First Step was launched in 2000 as a way of giving ordinary investors access to improved returns via selecting from a varied portfolio of mortgage products. Being Australian registered it also had various taxation benefits.
Click to see Related Parties page of Annual Report 2006
The First Step funds were established as a complex scheme of related party companies – with three common people behind them.
Directorships 2006
The structure had the following effect:
- The promoters could maximise their income as they “clipped the ticket” on each transaction
- Investors had no visibility on where money was ultimately lent, or to whom.
- There was no real independent oversight as the trustee company is owned by the promoters.
To protect investors there were four distinct trusts. Individual’s money was to be divided between the trusts based on their risk tolerances. A conservative investor would be heavily weighted toward Secured Mortgage Trust while less risk adverse investors could add Escalator Trust or Premium Performance Trust into their portfolio.
Importantly by having distinct trusts, exposure to a loan could only be via one trust, so an investor’s capital risk was effectively ring fenced.
The more risky funds were a function of less asset security, a lower ranking in security and introduction of other debt products. Importantly, the risk was to be carefully managed and minimized.
In 2004 the tax laws changed with the fund having around $500 million invested. From this time redemptions started to outweigh deposits.
First Step suspended repayments in late 2006, long before the global credit crunch in 2008.
At the time of the suspension there was some 7,368 investor who were owed $457m or $62,000 each. There were no discussions about shortfalls in loan repayments – rather it was more to arrange an orderly winddown.
During 2007 things proceeded as promised with four repayment dates meet.
However, in December 2007 it was revealed that $36million would be written off due to non-payment of two amounts pertaining to investments in Club Finance – a used car finance business ($63m outstanding) and Geotherm Ltd – a geothermal power plant development ($79m outstanding).
Surprisingly the write-off impacted each of the four funds – indicating that all four funds were exposed to these businesses, regardless of the clients risk profile.
Neither of these investments appear to have had proper security, nor do they appear to fit within the criteria of investment prospects promoted by First Step. They were material loans (20% and 25% of the loan book respectively in June 2007), apparently in breach of the issued prospectus for the fund - yet neither were mentioned in the Financial Statements dated 30 June 2007.
Since December 2007 our members have consistently retold stories alleging misrepresentation and deception.
For those who like things graphically, here is how things currently stand.
Depending on which accountant you choose the undecided is $54m or $45m out of a starting amount of $457m.
For the prospectus and trust deeds visit:
www.companies.govt.nz
search “other registries”
tick “Participatory Security”
search “Calibre”
First Step Investors have received notices of two small payouts from the Trustee Calibre Asset Services in 2011, so here is an update of the current financial situation as at Dec 2011:
Funds Value:
Total Investor Funds Value @ Feb 2007 – $457 million
Repayments:
Approx. Payout No.1 – 2nd-Feb 2007 – $53.0 million
Approx. Payout No.2 – 20th April 2007 – $51.5 million
Approx. Payout No.3 – 31st July 2007 – $51.5 million
Approx. Payout No.4 – 31st Oct 2007 – $29.5 million
Approx. Payout No.5 – 2nd Feb 2008 – $13.0 million
Approx. Payout No.6 – 31st April 2008 – $15.0 million
Approx. Payout No.7 – 27th Feb 2009 – $10.0 million
Approx. Payout No.8 – 18th June 2010 – $9.0 million
Approx. Payout No.9 – 4th July 2011 – $14.4 million
Approx. Payout No.10 – 9th Dec 2011 – $5.0 million
Total repayments to date – $251.9 million (55%)
Write-downs:
Write-down @ 13th Dec 2007 – $38.0 million
Write-down @ 29th Jan 2009 – $59.7 million
Write-down @ 30th Nov 2009 – $73.0 million
Write-down @ 30th Nov 2009 (future opportunity cost) – $8.5 million
Total write downs to date – $179.2 million (39%)
True Outstanding Funds:
Funds still not repaid to Investors (ignoring write-downs) $205.1 million (45%)
Outstanding Funds after Write-downs:
Funds yet to be returned @ Dec 2011 $25.9 million (5.5%)
Hi, it’s been almost a year since I last herd anything about my “investment” in First Step”. Can any one shed some info as to if I’ll ever see any of my money ever again?
