Blue Chip never short of answers

Nervous investors considering buying a property through Blue Chip were given a series of well-rehearsed answers if they expressed concerns.

Paul Dale and Daniel Grove, barristers acting for more than 300 investors, have obtained a document which showed how Blue Chip sales consultants were told to give standard replies to worried investors.

"It looks too good to be true" should be answered with an acknowledgment of their concerns but turned into a positive, the document said.

"I can do it myself cheaper and better" should be answered with emphasis on the amount of trouble and time tenants caused, it said.

"I don't like apartments" should be answered by telling investors that many apartments were badly built and in an oversupply phase.

But Blue Chip consultants were encouraged to tell investors the apartments they were selling were of good quality.

They were also told to explain the product was an investment and people should not be emotionally involved.

"Why is my deposit so large?" was to be answered with reassurances about the fact that Blue Chip was seeking 20% to 35% of an apartment's value when industry standards were just 10%.

People were to be told that the size of the deposit was needed "for your own safety".

"What happens if the market is down when I sell?" should be met with an answer about risks but also reassuring investors that they did not have to sell for some years.

"Why are your fees so high?" was to get the reply that nothing was hidden, Blue Chip believed its fees were reasonable and justifiable and were also tax-deductible.

Blue Chip charged brokerage fees, property management fees and other charges.

"Where does my money go?" should receive the assurance that Blue Chip covered all deposits, fees and costs, credited to a client ledger account held by the company.

"What happens when the bubble bursts?" should be met with the suggestion that no reliable analysis suggested there was, in fact, a bubble, nor that it was likely to burst.

"What if Blue Chip folds?" got the stock answer that it was a company listed on the NZX with a market capitalisation of $50 million.

"What happens if we split up" got the answer that it all depended on people's personal circumstances.

"What if I lose my job?" should be answered with the offer to restructure arrangements to keep the property.

Other questions posed were about the safety of people's own family homes in the deal and the security of deposits.

About 2000 people bought 3000 properties and Blue Chip's creditors claimed $80 million from an initial 20 companies.

Reports are due out next month from the liquidators to give more information on the state of the businesses. - Anne Gibson

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