Directors of a collapsed investment scheme that cost elderly Australians their homes and life savings have been referred for criminal prosecutions, a Senate committee has heard.

Australian Securities and Investments Commission chair Joseph Longo told the inquiry information on the Sterling Income Trust had been passed to the Commonwealth Director of Public Prosecutions.

The scheme lured investors into signing a long-term tenancy agreement with returns from a lump-sum investment to pay their rent.

Money from more than 100 investors was put into Sterling-linked funds between 2016 and 2019, but it eventually collapsed after a property market downturn and due to a “dysfunctional” operating structure.

But ASIC was criticised for failing to take immediate action when the West Australian industry regulator referred the matter in March 2017, not launching a formal investigation until May 2018.

Camera IconInformation on Sterling has been passed to the Commonwealth prosecutors, ASIC’s Joseph Longo says. Credit: AAP

Former ASIC senior investigator Niall Coburn told the hearing it was “incredible” it took so long to start investigating, citing its power to investigate on any suspicion of a contravention.

He noted the delay allowed the fraud to “spread its tentacles”.

“If you’re not quick off the mark, you lose the money … there’s no explanation to why ASIC wasn’t quick off the mark,” he said.

“It is incredible ASIC would wait a year to commence an investigation.”

Mr…

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