Thanks.
Chris Lee’s latest monthly update carries an update on this whole sorry mess,and why it cannot be allowed to happen again.But its busness as usual for everyone except the investers that have been plucked
That’s the sick and appalling thing, the francise holders of formerly MM/MMG are still in the market place supposedly flying independant flags yet haven’t they signed 5 year agreements to exclusively market NZ Fund products which continues to make them all business partners with 2 of the purpetrators of First Step.
I urge every investor of First Step or client of these people to log in to http://www.chrislee.co.nz go to the “Archives” and read the article “Taking Stock – 3rd Feb 2011″.
It will make your blood boil.
Does anyone know if there has been any successful court action against these thieves?
I’m not sure how long this action group has been up and running but I would like to add my name now to those already on the list.
Like everyone else we have lost most of our investments in the Secured and Traditional trusts and find it difficult since we got rid of MMG to get any worthwhile personal information other than the continual write down of assets still to be sold from Calibre Asset Services.
I’m having a problem with the computer so an email has already been received today please ignore this………
By the way does anyone have the Auckland Office for this company?
Regards
Since moving to Australia back in Sep 09 it’s been difficult obtaining information on our First Step “investment”. If anyone can shed some light on the current situation I would be grateful.
I guess the chances of getting a big fat pay out before Xmas is zip!
I reckon you will have got the answer in the mail today
More write downs and as has been the case in all the others, right on Christmas. nothing changes with this mob, heartless and shameless.
Hell of a coincidence yet again just as all the advisers have taken off for 3 weeks holiday.
Hi could you please let me know what has been said for the First Step Trustees as I have not received anything
Regards
Andrew Mcrae
Hi Eddie
Just to let you know, the First Step trusts have written off another 12.7 million dollars to the year ending June 2010
Regards
Andrew
So pleased to read the info from others who know the facts and figures.
I did not give my money as a donation-I trusted I would have security.
Why should Money Managers. get away with it?
I will support anyone or any attempt to bring to justice Somers Edgar and gang, for deceiving the public with First Step investments.
I dont presume to understand all of the fine print and mechanics of all the investments I have made in the past.
I guess I am guilty of being gullible and trusting of people who appear to be honest, and knowledgable, of financial matters and investing money with them.
How do you sleep at nights Mr Somers Edgar.
I am just another one of many victims who invested in First step, because of the advise from our so called friend Doug ?
On June 2nd I received a statement of holdings on my First Step . Only to be confronted with an 88% drop in my Secured Mortgage Trust, From Febuary 09 to 2nd June 2010 ,
I contacted MMG in Levin and asked for an explanation, of this drop, and if I did not get some satisfaction I would take it to the Media , ie Campbell live.
On July 26th I got a letter back from Mr Edward Russell, Chairman Calibre Asset Services , From Sydney!! Trying to explain the reason, But all he quoted was the same as he had in his “December 2009 Newsletter to investers”. He never mentioned the 88% drop in the Secured Trust at all.
So I got no satisfaction from him either.
As the so called Secured Mortgage Trust was supposed to be Secured WHY such a drop. [ I might add the other 3 trusts are down between 36% & 53%]
It has caused a lot of stress and strain to my health, because of the losses, we have been taken in by First Step, and all because of Money Managers lies
I worked hard for my money for many years, and now we have lost well into six figures so far.
So I as we feel that we will never get back the remainder of our money anyway, I intend to contact the TV to see if anyone of them are interested in the Money Managers First Step Saga.
I hope if this can get to air that some of you out there will stand by me, so that I dont have to stand alone.
Hi Eddie,
Go for it…and contact us directly to tell me how you get on.
