Members of Sydney’s Hillsong Church lost millions of dollars in an illegal property investment scheme, a court has been told.
The businessman behind the project, Robert John Orehek, is accused of illegally issuing securities, and of using investor funds to buy his $3.05 million harbourside home.
Orehek faced a committal hearing in Downing Centre Local Court today on 31 charges, including 27 counts of illegally issuing securities under the Corporations Act.
He began formulating plans in 2000 to capitalise on Sydney’s then booming property market by buying and developing real estate sites across Sydney’s north.
Orehek raised funds by issuing securities to private, unsecured investors, promising them annual returns of up to 35 per cent, the court was told.
The majority of investors were fellow members of the evangelical Hillsong Church, based in Sydney’s north-western suburbs.
They knew Orehek through his connection with Hillsong or were introduced to him by family, friends or associates within the church community.
Individuals ploughed as much as $335,000 into the scheme, but almost all of them failed to recoup their capital and interest, Magistrate Daniel Reiss was told.
The issuing of securities requires a disclosure document, such as a prospectus, to be lodged with the Australian Investments and Securities Commission, unless it is limited to 20 investors or raises less then $2 million in a 12-month period.
But Orehek allegedly raised almost $4.6 million by issuing debentures to 34 investors between November 2001 to November 2002.
His failure to disclose his levels of borrowing, or the progress of the property developments, meant investors could not make an informed decision about their investment, the court was told.
The 44-year-old also faces four criminal charges of fraudulently misappropriating $253,912 from investors.
In 2002, Orehek allegedly used $150,000 of investor funds to make a downpayment on his $3.05 million Balmoral apartment.
It’s also alleged he misappropriated funds to pay back an existing investor.
The property scheme operated through Orehek’s group of nine companies, which went into liquidation in April 2003.
The former company accountant, Virend Nath, told the committal hearing that new investor funds had been used to pay out existing investors “so that they can keep quiet”.
Orehek has pleaded not guilty to the charges.
His five-day committal hearing continues tomorrow.