The Serious Fraud Office is investigating Auckland property developer Leonard Ross and the outcome will determine whether apartment owners in one of his projects will pursue their own legal claim against him.

The white-collar crime investigator is conducting a part two investigation into Ross, though a spokeswoman declined to provide more detail.

A part two investigation means the SFO has reasonable grounds to believe an offence has been committed, and grants the director the ability to compel attendance to interviews.

The probe prompted owners of the Celestion Apartments in Auckland to seek a stay on the removal of Emily Projects Ltd (EPL) from the Register of Companies after the entity’s liquidator’s Gregory Sherriff and Timothy Downs of Grant Thornton said they didn’t want to pursue the allegations or delay winding up the company.

Sherriff and Downs received two non-investor claims from unsecured creditors of $671,000, and 53 investors claims totalling $2.9 million, paying out $420,000, or 11.8 cents in the dollar, they said in their final report in October.

The apartment owners say they’re creditors of the company and have faced “significant losses” as a result of a rental guarantee at the time of purchase not being met, according to a March 7 judgment by Justice Christian Whata.

Apartment owner Tan Lin filed the proceedings on behalf of her fellow owners, saying if Ross is found to have acted fraudulently or in breach of his duties, “the apartment owners as creditors of the company intend to pursue a derivative action against the director, or alternatively, intend to seek an order requiring the liquidator to pursue these claims,” the judgment said.

Justice Whata granted the apartments owners the stay on Emily Projects’ removal from the register, though imposed a six-month deadline to prevent it from dragging on.