Inside the ‘bizarre’ financial crime that connects an outback town to a Melbourne school

Inside the ‘bizarre’ financial crime that connects an outback town to a Melbourne school

The outback town of Bourke is not a place typically associated with white-collar crime.

Yet in this New South Wales community of fewer than 2,500 people and just a few main streets, there are today several residents recovering from a devastating case of corporate misconduct.

Tony Edwards is one of the victims of the “bizarre” investment scheme.

The Muruwari man has worked as a shed hand in shearing stations for decades. It’s a physical job that takes him away from Bourke for weeks at a time.

a man on a porch

Bourke resident Tony Edwards works on shearing stations and had built up around $90,000 in superannuation doing this manual labour by his 50s.(ABC News: Zaarkacha Marlan)

By his early 50s, Tony had built up about $90,000 in superannuation.

“I was hoping to reach 65 and be able to draw on my super. Settle back in life,” he says.

Now all of his superannuation is gone.

Tony knows other people in Bourke who lost out to the scheme but believes “they’re too frightened to talk” about what happened.

“These people worked hard all their lives for what they have, and it’s gone in a matter of seconds,” he says.

“I’m only talking [because] I want to get justice done.

“It’s been a battle.”

How did Tony sign over his super?

It was just before Christmas four years ago, when Tony was short on cash to buy presents after a year without enough work during a drought.

a sign in the outback saying 'bourke'

The outback town of Bourke saw residents caught out by a “bizarre” investment scheme.(ABC News: Zaarkacha Marlan)

Around town, some people knew of a bloke who billed himself as a “business professional” who could help them with financial troubles. 

It was this person, court documents since released allege, who put local residents in Bourke onto the investment scheme.

The born-again Christian who had once worked for a council near the Queensland-NSW border had even been asked to hand out flyers about the investment scheme at a funeral.

These pamphlets and the investment scheme’s website boasted about its long history of helping people invest in property development.

“To date, the value of the property our clients have invested through us is over AUD 40 million across the Australian property market,” its website pitched.

Yet behind this spin was what has since been described in court as “verbal fog”.

The firm had actually been set up by a 24-year-old TAFE graduate with aspirations of becoming a company director, Mudasir Mohammed Naseeruddin.

His firm’s now loaded name: Secure Investments.

How a man in his 20s got access to superannuation

Years before it got to Bourke, Secure Investment’s first clients were closer to home.

Abdullah (who asked for his name to be changed to protect his anonymity) remembers first meeting its director, known in the local community as Naseer, through a private school in Melbourne.

“He told us that he’s investing in property,” Abdullah recalls.

“So he was building units in different areas in Melbourne, and then selling the units, and then he gets returns from those units.”

As Abdullah recalls it, Naseer told him he’d see big returns back on his retirement savings if he invested his superannuation in this property development through a self-managed fund. 

A person kneeling in a prayer room

This man, who we will call Abdullah, is appalled that Secure Investments billed itself as Islamic compliant.(ABC News: Darryl Torpy)

Abdullah, who has a Master’s degree, was concerned about this complicated endeavour.

He recalls what eventually got him over the line was the idea that Secure Investments would invest in accordance with his Islamic religion’s principles.

“So not investing in alcohol or cigarettes or tobacco or anything like that,” Abdullah explains.

“He was persistent.”

What is a self-managed super fund?

Only about 5 per cent of the population have an SMSF, but around a quarter of all the superannuation in Australia is held through them, totalling $884.6 billion.

The median SMSF balance sits at $750,000 – making this financial structure common among the wealthy, a world away from Bourke.

“They certainly make more sense, if you’ve got more money,” Gerard Brody, the acting director of consumer advocacy group Super Consumers, says.

“But [an SMSF] comes with added complexities.”

Gerard Brody sits at a table with a computer, looking ahead.

Super Consumers acting director Gerard Brody is worried that SMSFs aren’t being tightly regulated.(Supplied: Consumer Action Law Centre)

To even pull your superannuation out of a fund and into an SMSF, you need to create a trust.

And while there are websites that claim they can do this for you in “minutes”, Brody warns consumers that managing an SMSF through a trust can be complicated.

It involves annual meetings, for instance, along with paying fees, the involvement of accountants and solicitors, and compliance checks by the Australian Taxation Office (ATO).

“That can be costly, if you’ve only got a small amount of money,” Brody says.

It’s for this reason that Brody cautions against consumers setting one up unless they’ve got at least $500,000 in superannuation.

The industry association representing SMSFs, perhaps unsurprisingly, recommends a lower minimum of $200,000.

Legally, there is no set benchmark.

How do SMSFs invest?

Lots of the SMSFs in Australia invest in high-interest deposits, the stock market, commercial and residential property, with some even dabbling in cryptocurrency and collectables.

Many people employ a financial adviser to help them decide how to invest their SMSF savings.

the shoulders of three men in suits holding pen and paper

SMSFs are a complicated endeavour, warns consumer advocates.(rawpixel: Public Domain)

This is where things went wrong for Abdullah.

