A financial adviser allegedly failed to declare interests in a business which took millions of dollars linked to collapsed superannuation funds First Guardian and Shield, the Federal Court has heard.
During an appearance on Thursday, lawyers representing corporate watchdog ASIC said receivers should be appointed for the property of Melbourne-based Ferras Merhi who encouraged thousands of his firm’s clients to invest in the failed funds.
‘Since the disclosure order came into effect on February 18, Mr Merhi has repeatedly only disclosed assets once they’ve been discovered by ASIC,’ Justice Mark Moshinsky heard, The Australian reported.
Among the interests Mr Mehri allegedly failed to disclose were sources of wages and dividends received, property interests, and shareholdings, the court was told.
It heard that Mr Merhi ‘failed to disclose his interests in a company incorporated in the Cayman Islands, which reportedly held a bank account in the Isle of Man’.
ASIC claimed the Cayman Islands firm called NexOasis Consulting Inc. had ‘substantial inflows of funds from companies connected to investments made by the First Guardian Master Fund’ to the tune of about $US9.6million (AU$14.8million).
Mr Mehri is accused of pocketing tens of millions of dollars in fees and benefits for advising his clients to invest in the two collapsed superannuation funds.
ASIC has previously alleged Mr Merhi engaged in ‘unconscionable conduct,’ failed to act in the best interests of clients, gave conflicted advice, and issued defective statements of advice.
Financial advisor Ferras Mehri encouraged thousands of his clients to invest in collapsed superannuation funds First Guardian and Shield
The watchdog alleged he did all of this while receiving millions of dollars.
According to ASIC, Mr Merhi used marketing companies to drive clients to his financial advice businesses, Venture Egg and Financial Services Group Australia, which are now in liquidation.
Between 2020 and 2024, Mr Merhi and advisers working for him allegedly directed about 6,000 clients to invest around $296 million of their superannuation into the First Guardian Master Fund and about $230 million into the Shield Master Fund, ASIC said.
In return, it is alleged Mr Merhi’s businesses received nearly $18 million in upfront advice fees, as well as more than $19 million from entities associated with First Guardian for marketing the fund to clients.
Both funds have since collapsed.
ASIC deputy chair Sarah Court described the matter as ‘misconduct on an industrial scale’.
‘This type of conduct doesn’t just undermine the integrity of the financial advice and superannuation industries, it can have a devastating impact on people’s lives,’ she said.
ASIC also alleges Mr Merhi implied to clients that the fund was operated by Macquarie.
His property assets have been frozen, and he is currently prevented from leaving the country.