ASIC has banned Grubisa for four years from “engaging in credit activity, providing financial services, performing any function in a credit entity, or controlling a credit entity or financial services business”
ASIC found that Grubisa:
Represented that she and her company DGI Wealth held an Australian financial services licence and Australian credit licence when neither she nor DGI Wealth held those licences,
Represented that she was an ‘ASIC licenced debt specialist’, despite no such licence existing at that time,
Failed to rectify these misrepresentations despite being made aware they were false,
Was in the habit of stating she held licences when she did not and had a tendency to embellish her qualification to create credibility,
Encouraged her students to use data from the Family Court list for an improper purpose, such as to identify people in financial distress, with the hope of buying property under value,
Has a habit of not telling the truth, and
Failed to conduct herself with the professionalism of someone providing financial and credit services
Grubisa can appeal this decision.
This ban would prevent her being involved in providing credit or financial services, including debt management services. However, it remains to be seen how her other activities might be affected.
Dominique Grubisa claims that “there is a misconception that taking over distressed properties is preying on struggling families”, and she says that buying a property from a financially distressed owner doesn’t make you a “vulture”. See other posts about Dominique Grubisa / DG Institute.
This is not a legal question, but an issue of your ethics and values. I don’t think buying a house cheaply makes you a “vulture”, but my view is that taking advantage of an owner’s vulnerability, ignorance and/or trust is preying on them – and some of Grubisa’s teaching encourages that.
There are many others profiting from distressed home owners – not just Dominique Grubisa students. Once a bank issues repossession proceedings, the owners are contacted by numerous businesses (>10 letters is common) wanting to profit from their situation, including a number from Grubisa students competing for attention. Some of these businesses hope to find a cheap property, others want to offer various services (including debt negotiation), often taking a caveat over the property so they are paid when it is sold. Many of these are labelled “debt vultures” by consumer advocates.
So what, in my view, could make a ‘distressed property’ deal unethical?
Dominique Grubisa and her companies offer a range of courses and products, including a course on finding ‘below market value’ properties and negotiating deals with distressed sellers (which I write about here), a renovations course, debt management, legal services, loans, insurance – and her Master Wealth Control (MWC) product which purportedly protects your wealth from governments, bankruptcy, banks, individuals and creditors.
This MWC product (costing about $10,000) has ‘found its moment’ during the COVID19 pandemic. Unlike some other DG Institute (DGI) products, it doesn’t rely on live seminars, and COVID provides just the right environment to increase people’s anxiety and sell a solution.
These are my views on some content of Grubisa’s seminars and videos.
Grubisa is a lawyer – I’m not – but these issues may raise questions that you want to check with Grubisa – or get your own legal advice about.
Grubisa promotes the fact that some of her strategies are new, for example she says about her Real Estate Rescue program “The process has never been taught or practised before in Australia”. When there is an unusual application of any law, it can mean that it has not been thoroughly tested in a court, and therefore the legal situation may be unclear.
Some strategies are presented in a way that links them to recent legislative reforms.
National Consumer Credit Code (NCCC) Regulations (2009)
Grubisa mentions the NCCC in relation to her “takeover” strategy – which involves students locating “motivated” vendors, controlling the property by way of an irrevocable power of attorney, a signed blank land transfer and other documents; and taking over mortgage payments until the house is sold for a price determined by the student.
On 15 November 2018, Rick Otton and We Buy Houses received the highest penalties ever imposed in Australia for breach of Australian Consumer Law.
The Federal Court imposed penalties totalling $18 million against We Buy Houses Pty Ltd (We Buy Houses) and sole director, Rick Otton, for making false or misleading representations about how people could create wealth through buying and selling real estate, following ACCC (regulator) action.
A $12 million penalty was imposed against We Buy Houses, and $6 million imposed against Otton personally. The penalty followed a Court hearing in August 2017 .
I have not attended a DG Institute (DG) seminar, however I have concerns that her students (“investors”) may be entering into complex financial arrangements with distressed house owners, and may have a grossly inadequate understanding of the owner’s situation and options, and possibly of the risks they face themselves.
I maintain this view despite references in DG information to “helping” owners, ensuring the owner has done “everything possible to keep their home from being repossessed”, and being “fair minded and genuinely want[ing] to help property owners solve their financial problems while earning a fair and reasonable profit in return”.
