he said.
"That created a massive flow of funds into Ralan. As long as they kept developing the next project, they always had the next presale going and allowing that to then continue to fund the working capital for the business."
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