In short:
Australian investors lost millions to a licensed investment scheme they allege was an international scam with possible terrorism links.
asserted
they → lose → links
They are now asking how it went undetected by authorities and its financial licensor.
asserted
it → ask → authorities
ASIC is investigating the Sydney company that authorised the alleged scammers to have a financial services licence, but the firm is denying that any due diligence failures occurred.
asserted
failures → investigate → licence
An Australian company that extended its financial licence to a group of suspected scammers is under investigation over fears that its failures cost investors $138 million.
asserted
failures → extend → million
More than a dozen Australians claim they were duped by a sophisticated investment scheme called Main Group FX, which appeared legitimate because it had a financial licence.
uncertain
it → claim → licence
An ABC investigation into the alleged scam found ghost addresses leading to Caribbean headquarters, a famous Australian cricketer acting as ambassador, and an enigmatic chief executive listed as having alleged connections to terrorism.
asserted
investigation → allege → terrorism
The corporate regulator is now investigating the Australian Financial Services Licence (AFSL) provider company that gave the alleged scam legitimacy by making it an authorised representative.
asserted
it → investigate → legitimacy
The Australian Securities and Investments Commission (ASIC) regulates financial services providers through a licensing scheme, but these companies can also act as licensors — supplying an effective sub-licence to others who become their authorised representatives.
asserted
who → regulate → others
Sydney-based company MGF Capital holds an AFSL, and its sole director is Matthew Starkey, a former Goldman Sachs trader.
asserted
director → base → AFSL
Corporate records show Main Group FX was an authorised representative of the parent licensor MGF Capital between February and December 2023.
asserted
FX → show → February
It is understood Australians may have lost as much as $138 million from financial products they believed were being offered by multiple authorised representatives under the umbrella of MGF Capital, including at least $2 million from Main Group FX.
uncertain
they → understand → FX
It has sparked fears the alleged criminals behind Main Group FX were effectively given a licence to scam.
asserted
criminals → spark → licence
ASIC told the ABC it was "actively investigating" whether there were "oversight, due diligence, and compliance failures" related to MGF Capital's corporate authorised representatives.
asserted
it → tell → representatives
"ASIC is concerned many investors may have been exposed to significant financial losses,"a spokesperson said.
uncertain
spokesperson → concern → ?
MGF Capital's Matthew Starkey declined an interview and referred the ABC to a lawyer and crisis PR manager, who denied any due diligence failures had occurred, but would not say what checks had been carried out to allow Main Group to be its licensee.
asserted
Group → decline → lawyer
Monthly dividends arrive late, then not at all
Candice Driver is among 13 investors the ABC knows of who have collectively lost more than $2 million to Main Group FX.
asserted
who → arrive → FX
The Sydney marketing executive said she was glad ASIC was investigating, but she had "no trust whatsoever" in the system that allowed the alleged fraudsters to have a financial licence.
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fraudsters → say → licence
The reason she invested with Main Group was because their financial services licence meant they were regulated by ASIC.
asserted
they → invest → ASIC
"Which, as Australians, we're told to trust,"she said.
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we → tell → Australians
Ms Driver poured tens of thousands into Main Group FX in 2023 believing she was investing in commodities on a trading platform.
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she → pour → platform
By year's end, the company was unravelling, with her monthly dividends arriving late and then not at all.
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dividends → unravel → end
She could not withdraw her cash and felt staff were "making excuses", with two separate workers claiming they had been slow to respond because their fathers were in hospital.
uncertain
fathers → withdraw → hospital
Another financial authority called in
Ms Driver reported Main Group's licence provider, MGF Capital, to the Australian Financial Complaints Authority (AFCA).
The complaints body acts as an ombudsman for external dispute resolution between financial institutions and customers.
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body → call → institutions
Within days of the complaint, MGF Capital's director, Mr Starkey, contacted her urging her to withdraw her complaint.
asserted
director → contact → complaint
"If you could make contact with them [AFCA] and explain you are in the process of resolving the matter that would be great," Mr Starkey said in an email.
uncertain
Starkey → make → email
Main Group's CEO Karim Farag also called her, saying her complaint was blocking company funds.
asserted
complaint → call → funds
That was the last she ever heard from Mr Farag, who has since been accused of having alleged links to a terrorist organisation.
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who → hear → organisation
Main Group's investment portal shut down, emails bounced, and staff became uncontactable.
asserted
staff → shut → ?
It was eventually deregistered.
asserted
It → deregistere → ?
Mr Starkey said in a statement that his firm "had no contact with any of the perpetrators of the [alleged] scam", but could not explain how Main Group staff knew about Ms Driver's AFCA complaint.
uncertain
staff → say → complaint
Complaint still with AFCA
Years later, Ms Driver and Mr Starkey are still locked in a long-running AFCA dispute.
asserted
Driver → lock → dispute
Ms Driver questions what due diligence MGF Capital did on Main Group, with serious questions about the veracity of at least one of its company directors.
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Capital → question → directors
An international student called Junru Sun was Main Group's first director in February 2023, at the time it became an authorised representative of MGF Capital.
"
asserted
it → call → Capital
She was a 21-year-old who was the director on ASIC paperwork for one month only," Ms Driver said.
asserted
Driver → say → month
Junru Sun is listed as a director of several other companies — Highstone Capital, which was also an authorised representative of MGF Capital, and a ceiling business in Western Australia.
asserted
which → list → Australia
Ms Sun told the ABC she had no idea how her name ended up on these documents.
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name → tell → documents
In his statement to the ABC, Mr Starkey claimed Ms Sun "met the relevant regulatory requirements" to direct an authorised representative.
asserted
Sun → claim → representative
The directorship then switched to Australian-Lebanese woman Robin Mahfouz, who is now based in Lebanon and has refused to speak to the ABC.
asserted
who → switch → ABC
MGF Capital said it "did not learn of the change in directorship" until afterwards.
asserted
it → say → directorship
Company cancels itself out of regulation
Despite the devastation facing investors, MGF Capital has been able to escape future AFCA compensation claims by essentially checking itself out of oversight.
uncertain
Capital → cancel → oversight
…and 27 more, not listed.
The Aporia
