Preparing for retirement is an absolute minefield and Australia's financial regulations are of only limited use in protecting investors. When it comes to running investment schemes, it's almost a case of anything goes, so long as you disclose, writes Stephen Long.

Want to make yourself enormously rich and wealthy while running an investment scheme that fails and destroys the retirement savings of thousands of people?

Want to structure your financial affairs so that liquidators and receivers have no hope of getting back tens of millions of dollars paid in fees to entities you controlled before the scheme collapsed?

It's possible. Ask Bill Lewski. He knows how.

The saga of how he managed it - by apparently legal means - is a story that speaks volumes about the law, about regulation, and about the minefield facing Australians as they try to responsibly invest for their retirement.

Bill Lewski was the founder of the Prime Retirement and Aged Care Property Trust. It specialised in retirement villages; with the population ageing, many thought it was a good investment.

But Prime Trust went into liquidation in 2011, and with it, $550 million of investors' money was lost.

Some of those investors are suffering debilitating depression. Some have been forced back to work at an age when they should be retired. At least one has suicided.

The board of the "responsible entity" that oversaw Prime Trust on behalf of investors included some luminaries: Michael Wooldridge, former health minister in the Howard government, was chairman; Peter Clarke, chairman of Victorian Government's urban renewal agency Places Victoria, was a director.

But when it came to Prime Trust, all roads led back to Bill Lewski.

He effectively owned that responsible entity, a company called APCH Ltd, through a company called Daytree. He owned another company, Retirement Guide, which provided services to Prime Trust.

Through those companies, Bill Lewski was paid $93 million in two deals worth scrutiny.

According to the liquidator of Prime Trust, those payments and the deals that accompanied them effectively sent Prime Trust broke. And according to the liquidator, the payments should never have been made.

The first payment was a $33 million fee for the listing of Prime Trust on the ASX in 2007. That's right, $33 million, not $33,000.

Why did investors who'd bought units in Prime Trust approve such a large payment? The short answer is they didn't; the board changed the constitution of the trust, without any consultation with investors, to provide for the payment.

It gets worse. Only 10 per cent of the listing fee was payable upfront. The rest was subject to performance hurdles and payable in instalments over three years.

But there was a get-out clause, in effect, inserted into the fine print in yet another change to the constitution of the trust. It provided for the payment of a "removal fee" equivalent to the listing fee if the "responsible entity" (controlled by Lewski) was removed as the registered responsible entity of Prime Trust.

That get-out clause was triggered through an adroit financial transaction. APCH, the responsible entity, controlled by Lewski through another company called Daytree, issued a single redeemable preference share to a company called "Kidder Communities". It was associated with a firm by the name of Kidder Williams, who were consultants to ACPH.

That share gave Kidder Communities 51 per cent of the voting rights at shareholder meetings of APCH. Aside from that, no actual shares changed hands at the time. But it was enough to affect a change in control of the responsible entity.

The balance of the listing fee, nearly $30 million, was paid out in full without the need for those pesky performance hurdles to be met. Elegant, clever: but topped, in money terms, by the sale of the management rights for Prime Trust's retirement villages.

Another Lewski company, Retirement Guide, sold the management rights in September 2007 for $75 million to Babcock and Brown Communities - a spin-off from the investment bank Babcock and Brown which collapsed spectacularly during the GFC. Only $60 million was actually paid.

It was a lucrative deal for Lewski and Retirement Guide - the only problem here is that, the liquidator argues, his company didn't actually own the management rights that it sold.

Each time Prime Trust acquired a retirement village, Retirement Guide was contracted to manage it. At first, formal contracts were entered into; later, it was just verbal deals.

Lewski's company was, quite legitimately, paid a fee for the service of managing the retirement villages. But Retirement Guide had paid nothing for the management rights it sold for $75 million.

The deal was done through another complex transaction: a series of options contracts that gave Babcock and Brown the right to purchase the management rights and the operating subsidiaries of Lewski's Retirement Guide.

A restructuring associated with the options contracts gutted Prime Trust's revenue: according to analysis by the Prime Trust liquidator, Stirling Horne, the income Prime Trust was receiving fell by about 60 per cent a year.

Stirling Horne maintains that the management rights were an asset of the trust, and were not Retirement Guide's to sell.

"Those two transactions - the listing fee and the sale of the management rights - just should never have happened," he said.

"If that (nearly) $100 million would still be in available to Prime Trust, I'm sure it would have been able to continue to this day."

Go through the accounts in the years before Prime Trust collapsed and it is apparent that, after the payment of fees running into the millions, almost the only money left in the responsible entity was the $5 million it needed under the law to keep its financial services licence.

So what happened to the money?

According to evidence given in court, at hearings called by bank-appointed receivers, the $60 million was placed in a family trust, then distributed as a gift to two of Lewski's sons. The rest of the money also appears to have made its way through family trusts.

Bill Lewski has said on oath that he has no assets, but he lives in opulent style across the road from the beach at Brighton in Victoria and drives a Porsche. He enjoys the benefit of a massive apartment opening onto the sand at the Gold Coast, purchased last August for $4.6 million.

The assets are all held in family trusts of which he is not a director, but of which he is, apparently, a beneficiary.

Stirling Horne owns race horses and has been a professional gambler, but he knows the odds are stacked against him here.

Asked what prospect there is of the nearly 10,000 investors who put money in Prime Trust getting it back, he says, "A million to one."

Don Steel, an 82-year-old former actuary and a founder of the Prime Trust Action Group, badgered the Australian Securities and Investments Commission (ASIC) incessantly about the way the constitution was changed to allow the payment of the $33 million listing fee.

He was initially rebuffed, first by the minions and eventually by the then-chairman of ASIC, Tony D'Aloisio.

"ASIC's main regulatory responsibility ... is to ensure that investors are given adequate information to enable them to make informed decisions and that the risks associated with an investment are disclosed," the ASIC chairman wrote.

"We note that the fees you complained of were outlined in the Product Disclosure Statement prior to the Trust's listing on the ASX. Accordingly, there is no evidence that the Responsible Entity has breached any of its statutory obligations."

Disclosure: it's the basis of our system of financial regulation. The problem is, it's almost a case of anything goes, as long as you disclose.

Never mind that the directors unilaterally changed the constitution of the trust in ways that allowed tens of millions to be paid out to the detriment of investors: it was all disclosed.

Prime Trust is not alone. Similar things have happened in many mortgage funds and other managed investment schemes where investors have lost money.

The absurdity of "disclosure" as a safeguard is evident in the billions that mainly elderly retirees have lost in mortgage funds and debentures over recent years.

Many of these businesses failed to meet the minimum benchmarks for capital set by ASIC, but the regulator could do nothing other than make sure this was disclosed in a document.

The corporate watchdog's approach has been to require these funds to state "if not, why not?" if its benchmarks were breached - but too often this became an invitation for propaganda, as the managed investment schemes used clever words to explain away their failings.

In the case of Prime Trust, ASIC belatedly changed its tune. It is now taking civil penalty proceedings against directors of Prime Trust's responsible entity, including Bill Lewski, arguing that they failed in their duty as directors.

The regulator is seeking to have directors fined and banned for a period of time from running companies. There are no guarantees it will win.

Bill Lewski told a court hearing he believed he could face criminal prosecution by ASIC, but that, apparently, is the last thing that ASIC has in mind.

Angry investors have described what went on at Prime Trust as "criminal". Under the eyes of the law, it appears to be nothing of the kind.

Stephen Long's Four Corners investigation A Betrayal of Trust airs on ABC1 at 8.30 tonight. View his full profile here.