Tax scam highlights risk in insolvency’s referral ritual

The ritual of referral is ripe with risk.
Referral went pair shaped

Providore of “quality pre-insolvency advice” David Evans.

A report about two elderly Australians losing their house after spending more than $100,000 on advice from a company accused of operating a multi-million dollar tax evasion scheme highlights the risks inherent in the practice of referral.

Queensland fruit and vegetable peddlers Tony and Doris Di Blasio operated the Crisp on Creek fruit and veg business in Mount Gravatt in Queensland but ran into trouble meeting their personal income and corporate tax obligations.

In 2014 the Australian Tax Office (ATO) got serious, commencing winding up proceedings against various entities including TD Toys Pty Ltd and Di Blasio Employee Services Pty Ltd.

According to the ABC, those winding up applications attracted the attention of David Evans, then a partner running Jirsch Sutherland subsidiary Corporate Guardian.

Evans contacted the Di Blasio’s sometime in late 2014 and by January 2015 Jirsch partners Trent Devine and Chris Baskerville had been installed as voluntary administrators (VAs) of Di Blasio Employee Services. No prizes for guessing how that referral worked.

But Evans was also assisting the Di Blasios in relation to TD Toys, referring them to Melbourne-based A&S Services Pty Ltd, which is now in liquidation and part of a network of pre-insolvency advisers alleged by the ATO to have operated a multi-million dollar tax evasion scheme involving bad advice and fake directors.

Evans left Jirsch and in 2015 founded pre-insolvency advisory Iron Bridge Corporate. He did not respond to requests for comment but SiN understands he claims to have had no idea about the alleged nature of A&S Services and the advice it was offering clients when he referred the Di Blasios.

On his Linked In page Evans says he founded “Corporate Guardian and Corporate Guardian Finance with the aim to provide business owners with quality pre insolvency advice and short term business finance”.

Devine and Baskerville, both of whom are on leave during the school holidays, also declined to respond to questions, including whether Mr and Mrs Di Blasio provided them with books and records, whether they uncovered evidence of payments by Di Blasio Employee Services to A&S and if so, whether they instituted any recovery proceedings.

Following their appointment as VAs in January 2015, the Jirsch pair were appointed liquidators of Di Blasio Employee Services in February 2015 and an application was then made in the Federal Court setting aside the ATO’s winding up proceedings by consent. Devine and Baskerville then went on to conclude the winding up within 18 months and deregistered the company.

Meanwhile, TD Toys, which is trustee for the Di Blasio Trust, was placed into liquidation in June this year following the initiation of winding up proceedings by the ATO in March.

Steve Nichols of Nicols + Brien was appointed liquidator of TD Toys in June and on realising that the company was automatically disqualified from acting as trustee of the trust on being placed into liquidation, had himself appointed receiver and controller by order of the Federal Court in August.

The Di Blasios meanwhile are now both bankrupt after unsuccessful attempts to executive personal insolvency agreements and, if that weren’t enough, are facing a claim by A&S, which previously won judgment against them for almost $120,000.

That claim is now in the hands of Pitcher Partners’ Andrew Yeo and Gess Rambaldi, who were appointed liquidators of the A & S Services Australia Group (ASSAG) on June 14, 2017. If it sounds messy that’s not the half of it and much could’ve been avoided but for that referral to A&S Services.

To be fair though, the whole fiasco could’ve been avoided if the green grocers had paid their taxes.

Further reading:

Report Reveals Insolvencies Linked To Scam Syndicate

Advisory At Centre Of Phoenix Probe Wound Up

ATO Raid Unearths Banned Liquidator

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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