Overview:
RRI was appointed as an Administrator for a group of companies involved in the transport business across Victoria and the east coast of Australia. Our appointment arose due to the business being taken over by a related party, which continued operating post our appointment. This case study highlights our diligent efforts in uncovering a sophisticated financial fraud scheme within the group of companies.
Key Challenges:
- Continuation of Business by Related Party: Following our appointment, a related party continued to run the business, posing a challenge in securing assets and investigating the company’s affairs.
- Fraudulent Activities: Our investigations revealed potential fraudulent activities, including issuing fake invoices amounting to $700k and diverting debtor payments to an account controlled by associated parties. Moreover, asset disposals with significant equity were identified before our appointment, with proceeds diverted to the same account.
- Reporting to Authorities: We promptly reported the identified offences to the Australian Securities and Investment Commission (ASIC) and filed a $1.2 million fraud complaint with the Victorian Police, seeking further legal action.
Actions Taken by RRI:
- Asset Securing and Creditor Liaison: We diligently secured the company’s vehicle fleet while engaging with various secured creditors to address claims against these assets.
- Thorough Investigations: We initiated comprehensive investigations into the group’s affairs, involving correspondence with debtors and meticulous scrutiny of recovered books and records, revealing the intricate nature of the fraudulent scheme.
- Reporting and Legal Pursuits: Upon uncovering substantial evidence, we promptly reported the findings to ASIC and filed a fraud complaint with the Victorian Police. Despite our efforts, no further legal action was taken by the authorities.
Outcomes and Results:
- Identified Fraudulent Activities: Our investigations uncovered the issuance of fake invoices totalling $700k, diversion of debtor payments, and suspicious asset disposals, indicating fraudulent practices within the group companies.
- Reported Offenses: We fulfilled our ethical and legal obligations by reporting the offences to relevant authorities, although ASIC or the Victorian Police took no subsequent action.
- Demonstrated Investigative Expertise: This case showcases our commitment to thorough investigations, deploying extensive resources to uncover the full extent of the fraud associated with external appointments.
Despite facing challenges from a related party’s continued business operation, we demonstrated exceptional dedication in uncovering a complex financial fraud scheme. Our exhaustive investigations and prompt reporting of the offences to authorities exemplify our commitment to ethical practices and protection against fraudulent activities within the companies we administer.
If you’d like to discuss the intricacies of this case study further, reach out to liam@rriadvisory.com.au
Disclaimer
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to RRI Advisory’s clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.