Range: Underworld criminal Networks

[Sophist]

EXCLUSIVE: Gary Hughes and Adele Ferguson | September 13, 2008

 

UNDERWORLD criminal networks and outlawed motorcycle gangs are exploiting weaknesses in corporate laws and poor regulation of financial markets, reaping multi-million-dollar profits from suspected share market manipulation, asset stripping and the snatching of control of companies they force into administration.

 

Five state and federal agencies - Victoria Police Purana gangland taskforce, the Australian Federal Police, the Australian Crime Commission, the Australian Securities and Investments Commission and the Australian Tax Office - are investigating financial deals and share transactions worth at least $100 million.

 

Legitimate business owners have alleged that standover tactics, including physical threats and intimidation, have been used in some cases to try to force through deals or stop people going to the authorities.

 

Detective Inspector Bernie Edwards, head of the Purana taskforce, told The Weekend Australian the business and finance sectors were rapidly becoming the new "powerbase" of organised crime.

 

Key figures in some of the investigations include the head of Melbourne's Carlton Crew, Mick Gatto, and his business associate John Khoury, financial adviser and loan provider Tom Karas, high-profile share trader Leo "The Gun" Khouri, who lost tens of millions of dollars in the collapse of stockbroker Opes Prime earlier this year, members of a notorious Melbourne crime family, outlaw motorcycle gangs in a number of states, including NSW and Victoria, and official administrator Stuart Ariff, who is being taken to court by ASIC over his involvement in a string of insolvencies. All have denied any wrongdoing.

 

In a number of cases uncovered by The Weekend Australian, so-called low-doc loans were used as a financial Trojan horse to force companies into receivership before they were allegedly legally plundered through the payment of excessive fees, had assets stripped out or were sold off to buyers with underworld links. Criminals and their business associates are known to have purchased shares in a number of small resources and biotech companies. The stock prices later jumped sharply after the shares were heavily traded through Opus Prime or off the back of favourable analyst reports, takeovers or rumours fuelled through the internet.

 

Trading in some of the companies later contributed to the collapse of Opes Prime, initially set up by the accountant whoonce worked for the head ofaMelbourne crime family.

 

Inspector Edwards said Purana, which is also working with the ACC, was using financial experts to track the dealings of suspected criminal identities and their business associates, although such investigations were "complex and lengthy" and could take years to complete. "Finance forms a powerbase for many organised criminal enterprises and is seen as a growing area of crime," Inspector Edwards said.

 

"We are unable to comment on any specific case. However, the Purana task force is aware of suspected financial crime and its links with underworld figures."

 

The head of the NSW fraud squad, Detective Superintendent Colin Dyson, told The Weekend Australian that organised crime was increasing its targeting of businesses and the financial sector, in some cases recruiting existing staff or infiltrating gang members to help on the inside.

 

"A business, particularly an incorporated company, is an entity, like a person," Superintendent Dyson said. "Accordingly it is possible for criminals to commit the same types of offences as they do against members of the community."

 

Bill Doherty, a company director who lost his business, Independent Power Coating, after it was placed into administration, said the lack of regulation in the insolvency industry had attracted a serious criminal element.

 

"The three bodies, the Insolvency Practitioners Association of Australia, the Institute of Chartered Accountants of Australia and the CPA Australia, resemble a dysfunctional hybrid of the three blind mice and three wise monkeys," said Mr Doherty, who has been interviewed by police about the possible role of organised crime figures in the loss of his business.

 

"They see no evil, hear no evil and do nothing. ASIC is critically under resourced and is known to ignore companies with turnover of less than $10million, which effectively excludes 95 per cent of companies from protection."

 

Another company director who almost lost his business said a royal commission was urgently needed to investigate how the lack of adequate corporate protection created the "near-perfect" environment for organised crime to legally infiltrate the private sector through the insolvency industry.

 

Documents seen by The Weekend Australian show that in one case involving Melbourne's Bulla Tip & Quarry Pty Ltd, Mr Ariff paid out more than $500,000 in suspicious transactions, including $400,000 that went to Mr Karas, before the company was sold the day before the Australian Securities and Investments Commission moved in and appointed accountants Ferrier Hodgson to investigate.

 

ASIC records show the successful tip and quarry, which was forced into administration by Mr Karas, was bought for $2.2 million by a company jointly owned by Mr Khouri, a business linked to Sydney bikie Adrian Pamplin, who has been named in court as an associate of former crime boss Karl "The Godfather" Bonnette, and another company run by a man once charged but not convicted over a $500,000 cocaine haul.