While you are at it, write to the Commerce Commission in Auckland to outline your disgust/distress…
Give it heaps and others will come in to support you.
Hi again,
I have a contact at the new herald, you will find it virtually impossible to make connect with other investors unless you go on tv or in the news paper, because most investors were elderly and they dont know how to use the internet, please let me know your decision
regards
Andrew Mcrae
Hi Eddie,
I will stand by you in regards to this mess, I am taking my financial adviser to court this year, as he was the one who put me in this mess called First Step.
And the second reason is when I was put into this trust by Mike Jones the adviser for Botany Money Managers I was not given an investment statement or a prospectus, now were you given the 20 page document when you invested, because I shore as hell wasn’t, and that Edward Russell said it is nothing to do with him take it up with your adviser.
regards
andrew mcrae
First Step Investors have just received notice of a small payout from the Trustee Calibre Asset Services, so here is an update of the current financial situation as at June 2010:
Funds Value:
Total Investor Funds Value @ Feb 2007 – $457 million
Repayments:
Approx. Payout No.1 – 2nd-Feb 2007 – $53.0 million
Approx. Payout No.2 – 20th April 2007 – $51.5 million
Approx. Payout No.3 – 31st July 2007 – $51.5 million
Approx. Payout No.4 – 31st Oct 2007 – $29.5 million
Approx. Payout No.5 – 2nd Feb 2008 – $13.0 million
Approx. Payout No.6 – 31st April 2008 – $15.0 million
Approx. Payout No.7 – 27th Feb 2009 – $10.0 million
Approx. Payout No.8 – 18th June 2010 – $9.0 million
Total repayments to date – $232.5 million (51%)
Write-downs:
Write-down @ 13th Dec 2007 – $38.0 million
Write-down @ 29th Jan 2009 – $59.7 million
Write-down @ 30th Nov 2009 – $73.0 million
Write-down @ 30th Nov 2009 (future opportunity cost) – $8.5 million
Total write downs to date – $179.2 million (39%)
True Outstanding Funds:
Funds still not repaid to Investors (ignoring write-downs) $224.50 million (49%)
Outstanding Funds after Write-downs:
Funds yet to be returned @ June 2010 $45.3 million (10%)
Interesting to note the ever diminishing payouts, as First Step grinds down to its ultimate demise, and investors become more aware of their total losses.
Is there any information re which of the four First Step trusts had payouts on 18th June and what % they were?
Brian,
I can give you figures for the 18th June payout from two First Step portfolios, which will give you somewhat of an idea.
The percentage indicated is the amount that was paid out of the total originally invested in that particular trust.
Secured Mortgage Trust – 0% (zero payout)
Traditional Finance Trust – 0% (zero payout)
Escalator Trust – 4.8%
Premium Performance Trust – 1.7%
First Up No.1 – 4.8%
First Up No.2 – (no funds were invested in this trust, so are not able to give you this percentage)
Hi,
Can any one please give us an update on 1st Step?
My wife and I havent herd any thing in a while as we now live in Australia. I’m guessing there isnt much left (if any) by now!
Thanks in advance.
Eddie,
The last letter from the Trustee, Calibre Asset Services to the First Step investors was in December 2010.
Nothing has changed since then, and no further details have been given.
The oustanding funds still owing is still $45 million as listed above till we hear otherwise, although you can be rest assured the funds are dwindling as fees continue to be extracted by the owners
http://www.stuff.co.nz/sunday-star-times/business/3644848/Fresh-look-at-First-Step-losses
This is dated 5th May 2010. For those with money, or should I say lost money in First Step.
Extremely disappointed with the advise we were given and to loose our retirement money makes us extremely angry. In the past I have handled our money situation with more expertise. Never again will we invest with you. I will go with my superannuation scheme which will give me $1 for $1
Would appreciate any new Emails on this scam.
To give you more of an insight into the insatiable greed of Money Managers / MMG and its owners Somers-Edgar, Siddall and Tills, think about this.
