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Scheme fails leaving baby boomers in the lurc -

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(generated from captions) RADIO ANNOUNCER: In Melbourne, it's 14 degrees. I'm Andrea Edwards for 3AW, your Commonwealth Games station. Initially I used to go to bed early, just lay in bed and listen to 3AW on the radio, and I heard the advertisement from Paul Cronin and Dawn Fraser. They were advertising about this Money for Living, and I sort of listened over a couple of nights and heard the same ad. Then I had actually noticed it on the TV as well

and I thought, you know, it might be worthwhile looking into. TV COMMERCIAL: You might be watching now because you don't have the money to do anything else. They were household names selling opportunity to Australia's baby boomers, to people who owned their own homes, who were asset-rich but cash poor. Money for Living is giving financial freedom to retirees and pensioners. (Reads) "The founders of Money for Living

"have spent 15 years developing a unique system "that allows people generally over 55 "to access the equity in their home,

"allowing them to enjoy a much better standard of living "than they would otherwise be able to afford." Money for Living offered to buy that home and free up the equity in it. Clients would be paid a lump sum and the rest in monthly installments and, best of all, they could still live in their home for next to nothing. They wouldn't even have to pay rates or water bills. They would pay me $45,000 upfront and $647 a month for 20 years. And I thought, you know, with the pension,

I thought, "That's pretty good." Ben Walsh sold his house to Money for Living. A car was sent to his home on the urban fringe of Melbourne and brought him here to No. 1 Queens Road where the documents were just waiting to be signed. As for legal considerations, well, the solicitors were in the same building. It was all very convenient. You know, when I first read the book, I thought, "You know, this just seems - everything seems right," which is when I made the phone call, and maybe it could be the most expensive phone call I've ever made. Ben Walsh has just learnt that Money for Living has gone broke with debts of some $2.5 million.

In its short history - 12 months, rather than 15 years - it bought 117 properties and onsold 70 of them. But then it became known that Stephen O'Neill, the man behind the scheme, is a convicted and now missing fraudster. The company was left with 47 homes and payments it couldn't meet. What's gone wrong is a number of things. The calculations in terms of the costs to maintain these properties over the period required extra cash that the company didn't have. They also had some problems when ASIC commenced their investigation into the previous history of Mr O'Neill, and when that occurred, the inquiry rate dried up quite quickly. Not much is known about the ASIC investigation into Stephen O'Neill. ASIC refuses to discuss it, beyond acknowledging that it exists. But we do know he was convicted of fraud in 2001 and spent three years in jail. He was also banned from being a company director for five years, but, amazingly, that fact slipped under the regulatory radar. With having Stephen O'Neill as a convicted felon as one of the directors of the company, as far as I'm concerned, I just feel it's fraudulent. It should never ever have been allowed to happen. Ben Walsh is having a rough time of it lately. His car is on its way to the wreckers

and his finances have gone up in smoke. But worst of all, he recommended Money for Living to an old friend, Ted McKenna, who sold his home of 35 years. If I was cheated by a mob of con men I would be kicking myself. I would be giving myself a big kick up the backside for being stupid and listening to glib people. But I wasn't listening to glib people, I don't think. I would have lost approximately, if I have to pay my rates and tax, $100,000. REPORTER: Can you afford $100,000? I haven't got $100,000. No, I can't afford it. This is $100,000. And as for Dawn Fraser and Paul Cronin, they're apparently devastated by what's happened but unwilling to speak about it. They issued this short statement.

Find out how Money For Living could make your life easier. REPORTER: You see the names Paul Cronin and Dawn Fraser. Did that give it a ring of legitimacy?

It gave it an enormous influence attached to it - enormous influence and I'm not criticising them, because I think they took this on with total sincerity, because the scheme was written up so well. The Money for Living scheme was flawed but not illegal. In Australia, the equity release business is growing rapidly. Some estimates suggest it could be worth between $3 billion and $5 billion

within the next decade as older Australians cash in perhaps part of their children's inheritance for a more comfortable retirement. Kieren Dell is the head of the industry association, Sequel. His advice to potential customers is clear: Don't sell the title to your property.

We also strongly recommend that you get independent financial advice as well as talking to Centrelink about your pension entitlements. And then the other issue is to make sure you talk to your beneficiaries,

make sure you talk to your children or whoever is going to inherit your estate, because they need to understand that they're not necessarily going to get a property that is unencumbered at the point that you die. At a creditors' meeting, Ted McKenna and Ben Walsh were told they will not be thrown out of their homes and new financiers have shown an interest in taking over the scheme. But for two retirees who thought the sale of their homes might provide some comfort and security, there is no certainty now. The whole concept - it just seems wrong. Why they should be allowed to get away with it? And as I say, I don't know where mine is going to end up and where my friends are going to end up, but we will just have to wait and see.

Geoff Hutchison with that report. With a distinguished legal career including 17 Royal Commissions behind him, four of them as chairman, a stint as head of Australia's domestic spy service ASIO and many other public roles, Sir Edward Woodward's memoir was always going to be worth a read. He was a confidante of prime ministers and once told his friend, Governor-General Sir John Kerr, weeks after he had sacked the Whitlam government that he had done the wrong thing. He also knocked back the governorship of Victoria because he didn't think it was appropriate for an Athiest to hold the position. It was during Sir Edward's five years running ASIO in the late '70s that Australia experienced its worst terrorist attack on home soil to date - the Hilton bombing. And he has now expressed strong views that Australia's role in Iraq has heightened the risk of terrorist attacks here. I spoke with Sir Edward Woodward in Melbourne today.