AG Financial and the Avestra circular investment scam

AG Financial (AHA.AX) is part of a circular investment scam run by criminals from Avestra Asset Management. Formerly known as Excela (EXA.AX), AHA was taken over by Avestra, and funds under its management siphoned into Avestra funds, including Avestra Advantage and Worberg Global. These funds then acquired significant stakes in the illiquid AHA, which was ramped to create unrealized sham profits. AHA effectively used funds under its management to "invest" in itself.

This crossholding fraud might be too blatant, even for Australia, if Avestra funds showed up in disclosure documents as majority owners of AHA. It was thus necessary to find cartel ratholes and perform sham transactions. Today AHA released a number of substantial shareholder statements from the cartel. The Avestra funds Canton Mackenzie and Avestra Advantage reported selling 34.5m and 29.3m AHA shares, respectively, on 21 February and 24 February 2014, at $0.035 per share.

http://www.asx.com.au/asxpdf/20140228/pdf/42n2l1kpwppfhq.pdf
http://www.asx.com.au/asxpdf/20140228/pdf/42n2l382flrc13.pdf

Substantial shareholder statements from hitherto unknown entities China Thrive Investments and Infinito Capital reported purchases of 34.5m and 29.3m AHA shares, respectively, on 21 February and 24 February 2014, at $0.045 per share. This leaves $638,000 "mysteriously" missing and unaccounted for.

http://www.asx.com.au/asxpdf/20140228/pdf/42n2m2tj0g0gyg.pdf
http://www.asx.com.au/asxpdf/20140228/pdf/42n2lzf591sgq8.pdf

The substantial shareholder forms for China Thrive Investments and Infinito Capital were filled out in identical handwriting. The forms, ostensibly submitted by non-associated parties, were filled out by the same person. Not much more is known about the enigmatic entities that now apparently hold 37% of outstanding AHA shares. China Thrive Investments previously showed up as a substantial shareholder for the AIM-listed Chinese shadow banker Adamas Finance Asia. This BVI-incorporated entity holds interests in four special purpose vehicles, which in turn holds interests in four Chinese businesses.

http://www.investegate.co.uk/aim/rns/sch-1-china-private-equity-investment-holdings-ltd/201402050959403482Z/
http://www.adamasfinance.com/index.php

In general, substantial shareholder notices in Australia are considered entirely voluntary, since there is exactly zero enforcement. Some entities do not submit these forms at all. Some choose to omit certain information, such as consideration paid, while others submit a range of possible values. Anything goes. For example, the recently ramped Australian Bauxite (ABZ.AX) was 44% owned by crossholding fraud Hudson Resources (HRS.AX), according to its 2013 annual report. HRS then sold its stake gradually, to parties that by and large have declined to submit substantial shareholder notices.