Even after First Step was closed in Jan 2007, Money Managers / MMG and their lords and masters were STILL CHARGING A COMMISSION on the frozen First Step Funds, and their company Matrix is STILL CHARGING MASSIVE FEES to wind down First Step.
When First Step is finally closed it will because they will have drained what little cash is left into their own private money trough.
They have written off $179 million of First Step funds to date and there is only $54 million left in the kitty.
For the last two years (2008 / 2009) they have taken out, $4 million in Brokerage fees (commission) and $13 million in Management fees.
This does not include the current year, 2010, so my guess it will be all over by the end of 2011, and we the investors will be lucky to see one more cent returned before that period.
Money Managers sold these to us as an improvement to the contributory mortages they had previously promoted & lost our money, e.g. Metropolis.
Money Managers said the risk would be spread amongst many investors & loans spread over many borrowers.
So the 2 loans to Club finance ($63) & Geotherm ($79) are such a huge proportion of the total funds, that they do not fit this promotion
Money Managers have lied.
To make it worse, Somers-Edgar, Tills & Siddall are still involved in the various companies involved with the new MM advisors.
We are another loser in this fisasco. We were assured and have written proof that our funds were in ‘low risk’ investments but they went down the tubes faster than a rat up a drainpipe. Currently out of $350,000 invested with Money Managers we can access $46,000 AND they are still sucking out 1% from the total
I can’t believe that this country talks about smacking kids laws while the elderly can lose their life savings and the Govt. does not lift a finger.
Why would you invest another $ in this country?
I say we should all put in $1000 and take money managers to court, in my opinion, they are a pack of theives
I’m with you Andrew.
But how to go about it……
I’m interested to know if your suggestion has prompted any response.
Very good idea Andrew, I’m with you all the way. I would gladly invest $1000 to see this pack of thieves behind bars.
hi again,
there is 7000 investors in this mess, called money managers first step, I have not been keeping up with this webb site and i think it is well over due taking this bunch of used car sales men to court, like i said if we all put in $1000 each that would start a very good fighting fund. My loses to date are approx $650,000 has anybody lost any more that me to date please let me know, but i am not sitting back to let these donkey ruin my life, my court case starts early next year,
regards
andrew mcrae
Look out, we have had yet another set of writedowns, so time for another breakdown of the current financial state of the First Step Trusts @ Dec 2009.
Funds Value:
Total Investor Funds Value @ Feb 2007 – $457 million
Repayments:
Approx. Payout No.1 – 2nd-Feb 2007 – $53.0 million
Approx. Payout No.2 – 20th April 2007 – $51.5 million
Approx. Payout No.3 – 31st July 2007 – $51.5 million
Approx. Payout No.4 – 31st Oct 2007 – $29.5 million
Approx. Payout No.5 – 2nd Feb 2008 – $13.0 million
Approx. Payout No.6 – 31st April 2008 – $15.0 million
Approx. Payout No.7 – 27th Feb 2009 – $10.0 million
Total repayments – $223.5 million (49%)
Funds not repaid to Investors (ignoring interest) $233.50 million (51%)
Write-downs:
Write-down @ 13th Dec 2007 – $38.0 million
Write-down @ 29th Jan 2009 – $59.7 million
Write-down @ 30th Nov 2009 – $73.0 million
Write-down @ 30th Nov 2009 (future opportunity cost) – $8.5 million
Total write downs to date – $179.2 million (39%)
Funds yet to be returned or written off @ Dec 2009 ignoring interest $54.3 million
(12%)
Well they have struck again, and we the investors have lost another huge slab of our investments, the biggest to date.
Write downs @ 30 Nov 2009 have cost us another $81.5 million.
The total write downs in 2009 now equal a massive $141.2 million.
Never mind, we are being promised some repayments next year.
However I wouldn’t hold my breath if I were you, because if you look carefully, you will notice the cupboard is nearly empty, there is only $54.3 million left of the $233.5 million they owe us.
