Mahala Rae Klotz: South Lismore gym coach jailed for fraud

A childhood dream has been crushed for a Lismore business owner who has been jailed for defrauding Commonwealth agencies of almost half a million dollars.

A desire to keep her dream alive led a South Lismore gymnastics coach into defrauding almost half a million dollars in false childcare claims, a court heard.

Mahala Rae Klotz, 49, faced sentence in Lismore District Court on Friday for two counts of dishonestly intending to obtain a gain.

The court heard Klotz, who runs North Coast Gymnastics and associated childcare GymCare, made ‘flagrant’ fraudulent childcare enrolment advances, rebate and benefit claims between November 2011 and May 2017- a period of five-and-a-half years.

The total amount of fraudulent claims over that period amounted to $465,946, the court heard, with Klotz repaying $97,000.

The business owner fraudulently enrolled 62 students over the years.

When she was advised in 2017 of a change to enrolment advancements, she emailed back she was “extremely worried and concerned for my circumstances”, effectively alerting authorities to her methods of receiving the cash flow advances, the court heard.

“I know what I did was wrong and I’m extremely embarrassed,” Klotz said when asked to give evidence on Friday.

Klotz had previously stated in affidavit material that she re-enrolled students because it was “not unusual” for a child to return at a later date.

On Friday, she said that was an attempt “to justify” the fraud to herself and others.

A Commonwealth Director of Public Prosecution barrister said it was not the first time Klotz had downplayed her guilt, whether it was due to software issues or not understanding the rules.

While the enrolment advances fraud was a matter of “clicking a box”, the rebate and benefit claims suggested more criminal activity, the barrister indicated.

“In relation to those claims you actually had to state on your system there had been a session with the child,” the crown prosecutor said.

“There was certainly some active conduct beyond just clicking a box.”

Judge Jeffery McLennan accepted it was difficult for Klotz to “have the mask pulled down” on her offending which may explain the downplayed attitude.

“When people who have maintained a front … are caught out and badly, I understand the shame and I understand the attempt to persuade others it’s not quite as bad,” he said.

Judge McLennan acknowledged the Phyllis St gym site had been effectively “wiped out” during the recent floods and that there was no evidence Klotz was defrauding with hopes to live the high life.

He told the court Klotz had lost half a million dollars worth of office and gym equipment and that the building suffered “catastrophic damage”, rendering her unable to work since March.

“The fact of the matter here is she was keeping her business afloat … the business, of course, was the source of her income,” he said.

“There is no evidence she was planning a lavish lifestyle. It may be in fact she, it seems to me, may (have been) investing in all the equipment lost in the floods.”

Judge McLennan said it was clear Klotz was led to the criminal offending to continue being involved in the gymnastics world.

“Clearly, in my view, it was about her emotional need to be involved in gymnastics. It was a childhood dream, which as an adult, she was seeking to live out,” he said.

“Whatever else one may say about Ms Klotz, she was a successful coach and derived joy from the success of others.”

However, it didn’t negate the harm done to the system through the “breach of trust”, putting affordable childcare as a whole at risk.

“How important childcare is for people and how frauds like this can erode not only people’s confidence in the scheme, but willingness to even support these kinds of schemes as the important social benefit they are, can’t be underestimated,” Judge McLennan said.

“These are just simply sustained, deliberate, calculated frauds to keep her dreams’ alive.”

He sentenced her to a two-and-a-half year jail term.

Klotz will first be eligible for release on August 26, 2023 after which will enter a Good Behaviour Bond for 15 months.