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Alleged ‘fake debts ring’ involved with Timbercorp

Authorities are investigating members of an alleged “fake debt bankruptcy fraud ring” accused of using sham debts to shield millions of dollars in assets from Timbercorp creditors and investors. Source: The Age

An explosive document lodged in the Federal Court alleges that a ring of professionals helped protect the assets of bankrupt people, including banned financial planner Peter Holt, whose victims were financially ruined by his advice to sink money into Timbercorp and other collapsed schemes.

Mr Holt owes Timbercorp $2.5m

Mr Holt, a key spruiker of Timbercorp products through his company Holt Norman, is bankrupt but lives in an eastern-suburbs mansion, drives a European car and has been described in parliament as a “crook, a criminal and a fraudster”. He owes Timbercorp $2.5 million.

Holt’s company, the Holt Norman group, exposed 460 investors to Timbercorp, which sold managed investment schemes based on bluegum plantations and horticultural crops like olives and almonds.

It collapsed in April 2009 with debts of $750 million, leaving thousands of investors holding massive loans taken out to invest in the schemes.

Timbercorp was the subject of a Senate hearing in Melbourne recently in which burnt investors, including former clients of Holt, gave moving testimony of how their lives had been destroyed.

It was their stories that contributed to senator Ricky Muir and independent Jacqui Lambie changing their positions and blocking the government’s watering down of reforms to financial advice laws brought in under the previous Labor government.

Holt was banned from providing financial advice for three years in 2012. But his former clients cannot sue him because he is bankrupt.

KordaMentha files Federal Court affidavit

Fairfax Media can confirm that the Australian Securities and Investments Commission and the Australian Financial Security Authority are conducting separate investigations into people linked to the alleged “fake debt” scheme, which was detailed in a Federal Court affidavit filed by Timbercorp’s liquidator KordaMentha last month.

The Legal Services Commissioner is also believed to be investigating matters connected to the scheme.

KordaMentha is pursuing people who owe money to Timbercorp on behalf of the failed company’s creditors. Its affidavit, signed by KordaMentha partner Craig Shepard, alleges that key people each played a role to put more than $20 million in properties and other assets linked to Holt and 12 other bankrupted people beyond the reach of their creditors, which in each case included Timbercorp.

Allegations of a “fake debt bankruptcy fraud ring” involving Holt and lawyer John Voitin were raised in last month’s parliamentary hearing into the collapse of Timbercorp.

According to the affidavit lodged by KordaMentha, overseas companies associated with Mr Voitin allegedly put claims over properties and assets owned by the bankrupts, allegedly placing them out of reach of other creditors.

The affadavit says that accountant Graeme Watters referred Holt, his partner and the former clients to Sydney-based Andrew Wily to act as their trustee in bankruptcy or their controlling trustee.

The affidavit was lodged as part of an application by KordaMentha to remove Mr Wily as bankruptcy trustee of the 13 bankrupts, including Holt, on the grounds that he may not act with impartiality.

Mr Wily stepped down voluntarily as trustee following KordaMentha’s application. The role of a bankruptcy trustee is to act for creditors to ensure they receive the highest possible repayment of debts.

The allegations in the affidavit have not been tested in the court, and Fairfax Media is not suggesting the allegations are true. Mr Wily denies any wrongdoing, saying he had tried to get funding from KordaMentha to investigate the bankruptcies and remove some of the Voitin-related claims, or caveats, flagged by the liquidator.

“I wrote to them on numerous occasions to get more funding.” The money was denied, he said.

Mr Wily said Holt was a high-profile case and as his bankruptcy trustee he had given him a good “shake-up” and a thorough investigation.

ASIC told parliament that it had “an investigation under way in relation to Mr Wily, who was suspended for four months in 2003 by the Companies Auditors and Liquidators Disciplinary Board for breaching his duties as a liquidator. The investigation is believed to be unrelated to Holt.

Associated companies named in other bankruptcy

Companies associated with Mr Voitin were last year named in a separate Federal Court case involving allegations of suspicious bankruptcy debts. Holt requested bankruptcy in June 2011 with debts of $26.9 million, including $2.5 million to Timbercorp Finance and $14.7 million to a company called Dapal Ltd, which is registered in Hong Kong. Dapal was also named in last year’s Federal Court case.

According to Holt’s banning order issued by ASIC, Dapal had agreed to lend the money to Holt and his business partner William Norman for a “proposed agribusiness project” in the Goulburn Valley.

Mr Voitin said any allegations of sham companies, sham debts or sham transactions were denied. He also denied that anything other than commercial transactions were involved with Holt and his clients.

Dapal was also a “very real” company and the managed investment scheme was real, he said.

“I am not under any investigation, not to my knowledge,” he said. “I met Peter Holt a number of times. What he has done to his clients is disgusting,” Mr Voitin said.

Mr Watters said his role was simply to record information clients gave him on their debts for a statement of affairs, which was then handed to a bankruptcy trustee.

He said Mr Wily was just one of four or five trustees he gave business to. He rejected as untrue allegations raised in parliament by Labor senator Sam Dastyari that he, Mr Watters, had claimed to have “bulletproofed” Holt’s assets.

Holt did not respond to questions from Fairfax Media.