We do hope Money Managers / MMG all have a happy and enjoyable Xmas.
Hi there,
I’m one of the victims of Money Managers.. I’m angry and don’t know what to do … from the article it can easily be seen that the company is not interested in what is happening with us investors that have lost a lot… I think we should do something because the leaders of this company should be put under a microscope… what about making a big fuss in media…and expose what has happened?
Here is a breakdown of the current financial state of the First Step Trusts @ Oct 2009.
Funds Value:
Total Investor Funds Value @ Feb 2007 $457 million
Repayments:
Approx. Payout No.1 – 2nd-Feb 2007 $53.0 million
Approx. Payout No.2 – 20th April 2007 $51.5 million
Approx. Payout No.3 – 31st July 2007 $51.5 million
Approx. Payout No.4 – 31st Oct 2007 $29.5 million
Approx. Payout No.5 – 2nd Feb 2008 $13.0 million
Approx. Payout No.6 – 31st April 2008 $15.0 million
Approx. Payout No.7 – 27th Feb 2009 $10.0 million
Total Repayments $223.5 million (49%)
Funds not repaid to Investors (ignoring interest) $233.50 million (51%)
Write-downs:
Write-down @ 30th June 2007 $38.0 million
Write-down @ 29th Jan 2009 $59.7 million
Write-down @ 30th Mar 2009 $14.3 million
Total Write Downs to date $112.0 million (24%)
Funds yet to be returned or written off @ Oct 2009 ignoring interest $121.50 million
(27%)
Ironic that the two huge risky loans (Club Finance $51m and Geotherm $75m) were not part of the financial Statement & Prospectus that we all signed up to, but were introduced without notifying investors or even Money Managers financial advisors.
Adjustments to the prospectus were made after the event in Aug 2006, a few months before First Step fell over. I think this was done to apply a veneer of respectability to their actions.
It is worth noting that the collapse of First Step is far different to other Finance Company collapses we have all witnesed recently. It happened well before the credit crunch hit and was the result of an empire built without foundations.
The money still owing to investors has not disappeared. Authorities should investigate this throughly and anyone who has acted illegally should be forced by law to hand it back.
I am really pleased a quality website like this has been set up to allow victims of Money Managers Financial Advice to contact each other.
The point is that we all went to our local MM branch for advice. They presented themselves as “professional financial advisors” so that doesn’t seem unreasonable. Furthermore they said that they had a team of financial analyists who vetted investments and that the interests of the investors (you and me) were of prime importance to them.
Now the FirstStep investment has turned sour they say read the fine print, all the risks were fully disclosed.
I have looked carefully at all the documents I can find and the conclusion I have come to is that FirstStep should never have been recommended to anyone, not even a problem gambler, because it is so hopelessly weighted in favour of the beneficiaries of the Financial Trusts Nos 1, 2, 3 & 4 these are a parallel set of trusts to the STEP trusts we invested our money in.
The STEP trusts were paid interest of 6% (in the case of Secured Mortgage) its funds were forwarded to FT1 who added 4% and “invested” the money in some development project or other.
In 2004/5 that 4% margin earned about $9million dollars for the three trustees of the Financial Trusts Messrs Somers-Edgar, Siddle and Tills. A nice little earner considering none of their money was at risk.
On top of the beneficiary distributions Matrix charged $6 million and directors fees from the “Joint Venture” companies were possibly another $12 million.
I wonder how many investors realise that about $250million (50% of the total) went into these joint venture companies and that these JVCs were not subject to any lending criteria at all.
Messers Somers-Edgar, Siddall and Tills took the profits from the FTs each year so there was nothing left to cover the bad debts when so many of their speculative ventures ran into trouble.
It is hard to know exactly how much they will have made over the six years or so before the Investment was frozen but $100 million seems possible. That is a bitter pill to swallow knowing we are left to face the losses on our own.