Former high-flying developer and self-styled property investment guru Dan McEwan has been bankrupted.

Dozens of small investors in McEwan projects are millions of dollars out of pocket, as one development after another goes to mortgagee sale.

In the High Court at Auckland late last week, McEwan was adjudged bankrupt over a $978,000 debt. Troubled finance company Hanover Finance told the court it was also owed $4 million.

But McEwan's own lawyer had earlier told the Auckland District Court that his 70-year-old client, who claims his only source of income is a pension, owed in excess of $100 million.

McEwan is to be sentenced in the District Court tomorrow for breaching the Securities Act by offering investments without a registered prospectus or investment statement.

The maximum penalty is a $300,000 fine but as McEwan is bankrupt it is not clear what the court may do.

The Herald understands community service could be an option.

McEwan led the Investors Forum, a group which held seminars to promote property investment and offered the opportunity to buy shares in developments.

Many have failed. The latest is the former Dunedin Chief Post Office which was to be redeveloped as a Hilton hotel. South Canterbury Finance, owed $5 million, has put the property to mortgagee sale.

McEwan bought it in 2006 for $7 million and sold apartments and suites in the yet-to-be-built development.

The property has a current rateable value of $5.7 million.

The large-scale redevelopment of the spa town Waiwera, north of Auckland, has also run aground.

In a letter to investors last week, McEwan's son Kelly said the land's value had reduced by 40 per cent and was likely to go to mortgagee sale.


MATE 'TAKEN TO THE CLEANERS'

Southland entrepreneur Basil Walker has known Dan McEwan for years.

He attended one of his first Investors Forum seminars, and trusted him as a fellow Southlander and developer.

At Christmas, he confronted him over the $1.68 million he was owed on a Frankton, Queenstown property that was never developed and subsequently went to mortgagee sale.

The Walkers have lost their house over the failed deal, and do not hold out any hope of seeing their money again. "We've been through the bloody cleaners with it."

Mr Walker says Dan McEwan revalued the property for development purposes and took $3 million out of it. It took him years to get Mr McEwan to sign an agreement, he says.

Mr McEwan set rents at an unrealistic level to justify what his developments were supposed to be worth, Mr Walker believes.

"It was just bull, and it went on and on, and Dan believed it."