Julie discovered an abuse victim’s ex had left the woman saddled with $12m in debt

When Julie Dal Pra met Christine, a Melbourne mother who had been issued with a bankruptcy petition out of the blue, she had no idea it would take three years – and 77 people working for free – to save Christine from previously unknown debts big enough to ruin her life.

The stay-at-home mother of two had emailed Dal Pra, a financial counsellor at not-for-profit agency Each, saying she had learnt that her estranged husband, an IT business owner, had created fraudulent business debts in her name of about $200,000.

A creditor was pursuing her through court action, and she feared she would lose her only asset – the family home, to which Christine had contributed $400,000 earlier in the five-year marriage.

Financial adviser Julie Dal Pra has worked for three years to free Christine (in background) from millions of dollars worth of business debts for which she was liable because of her ex-husband’s fraudulent business activities.Credit: Chris Hopkins

Christine had been cut off financially by her ex during family court proceedings and told Dal Pra that she did not have the money for legal representation. She wondered “if bankruptcy is the best option rather than risking a large amount of legal fees … or whether my case is worth fighting for”.

What Dal Pra discovered when she obtained the full credit report for Christine “initially made me feel sick”.

The report showed “pages and pages” of credit application inquiries, loans, court judgments and directorships. Christine, whose identity cannot be revealed for legal reasons, had been assigned seven company directorships without her knowledge.

‘It is shocking how easy it is to make somebody liable for business debt of a company they had nothing to do with.’

Julie Dal Pra, financial counsellor

Some of the signatures on the loan documents and director applications were faked, and some had been obtained from Christine under duress from her husband, who did not inform her of what they were for. Dal Pra verified that Christine had experienced coercion in the relationship.

During the marriage, she had been denied access to her own money, prevented from working, not allowed to have her own bank account and had no access to her personal financial information. False emails were created in her name, from which business and accounting dealings were conducted.

What Dal Pra found on her credit report was “mainly business inquiries … This means credit had been applied for in her name.”

The total value of loans for which Christine had been made guarantor was $9.7 million. Once director’s liability for trading while insolvent, liquidator claims and tax fraud were added, it totalled more than $12 million.

Christine says that when the first subpoenas arrived, “I was dealing with a family lawyer at the time who said, ‘You need to start calling some corporate law firms.’

“I started Googling and making calls to see who can actually help me. They were giving me quotes saying it’s going to cost you $70,000 to $100,000 in litigation. I’m on Centrelink; he’s cut me off completely.”

There were several caveats lodged on the family home which Christine’s money had been used to build. “We received a liquidation report, and that’s when we uncovered there was a lot of money involved and the creditors were going after me,” Christine said.

“I was shocked, numb. I couldn’t believe someone could do something like that.”

Financial abuse inflicted on Christine by her husband’s fraudulent business activities

$12,101,967 – Total debt generated by financial abuse of Christine by her then-husband’s business activities, in loans, personal guarantees, equipment finance, credit cards, utility bills, tax refunds and tax fraud.

This Included:

• $9,790,303 – Financial institution creditor claims against Christine.
• $404,779 – Tax fraud.
• $1,866,885 – Trading while insolvent claim.
• Five caveats or second mortgages placed on Christine’s home.
• Seven company directorships either made for Christine without her consent, or for which her signature was obtained by duress.
• 20 financial service products obtained in Christine’s name under fraud or duress.
• Two accounting firms completed Christine’s “tax return”, and accessed her tax portal without her knowledge or consent.

Dal Pra said the full picture of Christine’s debt made her heart sink because “I knew we didn’t have a system to resolve this financial abuse”.

Unlike the US, Australia has no system by which innocent spouses – who tax experts say are mainly women, or men whose perpetrator is another man – can be supported to exonerate themselves from fraudulent business activity by a partner.

Community legal services that help women with family violence matters and other financial abuse are not funded to help victim/survivors of business financial abuse.

The service that assisted Christine at Each was set up to help small businesses recover from the pandemic and floods, but it has attracted many women like Christine, who have nowhere else to turn.

Without it, Christine would have been made bankrupt.

“Financial abuse through business is ruining the lives of Australian women and children, but is virtually unrecognised, poorly understood, and has no support available to victims,” says Jayne Dullard, executive director of engagement and advocacy at Each.

“It devastates families, and the people who do it to them continue living their lives without consequence. Business owners and abusers should not be above the law, but currently in Australia, that’s the reality, and it needs to change.”

Christine’s case, and others in which victim/survivors were left owing large sums, were used as examples in submissions to the 2024 federal parliamentary joint committee inquiry into the regulatory framework and financial abuse. The average business abuse survivor has more than $100,000 of fraudulently generated debt, enough to cause serious harm to many, women’s sector workers say.

Dr Ann Kayis-Kumar, an associate professor in the school of accounting, auditing and taxation at the University of NSW, provided research for the parliamentary inquiry and said 80 per cent of female clients who attended the tax and business advisory clinic run by the university for small business owners in severe financial distress also reported business financial abuse in their relationship.

She said this number was 60 per cent when she founded the clinic in 2019.

Kayis-Kumar said Christine’s case was far from unique. “This is the bread and butter of the clinic; whether it’s $8 million, or $90,000, that is enough to sink someone experiencing financial abuse who then goes bankrupt,” she said.

“Short-term effects of bankruptcy are one thing, but the long-term effects are profound,” Kayis-Kumar said. “The financial repercussions are that you can’t leave the country, you can’t get finance at the same rate as you could, you’re in the high-risk category, it’s difficult to secure accommodation to rebuild and recover.

“You also lose standing in the family court, which can mean you lose child custody.”

Having helped many women navigate a system with no current protections, Kayis-Kumar has concluded “none of this is an accident. Perpetrators aren’t accidentally putting debts in victim/survivors’ names; these are steps of calculated abuse that escalate post-separation.”

She has had clients who have been told directly by the perpetrator, “I am going to financially ruin you” as a method of revenge.

“Unfortunately, one of the things we have identified and are currently studying is manipulation of the [accounting, tax and legal] professions by perpetrators,” she said.

Kayis-Kumar and Julie Dal Pra are among advocates who hope to see significant protections for women who have experienced business financial abuse, as recommended by the Inspector-General of Taxation and Taxation Ombudsman Ruth Owen in her review into financial abuse in the tax system, due to be released early next month.

They are also hopeful that a recommendation by the parliamentary joint committee on corporations and financial service for the creation of US-style innocent spouse provisions will be adopted by the federal government, which is also due to release its response imminently.

This would mean that “where you can prove there was abuse, then the tax debt that would have been borne by the victim-survivor doesn’t have to be paid by her”.

Dal Pra and Each are part of an Economic Abuse Reference Group of 60 community organisations, which last week briefed Assistant Minister for Women and Assistant Minister for Social Security Kate Thwaites and several key federal government representatives on necessary preventive and protective measures against business financial abuse.

While much of Christine’s debt has been straightened out, Dal Pra and Each are still working to resolve her tax situation.

“It is shocking how easy it is to make somebody liable for business debt of a company they had nothing to do with,” said Dal Pra, who is sticking with Christine until the end.

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