KPMG receivers John Lindholm, Timothy Michael lose bid to bill taxpayers for A One Multi Services work
Receivers administering an investment company alleged to have frittered away client funds have lost a bid to bill taxpayers for their work. Find out why a judge looked dimly upon their claim.
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Receivers administering the affairs of an investment company that allegedly frittered away client funds have lost a bid to bill taxpayers for their work.
A judge has found the shortfall in funds was due to their quixotic hunt for cryptocurrency millions.
KPMG pair John Lindholm and Timothy Michael were appointed receivers of Gold Coast investment company A One Multi Services in November 2021 after an investigation by corporate regulator ASIC, according to a recent judgment of Federal Court Justice Derrington.
The company, since wound up and placed into liquidation by court order, was accused by ASIC of soliciting investments worth up to $25m from 60-plus investors, promising returns as high as 26 per cent.
ASIC further alleged $5.7m was spent for the personal benefit of directors Aryn Henry Hala and Heidi Elizabeth Walters.
According to Justice Derrington, Messrs Lindholm and Michael recovered $3.487m during the receivership. But none of it flowed to investors, instead spent on “the receivers’ remuneration and costs, payment of large sums to its solicitors, and payments to Mr Hala and Ms Walters... for their living expenses”.
Yet the KPMG receivers were not satisfied with the recoveries, from which they were to pay themselves, applying to the Federal Court for an order to force ASIC to meet the shortfall in their fees on an indemnity basis.
Justice Derrington rejected it.
“It is important to note the receivers had accepted their appointment on the basis of the court making an order that they had rights of indemnity from the assets in respect of which they were appointed,” the judge said. “At no time prior to the bringing of this application did they cavil with the appropriateness of those orders.
“Despite that, they now seek additional orders as it appears, contrary to their initial expectations, that there will be insufficient recovery from those assets to meet their claims.”
According to Justice Derrington, the KPMG receivers were confident of getting their hands on a significant pot of gold in the form of cryptocurrency that, according to ASIC, had been illicitly purchased using client funds.
Mr Michael believed a CoinSpot wallet containing 375.99 bitcoins to be worth as much as$27.5m, the judgment states.
The pair perceived the receivership to be “very profitable” for them, Justice Derrington stated, but their confidence in their ability to unscramble the crypto egg was misplaced.
“Although the receivers professed proficiency in recovering cryptocurrency, they were unable to do so save for a small amount [$201,781.62],” the judge said.
“Despite it becoming rather apparent from an early stage that recovery of any further amounts from cryptocurrency would be difficult, the receivers thereafter expended substantially more time on the receivership, including pursuing actions and incurring expenses for which they now seek indemnity.”
According to Justice Derrington, the KPMG duo received remuneration of $850,426.50 paid out of A One Multi Services property between their appointment in October 2021 and May 31, 2022.
The judge additionally approved fixed sum remuneration of $615,032.50 for the period from June 1, 2022 to April 30, 2023, although it’s unclear how much the KPMG duo will in fact be paid for this period, as they estimated the shortfall needed to cover their fees and expenses to be $622,244.
Company liquidators Michael McCann and Graham Killer, who were appointed after A One Multi Services was formally wound up, thus ending the receivership of Messrs Lindholm and Michael, told this masthead in a statement they did not expect to pay a dividend to any class of creditor.
Mr Hala has been charged by ASIC with nine counts of carrying on a financial services business without a licence.
He will next appear in Southport Magistrates Court on March 3.
Action against his co-director, Ms Walters, has been discontinued by consent of the parties.
KPMG has been contacted for comment.
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