Watchdog sniffing around LM Investment Man of mystery ... Peter Drake. Photo: Sharyn Rosewarne The corporate watchdog is investigating one of Australia's biggest mortgage fund operators, LM Investment, for potentially false and misleading statements. The ABC's Four Corners program, to be aired tonight, investigates the human suffering and huge destruction of wealth arising from the collapse of the mortgage fund industry. The Gold Coast-based fund manager LM Investment, which operates in 70 countries and claims to manage $3 billion of realisable assets, has even said that one of its key funds is a "bank-like" facility and that it operates in Australia as a "conservative and highly-rated private bank." At least three of LM's funds are frozen, hundreds of millions of dollars have been lost and many unitholders cannot access what is left of their savings. LM denies that it has misled investors. Its founder, Peter Drake, brought legal proceedings against Fairfax for defamation late last year after demanding the SMH and Age websites take down this story. As the following picture shows, Mr Drake also claimed on his blog that he has the author of this article "Under Investigation." The corporate regulator has been investigating LM for some time. "The ABC understands that a team of investigators from ASIC is looking into LM's statements, disclosures and the valuations it has placed on a key asset in one of its funds," says the website today. Property funds management group, Trilogy Capital, is seeking to remove LM as manager of its flagship fund, the frozen LM First Mortgage Income Fund. In marketing to clients to defend against the incursion by Trilogy, LM has ratcheted up its fees for the funds which are still open, such as the Managed Performance Fund. Sources said that some financial advisors had been offered circa 10 per cent cash in the first year in commissions to put their clients' savings into an LM fund. LM and Mr Drake were unavailable for comment.