Sterling First sold retirees 40-year leases, then kept selling under a new name

Perth's Sterling First Group marketed Sterling New Life retirement housing as "the smart way to retire": elderly customers paid up-front sums — usually hundreds of thousands of dollars — for long-term leases of up to 40 years over properties, pitched at seminars and in ads as a cheap alternative to a retirement village. More than $18.5 million flowed in from customers nationwide. In June 2019 the group was put into liquidation, leaving more than 100 customers facing possible eviction; Perth couple Maureen and Malcolm Cameron fear losing the $180,000 of life savings they paid to move in.

Complaints to ASIC began in 2016; the regulator said the first complaint "was not enough to prove misconduct". WA Consumer Protection went undercover at a Sterling seminar, concluded the scheme "seemed too good to be true", and referred it to ASIC. An interim stop order followed six months later — but once the paperwork was amended, sales through the Sterling Income Trust resumed.

In late 2017 the group set up a new structure, Silverlink, and signed 38 new tenants for almost $7 million — without a product disclosure statement. Ron and Beryl Race paid more than $250,000 in April 2018, never told of the stop order.

In November 2020 the Federal Court found Theta Asset Management and its managing director Robert Marie had contravened the Corporations Act by issuing defective product disclosure statements: Theta was fined $2 million, Marie ordered to pay $100,000 and disqualified for four years. ASIC will not pursue the $2 million because it would decrease money left for creditors. Even after a July 2018 agreement with ASIC to stop offering the product, the Camerons signed up under Silverlink in October 2018 — their life savings going into Silverlink shares they say they were told were a trust.

The product moved life savings into long leases on the promise of cheap retirement living, while the ultimate risk of eviction if funds stopped flowing was never really disclosed.

ASIC's disclosure-based regime let Sterling amend paperwork and resume selling — a light-touch response that took six months, in critics' view far too slow.

The Silverlink restructuring exploited the gap between a stop order on a trust and a stop on the operation, and its information memorandum was never lodged with ASIC.

A stop order on the product is not a stop on the salesforce: when a banned scheme re-emerges under a new name, the regulator's paperwork race is already lost.

ASIC ran what it called a priority investigation with special enforcement funding and external legal advisers. KPMG's liquidation report said investigations into potential legal breaches by current and former directors — including offering securities without a current disclosure document and misleading conduct — were continuing. Victims' AFCA claims sat on hold pending a federal compensation scheme of last resort. Founder Ray Jones, previously bankrupt until 2015, declined interview; director Brian Ruzich conceded, "As a director I suppose I should have paid more attention."