Cycclone investor speaks out
DAVID HOFFMANN has kissed goodbye to the money he sank into a shonky investment, but he is worried those responsible will do it again.
The Richmond Hill resident is one of more than 120 investors, mainly from the Lismore area, who took the advice of a mate and put savings into a company that claimed to be developing a new engine powered only by magnets.
Usually a savvy businessman, Mr Hoffman, of David's Health and Lifestyle Studio at Goonellabah, forked out about $2000 on the advice of a friend in Lismore.
He wasn't the only one caught out. Between March 2005 and mid-2006, Cycclone Magnetic Engines Inc raised more than $1.3 million in this fashion, according to the Australian Securities and Investments Commission (ASIC).
ASIC commenced legal action against CME in early 2007.
Now the Supreme Court of Queensland has found that the company engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive, by suggesting on its website that the engine worked when it could not.
It also ruled that CME, along with its 46-year-old Gold Coast chairman Micheal Nugent, misled or deceived investors by saying that $50,000 would be spent on tooling, plant and equipment, when less than $8000 was actually spent.
Of the $300,000 promised for research and development, no money was spent.
And while CME said that just $100,000 would go on salaries and wages, in actual fact more than $400,000 was committed.
The court ordered that CME and Nugent not engage in any future misleading or deceptive conduct.
But for Mr Hoffmann, this ruling did not go far enough: “If ASIC has found they've done this, what are the ramifications for these people? I'd love to have seen it go further.
“What's to stop them tomorrow going out and doing the same thing with another product?”