Search for fleet of cars owned by collapsed food empire Criniti’s
After the Criniti’s food empire collapsed under $16 million in tax debts, at the top of the list of assets the administrators wanted to sell was a fleet of luxury cars — including a $1m Rolls Royce Phantom — that the owners had previously splashed across social media. But they were nowhere to be found.
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When forensic accountants arrived at Criniti’s restaurants looking for assets – and its famous fleet of luxury cars – they found the table was bare and the car park empty.
After the food empire collapsed under $16 million in tax debts, at the top of the list of assets the administrators wanted to sell was a fleet of luxury cars that the owners had previously splashed across social media.
At the peak of the restaurant’s success, when it had 13 outlets including the flagship celebrity hotspot on the Woolloomooloo Finger Wharf, VIP diners could elect to be chauffeured to its restaurants by one of its luxury cars, including a Rolls Royce Phantom worth about $1 million.
However, by the time the administrators from Sydney forensic accountancy firm Worrells called in on November 18 to recover assets in the hope of selling them to clear the debts, the cars were nowhere to be seen.
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It was the same case for most of the Ducati motorbikes used as decorations inside the restaurants or the Ferrari engine that once adorned the wall of the private dining room at Woolloomooloo.
Instead, they found empty walls and carparks, fit-outs that could be sold at only a fraction of their value and business records relating to other vehicles.
After an Australia-wide search for vehicles registered to Criniti’s, the administrators only recovered records relating to a few luxury cars that were of little use given the amounts still owing on them.
One included a 2016 Bentley Continental, which can sell for $485,000.
Criniti’s director and family patriarch Cosimo Criniti told the administrators “ … the vehicle was surrendered to the financier and sold for a significant shortfall, according to one of the reports filed with ASIC.
That shortfall was $208,000.
Then there was a missing 2015 model Harley Davidson that was once displayed in the Criniti’s restaurant in Carlton, Victoria.
“We are advised the Harley was on display at the Carlton Criniti’s restaurant, however, as at our appointment, we could not locate it,” the administrator wrote in the report.
The motorbike was purchased using money from a Victorian finance company, which issued a repossession notice in November for the Harley worth an estimated $32,000.
There were other vehicles registered to the business, including a 2017 Audi SQ7 and a 2014 Range Rover. However, the report said the resale value was well short of the amounts still owing on the vehicles.
As for the Rolls Royce and the fleet of other luxury vehicles, administrators noted in their reports that it seems unlikely they will be located or sold.
“The directors have advised that display vehicles were leased or displayed subject to arrangement with third party owners,” the administrator’s report said.
“Our investigations are ongoing, however it appears at this time that there will be no realisation in regard to the company.”
When then husband and wife team Frank and Rima Criniti opened Criniti’s eatery at Parramatta in 2003, its rapid rise was based on a flamboyant image of wealth and success.
Administrators are now trying to piece together the wreckage with their early picture being that of a company that kept financial records that were incomplete to the point of being in breach of the law.
They are now picking apart a complex web of at least 38 companies that were used to run the restaurant empire.
A bleak picture has emerged so far with the administrator’s report for one company, known as Criniti Group, forecasting a return to creditors of 1.6 cents for every dollar the company owed.
Cosimo Criniti, 72, was the director of most of the companies. His wife Rosa was also a director of a number of the other companies.
No longer part of the business is their 40-year-old son Frank Criniti or his now estranged wife Rima.
Famous for its wood-fired pizzas, the menu was designed to combine traditional Southern Italian food and contemporary Australian cuisine.
In February, Frank pleaded guilty to assaulting Rima with his lawyer telling Parramatta Local Court the offending was related to the struggles of the restaurant empire.
Frank was a previous director of a number of the Criniti’s companies.
Last year ASIC disqualified him from acting as a company director for a maximum of five years.
This came after the corporate regulator found he had committed a string of offences while acting on businesses outside the Criniti’s empire. ASIC’s findings included that Frank provided false information to authorities, allowed companies to trade while insolvent and failed to pay tax.
In 2014, Frank sold his Glenhaven mansion and estate for $9 million but is listed as not owning any property.
Only seven of the restaurants remain open. Administrators opted to close six that were faltering financially, including Manly, Woolloomooloo and Wollongong.
A potential $6.1 million sale of the empire was abandoned due to the COVID-19 threat earlier this year.
However, the Brunelli Group – a South Australian-based Italian restaurant chain – stepped in to buy the remaining six restaurants on Tuesday.
In their search for saleable assets, administrators are so far coming up short.
One of the companies sold the Church St site of the Parramatta restaurant for $2.8 million last July, which was not recorded in the company’s books, the report said.
“We met with Cosimo Criniti and Frank Criniti and asked them to explain what happened to the net proceeds from the sale,” the administrator’s report said. “They advised that the ATO was entitled to register security over the property. The net proceeds were used to settle a claim by a liquidator of a related entity with the ATO’s consent.”
Several of the restaurants — including Manly and Wollongong — underpaid employees by keeping them on introductory wages beyond the three-month limit and not paying overtime, the reports said.
About 800 employees are believed to have been affected but forensic accountants are still working through the books to get a complete picture.
“The calculation is complicated and time-consuming to complete, and we are aware of over 800 affected employees for which the calculation is required across the group,” the administrator’s report said.
The prospect has now been raised that Cosimo might be personally pursued for the value of the huge debts the businesses clocked up while trading when they were insolvent from as early as 2018, the reports said.
Property records showed Cosimo owned a property in Auburn, which was sold in March for more than $1 million.
The administrators also reported Cosimo to ASIC for failing to disclose the location of other vehicles that are still registered to Criniti’s that have not been sold.
“We have written to the Director requesting him to surrender all motor vehicles owned by the company or provide their location so we can arrange a pick-up. However, the Director did not surrender any motor vehicles and has refused to provide their location,” the administrators report said.
There were also huge shortfalls in Criniti’s books versus what was reported, including more than $316,000 for one company and over $212,000 for another, the report said.
“We are investigating whether the director and/or his family have received cash from the company and other companies in the group,” the report for the company known as Criniti’s Carousel said. “If that is the case, there are several avenues of recovery that a liquidator may
pursue …”
One of the other challenges for forensic accountants will be to pick apart the labyrinth of loans between the individual companies used to run the restaurants, which could run into millions.
Criniti’s tax problems emerged on August 31, 2018, when it entered into an arrangement with the ATO to repay debts of $15.8 million.
According to the administrator’s reports, the repayment scheme has been in default since December 2018.
It is not the first time Criniti’s has found itself at the centre of controversy.
In 2017, Frank Criniti told the NSW Supreme Court some of his financial backers had used Comanchero bikies to threaten to shoot up his restaurants.
The claim emerged when the investors launched legal action, claiming they ploughed almost $4 million into the restaurant chain between 2011 and 2013 only to see him renege on an “oral agreement” to give them shares in the restaurants and a slice of profits.
The case was “disposed of” on March 10, 2017, court records said.
In 2016, Criniti’s was involved in another Supreme Court case. This time a liquidator sued claiming the restaurant chain’s cash reserves and glamorous facade was boosted because almost $8 million was allegedly siphoned illegally from a failing luxury car company.
That case was discontinued with the consent of both parties on May 14, 2018.
Originally published as Search for fleet of cars owned by collapsed food empire Criniti’s
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