A “thoroughly unscrupulous real estate agent” has been ordered by an NSW Supreme Court judge to repay the money lost by a family after he encouraged them to invest in Ralan property developments.

The defendant, Koon Tung “Gary” Chu, provided services to the now-disgraced Ralan Group as a contracted agent in his capacity as a director of several real estate companies and for a short time as a sole trader.

Ralan Group owed investors more than $500 million when it collapsed in 2019, with a pipeline of 3,000 apartments in development across Sydney and the Gold Coast. But a scheme that many investors took part in to release their property deposits to the firm in exchange for a 15 per cent return upon settlement was found to essentially be operating as a fraudulent Ponzi scheme, with the funds being used to repay other investors’ interest and cover losses.

The plaintiffs in the case are a wealthy family from Taiwan, whose senior members still reside there. The younger members of the Chen family, a daughter and grandson, live in Sydney and originally made contact with the real estate agent while looking for a home to live in that could also accommodate family on visits.

Chu reportedly showed them a number of properties that were unsatisfactory to their needs, before suggesting that they consider buying a property off-the-plan from Ralan. The family ultimately selected a penthouse apartment in Sydney’s northern suburb of Lindfield being sold by Ralan, which they could afford without finance. They paid a substantial deposit. The court heard that Chu then induced the buyers to sign contracts for a further 28 off-the plan apartments from the developer, which was originally pitched as a way to cover the stamp duty costs associated with the penthouse transaction. Earning a commission on each of those sales, he advised them to buy the apartments so as to take part in Ralan’s “Released Deposit Scheme”, which entailed offering purchasers 15 per cent interest rate if their deposit was released and lent to Ralan for its own use.

The interest was to be paid to the clients upon settlement of the purchase. But with the firm trading insolvent and no settlement taking place on the thousands of apartments it was said to be developing – including the dozens purchased by the Chens – the plaintiffs lost all the money they had released when the firm collapsed. Their losses totalled more than $7 million.

The court heard that Chu advised the plaintiffs that they did not need a lawyer to review any of the contracts, and would only need to hire a conveyancer upon settlement.

In his ruling, the Honourable Justice David Hammerschlag determined that Chu was aware of Ralan’s business practices, and by inducing the Chen family to make property investments with Ralan, he engaged in conduct which was misleading or deceptive and was responsible for their loss.

Naming the defendant by his known name, Gary, Justice Hammerschlag stated that given Chu knew of Ralan’s dishonest practices at the time of his dealings with the Chen family, “the plaintiffs’ damage was caused by Gary, and Gary alone. This is a case about what Gary said about Ralan, not about what Ralan said or did not say about itself”.

He ultimately ordered Chu to repay their losses of $7,438,548, plus costs. Chu is reportedly considering launching an appeal.