Complaint laid against Blue Chip firms

High-profile property investor and consultant Olly Newland has laid a complaint with the Commerce Commission alleging breaches of the Fair Trading Act by companies associated with structured residential property investor Blue Chip.

Mr Newland has been acting for several Blue Chip clients worried about their money. He said yesterday that making a complaint was "just to get the ball rolling".

Nineteen companies associated with the New Zealand franchise operations of Blue Chip have been placed in liquidation owing millions to about 2000 investors.

However, the master franchise company, Diem, and the associated Mide are not in liquidation and are operating normally.

The action follows increasing numbers of clients reporting difficulty in getting rental payments that were due, and concern over large sums of money invested to buy properties.

The Commerce Commission confirmed yesterday that a complaint had been received.

"We are assessing that information," a spokeswoman said.

The commission would not comment further till the information had been looked at.

Mr Newland also called yesterday for the Government to use its powers and appoint a statutory manager for all the Blue Chip-associated companies.

Australian sharemarket-listed Blue Chip Financial Solutions (BCFS), which franchised out the New Zealand operations in September and no longer owns them, asked for its shares to be suspended from quotation yesterday pending release of an announcement by the company. The shares last traded at A9 cents, having dropped more than 90 per cent in the past six months.

BCFS chairman Julian Gosse said yesterday that the company would make a statement in the next day or so.

Mr Newland said he believed statutory management would be the best course of action.

He said he was seeing people, mostly elderly, who had between $80,000 and $500,000 invested.

Blue Chip distributes tax-effective investments in wealth management products with a residential investment property focus. In New Zealand it has been involved in purchases of about 4000 residential units for clients, according to Mr Gosse. Its website says it has 4000 New Zealand clients.

People will often get the money to invest by taking out a mortgage on their own home.

"There's thousands of people involved. Each person is up to their neck in debt. It really is a tsunami of a disaster," Mr Newland said.

"There's a stream of people coming in, crying their eyes out and embarrassed.

"I'm just thinking of a couple who came in yesterday completely devastated. They are now having to move out of their house and move in with their daughter in one-room accommodation. I get so angry that I've taken it on as a mission."

The liquidator of the 19 Blue Chip-associated companies, Jeff Meltzer, said he would issue a report next week and planned a meeting of creditors after that.

- © Fairfax NZ News