Residential project marketer and sales agency Ausin Group‘s offices in China have collapsed leaving behind a trail of 130 failed settlements of houses and apartments in Australia.
Ausin’s China business, which is a separate entity to Ausin Australia, has allegedly misappropriated “tens and millions of dollars” of settlement and deposit monies for new homes acquired across 15 projects in Sydney, Melbourne and Brisbane.
Names of projects have been withheld while police and legal investigations are being carried out.
Ausin China had allegedly sold off-the-plan apartments and houses to Chinese buyers in China but instead of setting up a legal exchange between buyers and developers, Ausin China accepted all the deposits and settlement monies from buyers for these developers, in breach of Ausin Group’s policies.
It is understood the settlement monies were never sent to developers, and buyers have not been able to contact Harry Jin, who was in charge of running Ausin’s offices in China.
Ausin Australia and Group, led by founder and chief executive Joseph Zaja, said there was evidence of fraud and the matter has been reported to the Australian police. It is working closely with vendors affected.
Mr Zaja has also severed ties with Mr Jin and his businesses and cancelled licensing agreements with him.
Mr Zaja says while Mr Jin was a founder, his business Shenzhen Ausin Investment Consulting Co. Ltd runs all the China offices under a marketing and client referral agency agreement with Ausin Group and uses the Ausin name under a licence. He is not a director of Ausin Australia or Ausin Group.
Chinese staff and agents across its Chinese offices including Guangzhou and Shenzhen have not been paid. Offices have been abandoned.
The Australian Financial Review has sighted a memo from an Ausin China general manager to its Chinese staff saying, “due to serious issue with working capital, I regret to tell all colleagues that July wages and insurance covers are delayed. I sincerely apologise about the adverse effect it has on everyone, and will do my best to resolve the matter.”
Employees and buyers in China were videotaped painting graffiti on the walls of its Shenzhen office on Wednesday, saying “Ausin money launderer”.
“We have spoken to police in Australia, we are getting legal advice on how to carry out the investigation,” Mr Zaja told the Financial Review.
“We have cut off all communication with Harry and solicitors are now handling correspondences with people in China. It is unacceptable behaviour. I spent 10 years on solidifying Ausin as a reputable company in Australia.
“It is important to understand we are separate entities, and Ausin Group has sent Harry a ‘cease and desist’ to use the trademark name, Ausin.
“Since we had evidence of suspected fraud, we cancelled the agreement with Ausin China within 24 hours. It is a serious offence and does not reflect on Ausin Australia.
“We will continue to operate as usual in Australia and are committed to working with those affected to help find alternative buyers for properties not yet settled.”
The well-known group, which also offers accounting, property management and migration visa services, grew quickly fuelled by Australia’s high-rise apartment boom and Chinese appetite for Australian property.
Its marketing materials say some of its clients include Lendlease, Mirvac, Stockland and Asian developers such as Fragrance Group, UEM Sunrise, Eco World and Ballymore.
Mirvac stopped using Ausin Group for client referral more than two years ago. “There have been no new referrals in the past two-and-a-half years,” a Mirvac spokeswoman said.
It is understood Lendlease also ceased using Ausin Group for client referral about a year ago. A spokesman for Lendlease says the company doesn’t comment on other companies’ operations.
The group also considered offering loans to foreign buyers after the major banks cut off mortgages to these buyers in 2016. Early last year, Ausin was in talks with Blackstone, the world’s largest real estate and private equity manager, to offer direct lending facility to these buyers.
It has 26 offices and 500 employees in Australia, China, India, Britain, the US and New Zealand.