Property developer undertakes to stop taking on new customers
Published21 Sep 1995
Auckland property developer, Lifeforce 2000 Limited, yesterday gave undertakings to the High Court that it will stop taking on new customers until it has registered a prospectus that accurately explains its scheme.
Commerce Commission Chairman Dr Alan Bollard said the Commission took court action under the Fair Trading Act against Lifeforce 2000 alleging its house purchase scheme was false, misleading and deceptive.
People were told that for a $3,300 fee, part of which would be invested in international currency markets, they would get enough money to pay for 25 percent of a house on land owned by the company. They were also told that the company could get substantial discounts on the building costs, could help them with mortgage finance and houses would be built by December this year.
The Commission alleged that the company could not honour any of these claims.
Lifeforce 2000, its Managing Director, William John Gausden, and its General Manager, Michael Lust, have undertaken to stop making false claims that they:
own land for residential development
are building residential units, other than one showhome
can financially assist people to put deposits on homes
can provide mortgage finance
have arrangements with overseas funding institutions
can achieve large returns on investments by investing money overseas
have invested money overseas
They have also undertaken:
not to take on any further customers until their prospectus is registered, and then they will conduct business according to the prospectus
to provide the first house by December this year
It is important to note that Lifeforce 2000 can continue to develop properties but has undertaken to make major changes to the way it promotes its development scheme.
People who had previously paid to join the scheme will be offered residential units as they are built, but the company will not be able to provide the financial assistance it had originally claimed it could.
Media contact:Manager Fair Trading, Keith Manch
Phone work (04) 498 0908, home (04) 479 7105
Communications Officer, Vincent Cholewa
Phone work (04) 498 0920, home (04) 479 1432
On 16 June 1995, the Commerce Commission sought orders from the High Court in Auckland restraining Lifeforce 2000 from making various claims about how the scheme was operating, including claims that it:
owned land for residential development
was in the process of building residential developments
had the financial resources to assist participants in the scheme put deposits on houses and would be able to provide mortgage finance to participants in the scheme
had arrangements with overseas financial institutions
could achieve large returns by investing money overseas
had invested money overseas
could provide houses to participants by December 1995
could provide 25% equity in houses to participants in the scheme free, apart from the initial fee of $3,300.
Following issue of the Commission court action, the Securities Commission made an order under the Securities Act 1978 prohibiting the company from distributing company advertisements promoting the scheme, on the basis the advertisements did not, in its view, comply with the Securities Act. The Securities Commission deemed that the advertisements contained or referred to an offer for securities to the public for subscription and therefore should have been made in or accompanied by a registered prospectus or in an authorised advertisement.