 

A creditors' note released by Ferrier Hodgson and obtained by The Weekend Australian says no legal basis could be found for the $400,000 payment made to Mr Karas as supposed part-payment of a $800,000 loan, which appeared to have never been provided.

 

The creditors' note also shows a company owned by the Pamplin family received payments and other financial benefits totalling almost $600,000 while Bulla Tip & Quarry was under administration. Mr Ariff received $257,000 in fees while he was the company's administrator and is claiming a further $97,000.

 

The ASIC case against Mr Ariff, which is due to be heard in the NSW Supreme Court next month, includes the legitimacy of payments to Mr Karas and the Pamplin family and the fees he charged.

 

Mr Karas strenuously denied there was anything improper in the $400,000 payment or his decision to force the company into administration.

 

He told The Weekend Australian he has provided loans to Mr Gatto, members of a Melbourne crime family and Mr Khoury, who worked out of his Melbourne office. But these were legitimate transactions and not linked to money laundering or crime.

 

Mr Ariff, who is facing court action by ASIC over his role in 10 administrations, has also denied suggestions he was involved in organised crime.

 

"They are allegations and I totally refute them," he said.

 

Confirming he put up the $2.2 million to purchase Bulla Tip & Quarry, Mr Khouri denied there was anything improper in the deal.

 

"It was a real transaction," he said.

 

"There was nothing underhanded going on."

 

Mr Karas and Mr Ariff were also involved in the temporary administration of Melbourne's popular Chasers nightclub last year after Mr Karas called in a $1 million loan organised through his business State Securities Group and tried to transfer the club's liquor licence into a relative's name.

 

Purana taskforce detectives have been investigating the source of the $1 million, which reportedly originated in Greece, and what happened to the weekly interest payments of $4000 collected in cash personally by Mr Karas from the nightclub.

 

Mr Karas was accused by police in court in October last year of being behind a "large-scale, money-laundering operation" involving the purchase of a racehorse linked to a member of the Melbourne crime family.

 

A company owned by Mr Khoury was also named by police in court as being involved in the alleged money-laundering scheme that also included a number of suspicious loans.

 

Purana and the ATO are also looking at a series of transactions involving $550,000 that passed through bank accounts belonging to a series of companies linked to Mr Karas and his associates.

 

Investigators are examining the close connections between Findlay & Co Stockbroking and Opes Prime, which together played a role in the rising fortunes of several small mining and biotechnology companies that listed some underworld identities or their business associates on their share registers.

 

In some cases Findlay's, which has since undergone a restructure and change of directors, issued positive analyst reports and did the underwriting for the companies as part of takeovers and floats that saw share prices rise.

 

It is believed that large turnovers of shares belonging to some of the companies, including Range Resources, Boss Energy and Fairstar Resources, came from trading borrowed stock through Opes Prime. Findlay's previously operated in Melbourne out of Mr Karas's LaTrobe Street office and he remains a significant shareholder.

 

Mr Karas was also a substantial shareholder in Boss Energy along with Leo Khouri, Mr Pamplin, convicted heroin trafficker Amad Malkoun and John Khoury, who flew to Singapore earlier this year with Mr Gatto chasing the missing Opes millions.

 

Mr Khoury jointly owns a Melbourne property business with Boss Energy director and shareholder Joseph Obeid, a former Victorian policeman who has been involved with Mr Khouri in Range Resources, which has mining interests in Somalia.

 

In a separate investigation, the Australian Federal Police is looking at whether information was allegedly given to Mr Gatto and his business partner Matt Thomas about a planned takeover of Golden West Resources by Fairstar Resources.

 

The AFP raided the Sydney offices in January of Findlay, which was underwriting a capital raising by Fairstar to fund the Golden West takeover.

 

The Australian revealed earlier this year that Mr Thomas flew to Dubai to meet representatives of the Falak Group, which owns 7.5 million Golden West shares, after confusion over whether the group would vote in favour of the Fairstar takeover. Mr Gatto has denied he or Mr Thomas were given information on the Fairstar deal.

 

Earlier this year, Purana took court action to seize under proceeds of crime laws $15 million of shares in the clean-coal technology company Linc Energy, allegedly owned by the member of a Melbourne crime family.

 

Brent Potts, the founder of Southern Cross Equities and before that Potts West Trumbull, said the speculative end of the share market was particularly susceptible to systematic rumour-spreading, both positive and negative, through the internet. "It's pretty hard to pump and dump in this market, but people are still trying," he said.