Investors angry as resort goes under hammer

By ANNE GIBSON

Part of Waiheke Island's largest resort and conference centre goes to auction today, leaving out-of-pocket investors angry and frustrated.

Investor Miles Cain, who has lost most of the $100,000 he put into the Palm Beach property, said people had lost their lifetime savings in the disastrous $1.27 million investment scheme.

He was surprised that part of the property was back on the market and advertised for much more than it was sold for in December.

"The investors are distraught," Cain said.

A nominee company of Auckland law firm Fortune Manning raised money from about 24 investors, including Cain, and loaned $1.27 million to British fraudster Jonathan Powell to expand the resort.

But he hanged himself in a Parnell warehouse in March last year on the eve of a court appearance, leaving his Waiheke Island Developments to default on its loan.

The resort, which was valued at $2.5 million, went in a mortgagee sale which yielded only $1.4 million.

AMP Bank got some of this, having loaned money to Powell for the same venture.

Brent Gibson, who manages the resort through his United Leisure Resorts, said in March that the resort was bought by Palm Beach Holdings, whose sole director is Simon Barnes. It was part of Palm Beach Holdings' property which was being sold, Bayleys' Neil Prentice said this week.

Fortune Manning has told upset investors they will get only 21c in the dollar back, losing most of their original investment and the estimated 9 per cent return on their money.

Cain contacted the Herald about his plight, publishing his email address and seeking contact from others burned in the deal.

He said Fortune Manning had appointed an independent solicitor - Robert Benton from Cairns Slane - to represent most of the investors and advise them on what they could do to get their money.

A meeting of investors was planned for this month so they could decide their next move.

Benton said litigation was the only way to get more money back.

Bayleys is seeking buyers for nine chalets and the manager's house, a three-level lodge which sleeps up to 10 people. The chalets are being sold separately.

Bayleys says the properties are within 500m of the beach and part of the much larger resort, which includes five conference rooms, restaurant, bar, pool and tennis court.

The chalets are priced between $175,000 and $219,000, which includes furniture.

Anna Lunn, of Bayleys' Waiheke Island office, said buyers could keep the units for their own use or place them with the resort for its guests.

Under this arrangement, buyers would be able to stay in their unit for three weeks a year at no charge.

Some of other the units, the conference rooms, pool, tennis court, restaurant and bar are not for sale.

Cain said the investors were angry about this:

"It makes us sick to think that if they sell the nine units, say, for $200,000 each, that is about $2 million, compared to the $1.4 million they paid for many units and the conference centre with tennis courts and swimming pool.

"How can the nine units be sold for that amount when it was only four months back that a much larger part of the property was sold for just $1.4 million."

* Miles Cain wants to hear from investors in the Fortune Manning nominee company at m-cain@ihug.co.nz