$500m alleged Forum fraud running since “at least 2013”

The alleged Forum fraud, that has embroiled Westpac, was potentially conducted since at least 2013 and garnered up to $500m according to a new liquidators report.

Bill Papas at Xanthi Arena in Greece.

The alleged massive Forum Finance fraud, that has embroiled Westpac, has potentially been conducted since at least 2013 according to a liquidators report.

The alleged scam garnered as much as $500m according to the report, which has seen Westpac slammed for almost $300m in funds lent to the company for non-existent leases.

The liquidators report finds the company operated in a ponzi-like scheme which saw more funds gained to pay for old fake leases.

McGrathNichol, who were appointed to the Forum Group of Companies by Westpac in the wake of the bank’s realisation about the scope of the massive operation, allege key figures behind the company abused their positions to fund a lavish lifestyle.

The report says although investigations have focused on July 1 2018 to 2021, “we have identified materials suggesting similar behaviour was evident as far back as at least 2013”.

A court has earlier heard Forum chief of operations Craig Rollinson was alerted in 2018 to irregularities in customer contracts branded by some as “fake”.

The liquidators report suggests the alleged fraud running from 2013 saw Bill Papas and the Forum group reap “in excess of $500m”, with much of the money “ultimately applied to meeting obligations to financiers arising out of that funding or to repay historical financiers.”

However, McGrathNicol notes a large sum was also used to establish new businesses, fund the purchase of Greek football club Xanthi FC, “a range of high end vehicles and race cars, vessels, interests in race horses” and fund a lifestyle and personal expenses for Mr Papas” and his business partner Vincenzo Tesoriero.

Mr Tesoriero and Mr Papas have reported to the court an empire of fast cars and real estate investments.

The liquidators report finds at least $2.9m of the vehicles sitting on Forum Group Financial Services’ books on appointment but warns only $1.2m can be recovered from the sale due to the poor condition of the vehicles.

“The provisional liquidators understand the underlying assets comprising this vehicles balance includes high end vehicles, race cars, boats, jet skis and trailers,” the report says.

“In a number of cases, these vehicles are subject to leases, have been damaged and others which are registered in either Mr Papas’ or Mr Tesoriero’s personal name which complicates the realisation process.”

The XOXO yacht, moored in Miami and owned by Mr Tesoriero, which was not disclosed in his statement of assets, is currently under repair ahead of its sale by the liquidators.

McGrathNicol warns it is are “considering whether these circumstances may amount to breaches of s596 of the Act (Fraud by Officer) and s590 (offences by officers/employees)”.

“Mr Papas engaged in dishonest and deceptive conduct in setting up and perpetrating the fraudulent scheme,” the report alleges.

“Mr Papas did not exercise his power and discharge his duties in relation to Forum Finance in good faith or for a proper purpose.”

The report notes that while “we are still investigating whether Mr Tesoriero was aware of or participated in the fraudulent scheme” it is “likely he breached his duty to discharge his duties in respect of Forum Finance”.

“Mr Papas and Mr Tesoriero have used their powers for their own benefit and for the benefit of their associated entities, by funding substantial personal expenditure and/or investments for related entities on uncommercial terms,” the report says.

“The list of possible contraventions above is not exhaustive as the Liquidators are still carrying out their investigations.”

The report by the liquidators also finds key figures have failed in their duties to adequately disclose information regarding the state of the group of companies, warning it may report them to the corporate regulator if they continue to block efforts to uncover the full state of the group.

Forum Finance director Bill Papas, also known as Basille Papadimitriou (L) & Liverpool FC managing director and chief commercial officer Billy Hogan.

The 72-page post-mortem of the Forum Group of Companies rejects assertions advanced by Mr Papas, also known as Basille Papadimitriou, that the company failed because of Covid-19.

“We consider that: the real reason for the companies’ failure was the business they were operating included the preparation of false customer contracts which were then financed by third parties,” the report notes.

“A significant proportion of the proceeds generated from this activity was then paid away to other entities.”

“This resulted in the companies incurring liabilities far in excess of their assets and an inability to meet the payment demands that were made.”

McGrathNicol note Mr Papas, who arranged the administration of the Forum Group of companies via MackayGoodwin, has “not provided any meaningful assistance to the liquidators in respect to their investigations”.

“Mr Papas has shut down the email address that the liquidators were using to contact him,” the report says.

McGrathNicol and Westpac were recently successful in seeking Mr Papas’ former lawyer Rocco Panetta to hand over his Greek mobile number.

This came hot on the heels of moves by Westpac to have the court find Mr Papas in contempt for failing to return to Australia and breaching the freezing order imposed to block his access to the allegedly fraudulently obtained funds.

McGrathNicol also criticised Mr Papas’ business partner Mr Tesoriero and Forum Group’s chief financial officer Tony Bouchahine.

They note Mr Papas’s draft report on company activities and property “is largely incomplete and unsigned”, while Mr Bouchahine’s is “incomplete” and despite a further examination before the court he “has not answered certain queries in the ROCAP on the basis he wishes to involve privilege against self-crimination”.

When contacted by The Australian Mr Bouchahine declined to comment.

A court examination of former Forum accountant Brandon Chin heard Mr Bouchahine ordered funds be shifted via fake intercompany loans.

Mr Tesoriero is singled out in the report for failing to provide a ROCAP “in respect of either of the Companies”, with McGrathNicol warning they will issue a second and final request.

“The Liquidators will be lodging Mr Papas and Mr Bouchahine’s ROCAPs with ASIC shortly, noting they are largely incomplete and have not complied with the liquidators’ requests in substantiation,” the report says.

“Additionally, in the event Mr Tesoriero does not comply with the above second and final request in the requested time frame, he too will be reported to ASIC for noncompliance.”