Fraudster Kathy Jackson’s missing $1.9m for Health Services Union goes missing again

Convicted union fraudster Kathy Jackson’s bankruptcy trustee, Paul Leroy, has been referred for investigation to NSW police after he allegedly ‘stole’ $1.9m.

$1.9m has disappeared from Sydney bankruptcy trustee Paul Leroy's bank account, instead of going to the Health Services Union as money Kathy Jackson misappropriated.

A saga involving union fraudster Kathy Jackson has taken an ­extraordinary turn, with the discovery that $1.9m has disappeared from a Sydney bankruptcy trustee’s bank account instead of going to the Health Services Union as money Ms Jackson misappropriated when she was a union official.

Ms Jackson’s bankruptcy ­trustee, Paul Leroy, has been ­referred for investigation to NSW police and the nation’s insolvency regulator after he allegedly “stole” the funds.

Mr Leroy, a longtime insolvency practitioner and formerly Belgium’s honorary consul in Sydney, is understood to have left the country. His most recent employer, ­Sydney-based insolvency firm Mackay Goodwin, told the HSU’s lawyer it had been unable to contact Mr Leroy for more than a month and believed he was overseas.

All of the missing $1.9m originally belonged to rich Sydney barrister David Rofe, who named Ms Jackson in his final will, signed in 2014, as an estate executor and major beneficiary, less than two years after they had met.

Paul Leroy has been Kathy Jackson's bankruptcy trustee since 2015.

When Rofe died aged 85 in July 2017 from complications of dementia, Ms Jackson was set to ­inherit a 10th of the barrister’s $30m estate, or about $3m.

Ms Jackson’s $3m inheritance was whittled down to $1.9m in 2021 when the NSW Supreme Court ruled that Rofe’s final will including her was valid – but with about $10m of the $30m total chewed up by lawyers’ fees as relatives and others contested the late barrister’s final wishes in a drawn-out court battle.

Ms Jackson was then forced to forfeit all of her inheritance to the HSU when its lawyers successfully argued she was a bankrupt at the time Rofe died – with Mr Leroy as her bankruptcy trustee – and therefore all Ms Jackson’s $1.9m inheritance should go to the union as her court-ordered main creditor to compensate for money she had misused when she was an HSU official.

The HSU was told in December that it was set to receive Ms Jackson’s $1.9m inheritance money as a bank transfer from an NAB bankruptcy trust account controlled by Mr Leroy.

But circumstances changed dramatically less than a fortnight ago when Slater & Gordon lawyer Geoff Borenstein received a phone call from Tim Cole, director of enforcement for the Australian Financial Security Authority, telling him the insolvency regulator had received news it appeared Mr Leroy had “taken all of the money from the bankrupt estate bank account”.

Mr Borenstein said he was told by Mr Cole that AFSA intended to bring “urgent proceedings seeking that Mr Leroy be removed as trustee and to freeze bank accounts”. Mr Cole also relayed that “the matter had been reported to NSW police”.

According to legal documents obtained by The Australian, Mr Borenstein advised the HSU: “We have a situation where an insolvency trustee has allegedly stolen $1.9m and is overseas supposedly.”

HSU national president and NSW general secretary Gerard Hayes said he was shocked to learn that funds recovered from the Rofe estate that Ms Jackson had been ordered by court to repay the union – after her past years of theft – had now gone missing.

David Rofe and Kathy Jackson.

“We gave an undertaking to leave no stone unturned in our ­efforts to recover this money,” Mr Hayes said.

“Over a decade we have stuck to our word, and to get this outcome now, to have it literally stolen from us, is absolutely unbelievable.

“Particularly when we find that a trustee had an account with money owed to us, and there is only one signatory to that account.

“In terms of any level of governance … how could anybody have millions of dollars of other people’s money in an account, and that individual has the ability to just sign it out by himself?”

Mr Hayes said the HSU would continue to pursue “every opportunity to get that money back and hold the people responsible to ­account”.

The Australian sought comment from Mr Leroy but he did not respond. Executives from Mr Leroy’s most recent insolvency firm employers, Hall Chadwick and Mackay Goodwin, did not ­return The Australian’s calls.

