Dubber’s new board sues Steve McGovern and Mark Madafferi over cash payments to Melbourne identities
ASX-listed technology company Dubber is suing its ex-chief executive and his lawyer, breaking down for the first time where a missing $30m went, to who and when.
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Listed tech company Dubber’s board is suing its former chief executive and his lawyer alleging a $30m scandal originated with the pair dishing out cash to themselves and other Melbourne identities.
Dubber’s legal move to claw back $26.6m under new CEO Matthew Bellizia and non-executive chairman Ted Pretty — after the money was first reported missing last year — follows a Federal Court case brought against its former auditor BDO in June.
It alleged BDO failed to perform its duties, amid allegations former CEO Steve McGovern and lawyer Mark Madafferi misappropriated the cash in August 2021. BDO denies this.
To date, Dubber has recovered only $3.3m of the $30m that was transferred out of its accounts.
Billionaire investor Alex Waislitz’s Thorney Technologies is the company’s biggest shareholder. Mr Waislitz has previously told The Australian Thorney was actively managing its investment, and provided Dubber with an emergency loan that likely shielded it from collapse.
McGovern and Madafferi have also had their passports and assets frozen, following separate action from the Australian Securities and Investments Commission.
A writ, filed in the Victorian Supreme Court on Tuesday, detailed people and companies that allegedly received Dubber’s cash when it was supposed to be held in trust by Madafferi’s law firm, Christopher William Legal.
McGovern allegedly asked Madafferi to give him $200,000 on August 10, 2021. This was followed by a further request for $100,000 on September 13, $103,000 to his company called the Word Market, and $50,000 on April 21, 2022 according to the writ.
As well, McGovern allegedly asked that $900,000 be transferred to Madchi Holdings on September 22, 2022. Madafferi is listed as a current director of the company, according to ASIC records.
The writ also alleged McGovern asked for $200,000 to be transferred to “J Khoury” and $450,000 to Abou-Eid Holdings Pty Ltd on August 6, 2021, whose director is Mohammed Abou-Eid.
Further transactions requested include $100,000 to “T & J Iliou” on the same day, $250,000 to Reuben Slaney and $300,000 to Austin Slaney on August 10.
There was also $20,295 marked for “ATO compliance enforcement proceeding” on September 1.
Cash was allegedly splashed on other court cases, disputes and mortgages too, according to the writ.
Dubber Corporation advanced Dubber Pty Ltd $30m, which was meant to be invested in a term deposit “to be arranged by Madafferi through CW Legal”, according to the documents.
But it is alleged Madafferi did not invest the $30m in a term deposit and falsely told Dubber on September 8 that he, through CW Legal, invested the money in a term deposit with National Australia Bank.
Madafferi “gave effect” to the transactions requested by McGovern, the court documents alleged.
Madafferi previously worked with Cosimo Chiodo at their firm, Chiodo Madafferi solicitors. Chiodo died in 2017.
Dubber’s entire board was replaced in the wake of the scandal that came to light last year when the company announced its half year results.
Victoria Racing Club chair Neil Wilson resigned as chair in December last year.
Sarah Diamond, Peter Pawlowitsch and Gerard Bongiorno also resigned as part of “board renewal”, said a statement to the ASX.
Current non-executive chair Tedd Pretty told The Australian Dubber’s new board has reviewed the history of the matter and “intends to take action against those responsible” for allegedly misappropriating the funds.
Dubber flagged what that may be in June when it told the market it had kicked off a case against BDO which denies any liability, in a bid to recover the missing $26.6m.
“Dubber Pty Ltd asserts that BDO Audit (WA) Pty Ltd was negligent in its audit performance and, alternatively, that it engaged in misleading and deceptive conduct, in failing to adequately perform its duties. It asserts that, but for that conduct, it would not have suffered the loss that it did as the known parties would have been unable to misappropriate the funds or otherwise the funds would have been partly or wholly recovered,” the announcement said.
“Further and separate proceedings will be issued shortly against the known parties and in some cases against their associated professional bodies and insurers seeking restoration of misappropriated funds and associated interest and costs. A further major commercial contract claim is also likely.”
Dubber is seeking compensation and damages. McGovern and Madafferi, along with their lawyers, were contacted for comment.
Do you know more? Contact snowdena@theaustralian.com.au
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