After signing the paperwork to pull his superannuation out of a fund and to create his SMSF, Secure Investments set up a bank account for Abdullah to hold his retirement savings.

Abdullah says he then signed bank cheques to send this cash to the investment firm’s accounts.

“I didn’t know that I would lose that money,” he says.

Abdullah was also sent a “loan deed” saying that Secure Investments was going to invest his funds into a single-storey unit development with an annual return of 10 to 13 per cent.

As the years ticked on, Secure Investments sent Abdullah reports saying that his nest egg was growing and the firm was getting involved in “much larger and complex” developments.

Behind the scenes, documents from receivers now show few properties were actually being acquired and around $5 million was either paid or credited to Naseer.

Assets acquired included a Mercedes Benz, two Holdens, a black Harley Davidson and five horses at a stud in Melbourne’s north.

“Money shows the true colour of a person,” Abdullah says.

When the scheme started to unravel

Years after he had first invested, Abdullah grew worried and called up the ATO about his SMSF trust.

He was aghast at what he heard down the phone: his trust was not being adequately audited for compliance.

“[The Tax Office] should have warned me or sent a letter,” Abdullah says.

The ATO, which is responsible for regulating SMSFs, declined to be interviewed for this story but defended its checks and balances.

The Tax Office, in partnership with corporate watchdog ASIC, also oversees the 4,400 accountants authorised to audit SMSFs.

Their job includes checking that trusts are spending their super on authorised items.

Around 400 of them had their registrations cancelled between 2019 to 2023, during what former ASIC regulator Ginette Muller describes as a “dark” period in the industry.

“A lot has been done to clean up SMSF auditors,” she attests.

However, she believes many “gatekeepers” around SMSFs — solicitors, advisors, superannuation funds, and banks — need to do much more to help prevent crime and scams.

That is because, in her experience, the corporate watchdog often gets to these cases when it is too late for victims.

“Unfortunately, that’s the case,” she says.

In the Secure Investments example, ASIC did not start investigating until just a few days before Christmas in 2019.

This was already after Abdullah started getting suspicious himself and just weeks after several people in Bourke had signed documents to set up self-managed funds through the company.

Tony starts to get suspicious

Back in Bourke, Tony Edwards was suspicious within weeks of signing up to Secure Investments.

He had joined on the lure that he would be able to access $5,000 of his superannuation when it was pulled into an SMSF. Christmas passed and no money eventuated.

a man on a porch

Bourke resident Tony Edwards was suspicious within weeks that something had gone wrong.(ABC News: Zaarkacha Marlan)

Documents show a Macquarie bank account connected to Tony’s new self-managed super fund officially opened in late November 2019.

Tony’s superannuation arrived and was sent to a Secure Investment-linked entity almost immediately, leaving behind just $435.02.

“[The firm] kept ignoring my calls,” he recalls.

“I felt really sick in the guts. I didn’t want to tell my partner.”

The situation fully revealed itself when ASIC got in contact and asked for formal statements to help the case it was building against Secure Investments.

“[I was] drinking nearly every second day because of what happened,” Tony recalls of this period, adding that he “didn’t want to get out of bed”.

“I just couldn’t see no end, no light at the end of the tunnel.”

The director of the scheme pleads guilty

Mudasir Mohammed Naseeruddin was arrested and charged in late 2020.

This month, the 33-year-old formally pleaded guilty to financial crimes in the County Court of Victoria.

This related to dishonest conduct against six investors with around $500,000 in self-managed super funds.

Federal Court documents from when ASIC shut down the scheme, however, allege that at least 28 SMSFs were created with a total of $2.4 million.

The outside of the County Court of Victoria building.

Mudasir Mohammed Naseeruddin had his bail revoked in the County Court of Victoria after pleading guilty to financial crimes.(ABC News: Patrick Rocca)

“It’s the Crown’s proposition that they weren’t running a property development company,” prosecutor Robert Barry told the County Court of Victoria in December.

“A lot of this seems to be quite bizarre in terms of the things going on and the things people are agreeing to.”

The court heard Naseer had taken some worried investors out to dinner to reassure them about their funds, and had even been impersonating their voices to get access to their bank accounts.

Victim impact statements read out showed how victims, including a pharmacist and a teacher, were facing their twilight years with a new-found mistrust in strangers and ailments brought on by stress.

“I have not slept properly in months,” one said.

“I have developed psoriasis. I live on many tablets. I have developed chest pains,” another reported.

“I have anxiety attacks. I stay mostly at home.”

Was this part of a bigger scheme?

Listening to these statements, Judge Fiona Todd described the situation as “chaos” created by a criminal.

“It is certainly unskilled and naive,” she said.

“But there is plenty of machinery he is harnessing to do this. He’s got banks, company documents. All the wheels are turning.”

a man with a motorbike and a thumbs up

Mudasir Mohammed Naseeruddin pleaded guilty to financial crimes in the County Court of Victoria in December 2023.(Supplied: Facebook)

In court, Naseer also pleaded guilty to two charges of failing to exercise his powers and discharge his duties in good faith after he sent $555,000 to buy shares in a security company.