Ms Jackson, speaking from the NSW south coast where she lives, said she had not spoken to Mr Leroy since the initial stages of ­filing bankruptcy in 2015, and she said she did not know what had happened to the money.

As a bankrupt, Ms Jackson owed the HSU all of her $1.9m Rofe inheritance as a debt because of a Federal Court civil ruling in 2015 that ordered her to repay $2.4m to the union – $1.4m she misappropriated as an HSU leader in Victoria, plus another $1m in ­interest and costs.

Health Services Union Secretary Gerard Hayes. Picture: NCA Newswire / Gaye Gerard

During a separate criminal prosecution brought against her by Victoria Police, Ms Jackson was accused of stealing more than $500,000 of union members’ money from the HSU to support her lifestyle. In 2020 she pleaded guilty to reduced “rolled-up charges” of stealing $102,000 and was given a two-year suspended jail sentence.

Ms Jackson never paid a cent of her $2.4m debt to the HSU ­because – as the Federal Court was informed by a barrister acting for Ms Jackson’s then-partner Michael Lawler and her then-solicitor Philip Beazley – she filed for bankruptcy just before that court trial began to hear the HSU’s financial claim against her on June 29, 2015.

The court was also told that day that Mr Leroy, then a partner with Hall Chadwick, had been appointed as her bankruptcy trustee.

When Mr Leroy left Hall Chadwick in 2018 after 28 years during an acrimonious dispute with fellow partners at the firm, he took the Jackson bankruptcy matter with him as the trustee when he set up his own insolvency firm called Integrated Accounting Solutions or IAS.

At the time, Mr Leroy based IAS on the same floor of the Level 30, 31 Market St city office as the Belgian consulate in Sydney, where he also served as honorary consul.

When Mr Leroy’s IAS company fell on hard times several years later, he wound up the business and joined Mackay Goodwin, as an employee.

Mr Leroy gave up his post as honorary Belgian consul in Sydney.

But as a Mackay Goodwin ­employee he retained his role as Ms Jackson’s bankruptcy trustee because bankruptcy cases are ­legally linked to the individual name of the trustee.

After HSU lawyer Mr Borenstein was told by AFSA’s head of enforcement late last month that all of the $1.9m owed by Ms Jackson via Mr Leroy had gone missing, he contacted Mackay Goodwin as Mr Leroy’s current or most recent employer.

Former HSU boss Kathy Jackson. Picture: Britta Campion

Mr Borenstein said Gavin King, the head of Mackay Goodwin’s personal insolvency practice, told him that the company ­“believed Mr Leroy was overseas” and it had been “unable to get in contact with Mr Leroy for a month or so”.

Mr King, a former Hall Chadwick employee before joining Mackay Goodwin, further told Mr Borenstein that Mackay Goodwin had gained access to the Jackson bankruptcy estate bank account held with NAB.

He said bank statements showed “all of the $1.9m had been withdrawn from the account” and that the withdrawals had started in June 2022. With no funds left, the NAB account had been closed.

Mr Borenstein said Mr King ­informed him that the NAB bank statements showed all withdrawals were made by Mr Leroy as transfers to another bank account held by Mr Leroy’s previous firm IAS.

Mr King confirmed to Mr Borenstein that Mackay Goodwin was in the process of receiving ­further “tracing” of bank accounts that may have received money from Mr Leroy’s IAS bank ­account.

In her latter stages as an HSU leader, Ms Jackson achieved much publicity as a self-proclaimed corruption whistleblower when she turned against former, now convicted HSU colleagues Michael Williamson and Craig Thomson. It was later found Ms Jackson had also been stealing large sums of money from the union.

Following her conviction, Ms Jackson, 56, appears to be leading a quiet life on the south coast.

At this stage the whereabouts of Mr Leroy are unclear.

His connections to Belgium have been reportedly as a relative of the wealthy Leroy family, which owns a chain of DIY retail stores in Belgium.

Mr Leroy grew up in Sydney, educated at St Aloysius College and Macquarie University.