From Returns to Ruin: Inside the $230m ISG Collapse

The tale of ISG Funds is not a new one. It’s the story of how a now-bankrupt executive director spent some of the funds from its 1600 investors on $363,000 worth of Mercedes-Benz cars and instead of delivering returns, left ISG group companies with at least $230 million in liabilities. But despite its scale, ISG’s collapse has been eclipsed in the past 18 months by the downfalls of Shield Master, First Guardian and Lion Property Group. And attempts to untangle its cross-use of investor funds for developments and conduct, later described by the Federal Court as displaying Ponzi-like features, have been complicated by a complex fund structure and at least 30 group companies. Despite investigations by the Australian Securities and Investments Commission (ASIC), proceedings in Federal and Queensland Supreme Courts, and inquiries by liquidators Olvera Advisors, no money has yet been recovered. But ISG’s downfall underscores growing risks in an industry that has become increasingly accessible to retail investors, which ASIC has flagged as an ongoing area of concern. The fund Founded by Ben Godfrey and Maree Hawcroft in 2014, it geared up in 2019 to raise an initially reported $145 million from 1600 investors through its two schemes, ISG Real Estate Equity Fund (REEF) and ISG Private Access Fund. Archived material from its now-defunct website said REEF looked for real estate developments with “potential to deliver enhanced returns with low and manageable risk”. Product disclosure statements showed investor funds were typically used to acquire redeemable preference shares in special purpose vehicles, which then advanced funds by loan or subscription to other project companies. Among the projects ISG promoted was The Mills — a proposed $500-million, 730-home development across 118ha at New Norfolk, Tasmania. ▲ Some of The Mills masterplan has been completed with other sections sold off. Problems emerged in early 2020 when ISG subsidiary Lindak Investment Holdings launched proceedings against a Linzen Property Group entity over a $60-million North Lakes project. But the situation deteriorated rapidly in 2022 after ASIC suspended ISG’s financial services licence for failing to meet audit and financial reporting obligations. By September 2022, ISG stopped paying distributions and later froze investor redemptions. ASIC’s investigation continued, and in 2023 director Maree Hawcroft was banned for one year. By August 2024, ISG—which had changed its name twice in the interim to Oracle Funds Management and then A.C.N. 127 523 193 Limited— attempted to appoint receivers. Court cases and administration By this point, investors had had enough. A Queensland Supreme Court in September 2024 ordered that A.C.N. 114 733 569 Limited be wound up and appointed liquidators from Olvera Advisors, rather than ISG’s preferred appointees, after investors and ASIC intervened. However, Olvera did not initially have standing over several related entities, including Lindak Investment Holdings and Kappa Investment Holdings. That gap was addressed in June 2025, when the Federal Court ordered multiple associated companies be wound up together. In that decision, Justice Nicholas Owens said it “appears likely” that investor funds were routinely channelled across different projects and entities, exposing investors to subschemes they had not invested in — conduct displaying features of a Ponzi scheme. ▲ The Mills incorporated the Gateway Estate, a hospital and 200 independent living units as well as commercial uses. These uses of funds were not disclosed and were inconsistent with stated purposes, he said. “The widespread unauthorised use of investor funds is likely to have resulted in significant losses for investors” and would require “significant work” to untangle, Justice Owens said. Executive director Benjamin Godfrey was declared bankrupt in March 2025, disqualifying him from acting as a director or being held financially accountable. Liquidators get to work Olvera’s September 2025 creditor report said investor funds had been pooled and used “sporadically” across investment classes, prompting efforts to group companies so creditors could share in any recoveries. By January 2026, Olvera had been appointed to 29 ISG-related companies, with ASIC funding further investigations. However, there are still questions as to where such huge amounts went, and prospects for recovering any money are looking slim. Olvera reported $230 million in liabilities while bank balances across the companies in the negative—the most any held was $8. Unsecured creditors are owed a reported $199.25 million. ▲ Plans for a 130-unit retirement facility were submitted in 2019 for ISG ’ s Carina Heights asset. One group entity, HMS, was revealed by liquidators to have acquired three Mercedes-Benz vehicles costing $364,443, but liquidators said the finance and realisation costs would exceed any sale proceeds. Directors have failed to provide reports despite repeated requests, and ISG’s interests in property developments are either sold or on the market. Part of its The Mills Masterplan, a 186-home over-50s project called New Norfolk Resort was sold to Noble Life in 2023. Land at 1202 Creek Road in Carina Heights, earmarked for a retirement facility, was sold off-market in February 2025 for $5.13 million to reduce debt. Land at New Norfolk, including the Gateway Estate at Glebe Road in Tasmania, was also put up for sale. At the time of appointment, the funds and ISG entities held no material assets. ASIC-funded investigations continue, though the resulting report will not be made public. Wider problems? ISG’s collapse is part of a broader wave of fund failures that has exposed potential weaknesses in regulatory oversight. Specialist funds lawyer and CNM Legal principal Chris Mee says that registered schemes come with multiple hurdles put in place by law. A registered scheme must have a constitution and compliance plan registered with ASIC, he says. “[The scheme] must be operated by a responsible entity which has to be a public company that holds a licence from ASIC to operate that fund.” To be licensed, it needs responsible managers which meet certain skill and experience requirements, a compliance committee made up of a majority of external people, while a custodian holds assets of the fund, and must have $10 million in net tangible assets. ▲ Specialist funds lawyer and CNM Legal principal Chris Mee. Then, there are three annual audits that need to be undertaken for the scheme, the compliance plan and the responsible entity’s own accounts, Mee says. “Funds have to produce a product disclosure statement that has to meet certain content requirements, prepare a target market determination to ensure the product is appropriate for the investors that ultimately invest. “There are multiple gatekeepers and checks and balances,” Mee says. But that’s not to say the seemingly onerous licensing process is bulletproof and requires fund participation, which is something Lion Property Group avoided. “The problem with most of these funds is, what happens when the money leaves the registered scheme environment?” Mee says. “With real estate development schemes that get into trouble, investors’ money usually ends up in a proprietary company that ’ s related to the RE that ’ s undertaking a property development, and those entities are not necessarily regulated, or have any regulatory oversight. “That's where the issues arise.”

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