I base my comments on:
some of the information provided by DG online (including videos),
a manual DG has provided to students in relation to the Real Estate Rescue program, and
my background in consumer credit & debt advocacy.
I’m not a lawyer, but I have worked in policy and executive roles in the community legal sector for over 20 years, mainly in specialist consumer and debt legal services. Many of my colleagues are lawyers who specialise in credit, debt and consumer law, assisting clients by negotiation, in the Australian Financial Complaints Authority (AFCA, formerly Financial Ombudsman Service), and in courts and tribunals.
DG has been teaching property investment and wealth strategies for some years. She says that after the global financial crisis she went from “many millions of dollars in wealth” to “many millions in debt”. Continue reading →
‘Damage waiver” in car hire contracts isn’t insurance, doesn’t cover some types of accidents and can leave drivers exposed to huge bills
Excess insurance may be of little, or no benefit, if the ‘damage waiver” doesn’t cover you
While many insurers sell “excess insurance”, I only found one which insured the whole vehicle.
I don’t guarantee the accuracy of this information which is intended to provide general information only and does not constitute legal advice. The information relates to Australia.
When driving a hire car, you are probably driving uninsured – whether or not you pay for excess reduction. (This may not apply to car share schemes which have different arrangements).
Take Susan and Roy. They recently hired a car in New Zealand, and made a point of paying for “excess reduction” cover. While driving on a narrow road, Susan briefly lost concentration and the car crossed to the other side of the road and slipped into a ravine.
Luckily, no-one was hurt, but Susan and Roy found that they were liable for the full cost of the car (a write-off) under the car hire agreement because the “collision damage waiver” provided by the car hire company excluded any accident if the driver was charged with “an infringement/offence”. Police attended the accident and Susan was fined for crossing double lines.
They were also held liable for the cost of recovering the vehicle, which was significant. They couldn’t even claim the $4,000 excess cover because the ‘offence’ exclusion applied to that too. Continue reading →
On 11 August 2017, the Federal Court found that Rick Otton, and We Buy Houses (WBH) (referred to as “the respondents” below) engaged in conduct which was misleading or deceptive or was likely to mislead or deceive in contravention of the Australian Consumer Law.
In March 2015, after a co-ordinated investigation with NSW Fair Trading, the Australian Competition and Consumer Commission (ACCC) issued proceedings against Rick Otton alledging misleading and deceptive conduct. At the time, the Chairman of the ACCC said the ACCC was concerned about strategies promoted by We Buy Houses and Otton which “target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments”. Rick Otton is the sole director and sole shareholder of WBH. Since that date, Otton appears to have ceased doing business in Australia, but has been promoting, and running seminars, in the UK.
An 8 day court hearing was held in 2016, and on the 11th August 2017, Justice Gleeson handed down the court’s decision. (I understand that further decisions are yet to be made in relation to penalties, injunctions and costs).
A former Rick Otton student, and witness in his Federal Court case, lost a lease-option case in Supreme Court of NSW (Australia) in December 2016. The case shows, once again, the risks faced by owners, buyers – and even ‘creative property’ businesses – when entering lease option agreements.
Karin Siekaup is a former Rick Otton student, and the only former student who gave evidence for Otton in defending a misleading and deceptive complaint brought by the regulator (ACCC) in Australia. [Update: In August 2017 the Court found that Otton had engaged in misleading and deceptive conduct. It appears that Siekaup’s evidence in support of Otton involved two property deals – the two mentioned here which “fell over”.]
“Siekaup is the sole director of Sieve-Storm Pty Ltd,” and for the purposes of this article I refer to her by name rather than to the company, noting that the judge said “her mind must relevantly be the mind of Sieve-Storm”
Siekaup entered into two lease option agreements for two homes with the same owner, and appears to have ‘onsold’ the properties to third parties via lease options. Around the time Siekaup tried to exercise the options, and thereby buy the properties for the initial agreed amount, the owner claimed that the documentation didn’t comply with NSW law, and cancelled the option agreements. Siekaup tried to claim compensation from the owner but the court confirmed that the owner had the right to cancel the options, that Siekaup wasn’t entitled to compensation and ordered that Siekaup pay the owner’s legal costs. Continue reading →