Great Southern Failure

[steven]

Has anyone else here lost money in this ponzi scheme? in 2005 our accountant advised us to invest about 30k with them to lower our taxable income.

There is a creditors meeting in Melbourne next week, also keep an eye on this page for information as its made available;

http://www.ferrierhodgson.com/en/Current%20Matters/Corporate%20Recovery%20Matters/Great%20Southern%20Limited.aspx

Further reading

Great Southern enters receivership after banks decline to support restructuring (http://www.businessspectator.com.au/bs.nsf/Article/Great-Southern-enters-receivership-pd20090519-S77YJ?OpenDocument)

$30m Great Southern class action planned (http://www.businessspectator.com.au/bs.nsf/Article/30m-Great-Southern-class-action-planned-report-pd20090519-S6PZ7?OpenDocument)

Who felled Great Southern? (http://www.businessspectator.com.au/bs.nsf/Article/Who-felled-Great-Southern-pd20090518-S5VYX?OpenDocument)

[wolften]

...sorry to hear that Steve. Hope you don't use that accountant any more.

Glenn

[steven]

...sorry to hear that Steve. Hope you don't use that accountant any more.

Glenn

We do actually :- back then, we didn't really know any better. We're not to worried about it now, its not like we can go back and undo it. Most people who lost money in this scam, lost #$% loads more than we have.

Anyway, I thought if there are a few other members who have lost money, we could use a thread to make sure they know whats going on and share information with each other.

[nine fingers]

Hi Steve, Our finanical adviser recommended Timbercorp about 3 years ago ,appears Southern and Timbercorp are both a basket case now:o.
We sacked the adviser we used over numerous transactions and recommendations he made:~ ,cost a packet but at least we sleep at night now.:;
regards nine fingers

[Rossluck]

Far be it from me to defend these capitalist high fliers,:wink: but it wasn't actually a scam was it? My understanding is that these companies kept their heads above water by helping investors reduce their taxable incomes. With this recession, taxable incomes were reduced or diminished completely, and the companies are therefore going under.

Commiserations, by the way, Steve. 30k is cruel. :(

[Old farmer]

I am sorry to hear of your loss, too, Steve. You are taking it well but it was your money and your advisor failed you badly.

At the time, circa 2005, when both companies advertised frequently and ''advisors" were supporting their claims I wondered how this latter could be so since the main attraction of the schemes appeared to be tax saving whilst the tree felling and any subsequent return were well into an, hazy, future.

What many of us have had confirmed, once again, during this last greedy grasping is not to trust anybody who works in any form of finance.

[Gra]

What many of us have had confirmed, once again, during this last greedy grasping is not to trust anybody who works in any form of finance.


No dont trust someone who works in finance on commision.... same thing that happened in insurance in the 70's... (people have a short memory)

[johnc]

These schemes were marketed very heavily to accountants at seminars and conferences and one of the big attractions was the very generous commissions to be paid. The marketing to clients was the wonderful tax deductions you got. If there is one lesson everyone should take from this is never do anything for a tax deduction. See if the business/proposal stacks up and only then look at how tax effects it. These schemes rely on new investors coming in on new tree lots as they come on line to help fund the management companies. There is very little income from the established lots, and to much cream taken at the start. Chickens come home to roost in dowturns when the steady flow of new funds ebbs, but really they have both been accidents waiting to happen all along.

We wouldn't touch the things, however I wouldn't bag all the accountants that sold them, but I do suggest that most people who peddle managed funds understand a lot more about commission trails then they do about the products they flog.

[joe greiner]

Both amateur and professional investors should read "Extraordinary Popular Delusions and the Madness of Crowds." Just Google it for more info. First published 1841, and still in print.

Cheers,
Joe

[johnc]

Both amateur and professional investors should read "Extraordinary Popular Delusions and the Madness of Crowds." Just Google it for more info. First published 1841, and still in print.

Cheers,
Joe

Sadly we still find Tulips to this day, possibly the worlds first big financial stuff up, but repeated with regularly through the centuries. This time we just did it with derivitives, at least you see tulips, which is what I assume the book starts with.

[ian]

The first letter in Tuesday's Australian Financial Review should be required reading for anyone concerned about their losses in Great Southern or Timbercorp. (for readers in the future, that's Tuesday 19 May 09)

I can't help reflecting that these schemes followed changes to the amount deductible under the 10BA (?) film schemes. I don't remember anyone, who got the tax deduction, complaining that the film they "invested" was a complete flop

[Honorary Bloke]

No dont trust someone who works in finance on commision.... same thing that happened in insurance in the 70's... (people have a short memory)

Gra has the right of it. I refuse to use financial advisers who also sell any products. The "free" analysis comes back to bite.

[Poppa]

I was bitten by a financial advisor who put us into two "tax effective" investments, back in the late 90's. I finally paid off the loan for the second one last year - every year when the payment was due I was reminded of my stupidity in trusting the idiot. It was no consolation to me that he also lost money in the same schemes - just proved how big an idiot he was.

The good thing about the whole experience was that it convinced me to take responsibility for my own financial future and never rely on the advice of such "professionals" again. Since then I've done much better than the advice of the idiot would have done for me, and I know that if I lose money I have no one to blame except myself...

On the other hand, if you can find a financial advisor who is willing to get paid only if you make money - they don't sell anything or get commission, then they are the right ones. Even better, if they work on a sliding incentive scale - they get paid more if they generate a larger return for you. I know someone who has this type of advisor and they have done well, with relatively conservative advice over a long term.

[echnidna]

I have no sympathy for peple who use artificial schemes to reduce their tax.

[glenn k]

I lost a lot because I owned the stock, only bought it because it was gathering all that money for tax reductions.
Money from going trees for wood chip is a joke. I was told Timbercorp (i think) bought a property with 6 year old Blue Gums and mulched them into the ground to plant some more. Shows what they value the trees at.

[Greg Q]

I have no sympathy for peple who use artificial schemes to reduce their tax.

Well, its late so I won't go into too many details, but way back in 1992 I happened to have a federal treasurer captive for about 45 minutes. We had an engaging discussion on commonwealth corporations, tax, immigration. He advised me that Australian films would be a good investment given my tax status and love of the arts.

He went on to become Prime Minister, I went bankrupt about 7 years later. It seems that film investment managers were all shonks, and I was left holding the bag, including retrospective tax readjustments + interest + 100% penalties. I think I made 6,000, and it only cost me about $800,000 to do it! Fantastic.

Years later we "won" our suit against the Commonwealth Bank, but only got $45,000 after various fees, charges, lawyers, underwriters, blah blah.

My lesson: invest on the fundamental merits of the proposal. If the business case can't be made in one paragraph it's ########. In fact, just follow W. Buffet and get rich slowly. Or not at all; rich ain't all it's cracked up to be, although it is mostly better than being poor. Or so I'm told.

Greg