Ferras Merhi, a financial planner has been accused of engaging in shocking, manipulative conduct when giving advice to clients to invest their superannuation into certain products. Between 2020 and 2024, the SEC alleges, he misappropriated approximately $296 million in client funds and deposited them into the First Guardian Master Fund. This cast a dark cloud over the entire financial advice industry’s integrity. Additionally, the Australian Securities and Investments Commission (ASIC) have commenced examinations on Merhi and others associated with the First Guardian Master Fund. This investigation reveals a tangled web of serious potential misconduct, including the mismanagement of millions in client funds and widespread conflicts of interest.
As such, Merhi’s purported use of marketing companies to lure patients began rousing suspicion. Instead, he allegedly failed to promote their best interests. He’s charged with providing biased, self-interested guidance rather than disinterested financial advice. In addition, he purportedly made false statements that concealed the related dangers.
David Anderson, associated with First Guardian, is accused of diverting millions into offshore corporations he controlled. He allegedly misappropriated investor funds to bankroll his own business interests and pay off loans on his lavish Melbourne property.
ASIC’s Investigations Unfold
So far, the ASIC has opened 25 active investigations into major players tied to First Guardian and its network partner, Shield. The regulator has initiated 45 individual court actions to place assets in safekeeping. These actions further limit travel for those individuals and seek to close down businesses tied to the alleged bad behavior.
Garry Crole of Interprac, which is closely linked with First Guardian, released that the firm stopped client inflows into First Guardian and Shield. This ruling happened in July 2023. Less than two months later, they started authorizing advisors to direct even more client money into First Guardian.
“We approved negative consent on March 24 for some cases,” Crole stated. He said it was wrong to liquidate clients’ funds. He made clear that investments would be pushed to where they had already been committed.
Crole expressed confidence in their procedures: “We took steps to stop it. We took steps to tell ASIC. ASIC were told in 2021 and did not tell us.”
The Impact on Investors
The allegations have left many investors distraught, such as Melanie Wohlers, who lamented that her hard-earned savings had seemingly disappeared. “The money saved through my lifetime of work has vanished,” she said, reflecting the sentiment of many affected individuals who believed their retirement savings were secure.
Gary Prince, another investor impacted by the alleged misconduct, emphasized the profound consequences for those who lost their retirement funds. “They will be the best among us — they will be the nurses, they will be the teachers, the aged care workers,” he remarked, underlining the broader societal implications of these financial mishaps.
Equally culpable, some of the advisers have blown unrealistic fiscal projections. Garry Crole mentioned a particular statement of advice predicting an unrealistic return of 15 percent per annum: “I’ve got one statement of advice that suggests the investor will receive a 15 percent return in perpetuity on their super. You’ll read a message like this one, ‘Right now, you have $90,000 in super it’ll grow to $1.6 million in 25 years.
Legal Proceedings and Future Actions
Those investigations continue today. The ASIC has announced that it will pursue additional legal action against other platforms participating in this conduct. We are involved in discussions with Macquarie Bank over possible compensation for the investors injured by this demise.
Notably, David Anderson declined an interview with ABC News, stating that he does not want to face a “trial by media.” This reluctance closely ties to a larger fear around public backlash in the wake of intense controversy and accusations.
Dan Mackay from Mackay Chapman lawyers pointed out that “there have been no findings of fact or law by any court or tribunal, nor by ASIC,” indicating that the legal process is still unfolding.
Ferras Merhi commented on his situation: “My substantive defence to all allegations will be set out in those court filings.” These proceedings can have a life-altering impact on the people who appear before them. They will radically reform the superannuation landscape in Australia.
