iProsperity Founder Flees After Allegation Of Ponzi Scheme

Mr Gu is known to have left Sydney for Auckland on 26 July, before connecting through to Los Angeles. His current whereabouts are unknown.


Key Points:

  • Michael Gu, prominent hotel investor, has fled Australia

  • Alleged that he ran a $60m Ponzi scheme and owes other investors a further $120m

  • Funds were raised to purchase an Australian hotel portfolio worth c. $220m


Michael Gu, the founder of collapsed property group iProsperity, has fled the country amid accusations he purchased a Lamborghini with investor funds and ran a $60m Ponzi scheme and owes other investors a further $120m.


It has been reported that Gu left Sydney for Los Angeles on 26 July.


KPMG (the administrator for one of the 64 failed companies) said "potential misuse of investor funds" and "potential improper conduct" by Mr Gu were the main reasons for the collapse of iProsperity Capital Management Pty Ltd with debts of $60.5 million.


"We are of the opinion that the company has been insolvent since incorporation in July 2019," said the report.


The report said the $30 million was transferred to a Singapore entity and "appears to be a redemption of investor funds".


“The company appears to have used funds raised from investors and deemed to be held on trust in a manner which was inappropriate and in breach of certain agreements between investors and the company,” the report said.


iProsperity Capital Management raised $60.5 million to buy a portfolio of IBIS hotels across Australia in a deal worth about $220 million.


The administrator said the entire $60.5 million was missing and the broader group appeared to have no assets.


Singapore's ZACD invested in this deal along with high-net-worth individuals believed to be part of the federal government's significant investor visa program.


It has been confirmed that Mr Gu was granted a travel exemption by the Department of Home Affairs as no flag was put on his passport that would have allowed the Australian Federal Police to stop him at the airport.


Mr Gu is known to have left Sydney for Auckland on 26 July, before connecting through to Los Angeles. His current whereabouts are unknown.

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