Apricity boss Linden Toll a ‘man of straw’ with no assets but $50m debt

Creditors of Apricity Finance Group expressed disbelief that $50m in investors’ funds has disappeared and questioned whether they had been caught up in a Ponzi scheme.

Apricity Finance managing director Linden Toll.

Apricity Finance managing director Linden Toll is a “straw man” with no assets to speak of to cover at least $50m in debts owed to investors, a creditors meeting has been told.

The minutes of the meeting – which predates Apricity Finance Group being placed in liquidation earlier this month – reveal creditors, some owed millions of dollars, trying to understand where the money has gone, and questioning whether Mr Toll was running a Ponzi scheme.

The possibility of referring some matters to the police was also raised, with liquidator Darren Vardy telling the meeting he had been referred to a contact at NSW Police and preparing evidence and documentation for them was “on the radar’’.

That process was likely to take “months’’, however.

Apricity, which was a Bowral-based invoice financing firm, had been operating since 2013, and borrowed large sums of money from investors, purportedly to use in its business. Documents supplied to investors indicated the business was profitable.

However, Mr Vardy has since concluded that the business was never profitable, that business records supplied to investors did not reflect the operations of the businesses, and that funds – $4.8m in total – borrowed from the business by Mr Toll were used to help purchase two properties and to pay for gambling expenses.

Mr Toll is not co-operating with the liquidator and his phone has been disconnected.

Mr Vardy told the meeting he had been contacted by a bankruptcy trustee and “would suggest that in the not too distant future … Mr Toll will be declaring himself voluntarily bankrupt’’.

The meeting kicked off with creditor Carl Benjamin saying: “Presumably and hopefully there is a truckload of money out with customers who have been using the services of the company to factor debts?’’

Mr Vardy said that was not the case, and then agreed with Mr Benjmain that instead, there was a “very big hole of money and a missing CEO which is very concerning’’.

Creditor Carolyn Poon asked whether Mr Toll’s assets could be frozen, but Mr Vardy said it appeared there was little in the way of assets to be recovered. “Our investigations … would suggest that the former director for want of a better term is a man of straw and holds no real property assets per se,’’ Mr Vardy said.

“Unfortunately, that’s all I’d like to say about that at this moment in time because I don’t want to prejudice any claim that may come of it.

“But there are a number of matters which need to be investigated, particularly around what assets we are able to pursue or what actions and claims are available to recover funds, and what assets stand behind those claims.

“But certainly with respect to the former director there does seem to be no assets held by him personally, or very few assets. I am aware of some horses but am of the view that they are not assets, but liabilities.’’

When it was put to Mr Vardy that Apricity was operating as a Ponzi scheme, Mr Vardy said, “I’m not going to call it, but, it is certainly looking that way, yes’.

“I’ve come to the conclusion that monies may have been advanced which have simply been turned around to pay interest on noteholders.’’

With regard to referring the matter either to the corporate regulator ASIC, or the police, Mr Vardy said his role as liquidator was to investigate and report to the relevant bodies.

“Armed with the information then it’s a matter for them to go and do the prosecutorial process,’’ Mr Vardy told the meeting.

“For anything which is along the lines of criminal activity, again report to, say, the NSW or federal police.

“Then they go and do their prosecutorial process. I think for us it’s a matter of, with both ASIC and the constabulary, provide details of what we know, i.e. a $50m hole, ask what they need by way of evidence and by way of process what they require us to look further at, then attend to further investigations to support a prosecution.’’

In a separate creditors report Mr Vardy said he had come to the conclusion that the company had been insolvent from day one.

“My preliminary estimate is that the entirety of the company’s unpaid liabilities were incurred at a time that the company was insolvent,’’ he said.

“Further, that these liabilities were incurred at minimum recklessly and potentially dishonestly.

“Based on the information currently known, I do not believe that Mr Toll has any defence available to avoid personal liability from a potential insolvent trading claim.’’

Mr Vardy said Mr Toll may have breached the Corporations Act in several ways including failing to keep proper records, using the company’s bank account to pay for personal expenses, and by buying two properties with company funds “at significant detriment and no benefit to the company’’.

Shartru Capital, a related entity of Apricity, was placed in liquidation last week.

Originally published as Apricity boss Linden Toll a ‘man of straw’ with no assets but $50m debt