Background
From 1998 to 2009, around 1,300 investors jointly invested in various ways in a range of undertakings of which Mark Letten was the controller (the Letten Schemes).
By the orders of the Federal Court on 25 February 2010 and 4 March 2010, receivers were appointed to these schemes (Receivers). On 11 November 2010, the court gave approval to pool the proceeds of sales of assets of the Letten Schemes into a ‘Common Fund’. On 19 November 2012, the court gave approval on the method proposed by the Receivers to determine an investor’s entitlement to receive a distribution from the Common Fund. In coming to the decision, the court made findings of fact as to the nature of the investors’ interests in the schemes, the nature of any final distributions from the Receivers and any effect of the earlier actual and purported distributions by the scheme operators.
The way in which the tax law applies to these schemes is based on these findings of fact made by the Court. Even though the schemes were marketed as separate schemes, the money from the various schemes was mixed together, and because of the poor records of the schemes, the winding up of the schemes has been done collectively.