Ralan took $300M of apartment deposits as unsecured 15% loans, then collapsed

Ralan Group, a 21-year-old Sydney and Gold Coast apartment developer, went into administration in July 2019 with debts of $500 million and five unfinished projects, leaving 2,300 investors - many of them Chinese-Australians targeted by Mandarin and Cantonese-speaking sales teams - facing losses on almost $300 million worth of off-the-plan apartment deposits.

Contracts obtained by ABC Investigations show Ralan asked homebuyers to release their deposits as extremely risky unsecured loans paying 15 per cent annual interest. Administrator Grant Thornton said only a fraction of the deposits remained in the trust accounts; the rest is believed spent on business costs and paying earlier investors' interest. Said Jahani of Grant Thornton noted that raising money beyond 20 people requires an ASIC licence: 'None of that was actually done by Ralan,' and the practice appeared to run 'right from the beginning'. A referral to ASIC was under consideration.

Former salesman Stanley Xie said he specifically targeted people with Chinese names and pushed them into the deposit-loan scheme. Ex-bus driver Ben Huang's family invested $350,000 in two apartments after an unsolicited 2013 cold call and stands to lose the lot. Ralan's major lenders, Westpac and boutique financier Wingate, appointed receivers, denied any knowledge of the investor loan agreements, and now face three separate class actions being investigated by investors who say the banks profited from their losses.

Deposits meant to sit protected in trust were converted into unsecured company loans, unrecoverable once the developer failed.

The unlicensed fundraising ran on a Ponzi-shaped loop: new deposits funded operating costs and earlier investors' 15% interest.

Every project depended on the next presale for working capital, so the model only worked while launches kept coming.

Mandarin and Cantonese sales teams were pushed to sell the deposit-loan product into targeted communities with no disclosure documents.

Customer deposits are trust money: converting them into unsecured interest-bearing loans to fund the business is a Ponzi-shaped bet that the next project keeps coming.

Grant Thornton's Said Jahani was digging through Ralan's financial records to establish how long the deposit-tapping had run, and the administrator considered referring the company to ASIC over breaches of investor-protection laws. Receivers appointed by Westpac and Wingate controlled the immediate future. Founder William O'Dwyer declined interviews; through lawyers he said he 'deeply regrets the stress and anxiety' and warned that negative publicity could jeopardise any rescue or restructure proposal.