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A probe into the books of a suburban law firm over allegations up to $100 million is missing in an apparent Ponzi scheme has uncovered a bank account not linked to the business was being used to funnel funds.
Scammed investors have begun issuing letters of demand after the death of AMS Ivanhoe Lawyers employee John Adams led to concerns that investment proceeds could not be accounted for.
Deceased lawyer John Adams.
Adams collapsed at his Big Hill property, near Lorne on the Great Ocean Road, on October 20 and was quietly buried at a private ceremony last Thursday. His decades-long colleague and business partner in AMS, Shane Maguire, did not attend.
A source close to the law firm said staff had uncovered the investment proceeds were not deposited in trust accounts and had instead been funnelled through a Commonwealth Bank account unconnected with the business.
The loss has been estimated at anywhere between $20 and $100 million, with the Victorian Legal Services Board briefing the Victoria Police fraud squad.
The source said none of the other employees or directors at the law firm knew where the money has gone and were blindsided by the loss. Maguire did not respond to requests for comment.
The existence of the external bank account is a further blow to investors because if the money was never put in trust it may not be covered by insurance, leaving them out of pocket.
Victims and investigators are now being left to determine how a lawyer at an ordinary suburban legal business could have duped dozens of investors and colleagues for decades. There is no suggestion that any other person at AMS other than Mr Adams is suspected of wrongdoing.
Concerns that tens of millions of dollars were missing began on Monday when the Victorian Bookmaking Association said $1.8 million of their investment funds were missing.
On Tuesday, investors descended on the firm’s Upper Heidelberg Road office looking for answers and issuing letters of demand.
One investor, who did not want her name used in reports due to embarrassment, attended the office and was assured no employee knew what had happened to the money.
“In any realm of human decency you cannot do this,” the investor said in their letter of demand.
“We trusted John and AMS Law. We gave him our life savings. I worked a full-time job until I was 70 years of age to accumulate that nest egg.
Another victim who had invested with the firm for three generations and had received monthly payments without incident described Adams as affable and friendly.
“There’s nothing suspicious about him whatsoever. Nothing, just nothing,” he said. “There’s no red flags there as far as the man goes.”
In addition to the bookmaker association’s fears for its money, at least one private investor could be an estimated $11 million out of pocket.
Adams had a long association with the racing industry and AFL football.
Australian Securities and Investments Commission records show he was previously secretary of the North Melbourne Football Club, Brisbane Football Club, and director and secretary of Football Tasmania.
Tens of millions of dollars are allegedly missing, including funds from the Victorian Bookmakers’ Association.Credit: Jessica Hromas
AMS Ivanhoe Lawyers was established in 1966 by Adams.
Bookmakers have also privately invested millions of dollars with the law firm, seeking high returns on first mortgagor loans. A bookmaking source said they believe they had lost their investments.
The fund was accepting contributions as late as last month, with a member of the racing industry telling The Age the fund had accepted a payment of $250,000.
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