In court, his lawyer described this as part a long-term dream to work as a security guard, and that Naseer had himself become a victim when this money then disappeared.

“His life has personally and financially unravelled,” defence lawyer Rahmin de Kretser said.

“He tried to trade his way out. It’s not total smoke and mirrors.

“He was a young man when he started off on this escapade of criminality. He is now 33 years old.

“He’s really got no idea about business trusts, accounting, obligations.

“He learned it from other people.”

ABC News has connected Secure Investments to another SMSF scheme.

It also “targeted” at least 55 people and misappropriated the $7 million it raised off them, Federal Court documents show, before it was also eventually shut down by ASIC in 2020.

The people who ran this scheme in Australia have since moved overseas.

Nobody connected to this scheme has yet been charged.

Will Tony get his superannuation back?

After pleading guilty, Naseer had his bail revoked pending sentencing on December 20. He now faces up to 15 years in jail.

The court heard that Naseer, who had been working as a truck driver since his arrest, may be forced to pay back investors once he is back in the community working again.

a man on a porch

Tony Edwards says he felt “sick in the guts” when he realised he had probably lost all his super.(ABC News: Zaarkacha Marlan)

Yet this will not help Tony Edwards anytime soon.

He is now in his mid-50s and casual work in the shearing stations is getting harder to endure and find.

“I got to start all over again,” he says.

Superannuation and insurance lawyer John Berrill has seen people in Tony’s situation far too many times.

Man with white hair wearing light blue shirt stands in office with desks visible behind him

Superannuation claims lawyer John Berrill says people caught out by SMSF investment schemes are often left with little recourse for compensation.(ABC News: Kyle Harley)

He is concerned that people are losing out in the SMSF space to operations that do not have financial services licences (AFSL) through regulator ASIC.

One requirement of having an AFSL is that an entity takes out insurance that pays out clients in the event of losses, Berrill explains.

Naseer, at times, was an authorised representative of two entities with AFSLs and was sometimes authorised to provide financial advice.

Yet he never held an AFSL that authorised him to issue a financial product.

“There is no safety net for people,” Berrill says.

“This is a big twilight zone.”

Consumer advocate Brody agrees.

He believes people who lose out to investment schemes are being victim blamed for not being able to navigate a complicated financial system.

“It’s unfair and not appropriate to be expecting people to know that a particular provider is licensed or unlicensed,” he says.

“We don’t go to the dentist and have to check a register to see if our dentist is licensed before booking an appointment. It should be the same with investment firms.

“And it’s really on our regulators to be taking positive action and shutting down these schemes where they’re acting unlawfully.”

Are these sorts of schemes growing in prominence?

In response to this investigation, the industry association that represents SMSF investors said its financial product is “not the issue here”.

“Whether the ATO should be doing more to chase down outstanding SMSF returns, or whether ASIC needs to move faster when disqualifying auditors, is also not the issue,” SMSF Association chief executive Peter Burgess says.

“The real issue, and the root cause of the fraud, was dishonest conduct and unlicensed advice.”

“ASIC is the regulator that’s there to protect consumers. The question is whether they have the resources and funding to do their job.”

ASIC, which prosecuted the Secure Investments case, declined to be interviewed about the case ahead of Naseer’s sentencing.

Yet just this week, its deputy chair, Sarah Court, told packed crowds at a conference in Sydney that the regulator had serious concerns about superannuation fraud.

ASIC deputy chair Sarah Court is sitting at a desk with arms crossed looking directly at the camera

ASIC deputy chair Sarah Court told a crowd at a Sydney conference that SMSF scams are on the rise.(ABC News: Craig Hansen)

“People are rolling their life savings over into things they think are investments,” she said.

“Particularly – increasingly so – in the superannuation area where people are being tricked to rolling their entire superannuation savings out of a retail fund into a so-called self-managed super fund that’s in the name of a criminal.”

ACCC deputy chair Catriona Lowe told the same forum that “there is a scam for everyone”.

“We need to move the dialogue away from, ‘How can people be so stupid.'”

How many more people will get ‘ripped off’?

The federal government has been pledging to tackle scams, although as heard at the Sydney conference, targeting and defining what is a scam and what is financial misconduct is difficult.

Consumer watchdog the ACCC believes Australians are losing $1 billion a year on investment scams.

It is unclear if this data includes losses like that experienced through Secure Investments.

Super Consumers says a wider look into SMSF fraud is well overdue.

“I am worried that there is insufficient oversight when people create an SMSF,” Brody says.

a man on a porch

Bourke resident Tony Edwards fell into depression and drinking after his superannuation disappeared.(ABC News: Zaarkacha Marlan)

Back in Bourke, Tony Edwards still feels “egg on his face”.

“How many more people are going to get ripped off?” he wonders.

Yet he has pulled himself out of the depths of depression. He says looking at his grandchildren and family was what helped him through.

“Try to be the best I can be,” he says.