Philip Newman.
Was it a Ponzi scheme? Or were the monies invested in the The Edge, the now notorious betting scam operated by incarcerated racing identity Bill Vlahos, held on trust?
That is one of the key questions at the heart of a dispute playing out in the Federal Court between Vlahos’s trustee in bankruptcy and at least some of the scores who punted on the arrangement and blew their dough.
If it was a Ponzi then the investors’ case may well be are doomed. If not, then there may be a pay day yet.
“I doubt Mr Vlahos would’ve lodged a Prospectus or PDS with ASIC. We don’t know what the marketing material comprised. The trustee said on oath that the Scheme was marketed. We just want anything Mr Vlahos said in marketing the scheme or explaining its operation.” Barrister Carl Moller.
Vlahos, who was gaoled in December last year for a minimum of six years, initially faced 347 charges.
When it came time to plea however he confessed guilt in respect of just two counts of obtaining financial advantage by deception in regards to $17.5 million.
He was declared bankrupt in 2013 with PCI Partners director Philip Newman taking on his estate as trustee in bankruptcy.
The National Personal Insolvency Index (NPII) indicates that Vlahos was discharged from bankruptcy in 2016 but it wasn’t until 2020 that Alex Ragogna, an investor in the scheme, commenced the current proceedings which name Newman and the Official Receiver as respondents.
The matter came before a Registrar yesterday as the parties sought to resolve differences in respect of two categories of discovery.
Ragogna’s barrister Carl Moller said that his client wanted access to materials that would allow them to determine if Vlahos was employed during the relevant period.
The purpose was to try and determine if Vlahos earned income that could be defined as property that would therefore vest with Newman as the Vlahos estate trustee. Or otherwise.
Moller suggested the Registrar make an order directing Newman to tell the other side what forms of employment Vlahos had.
Barrister Chris Fenwick for the respondents said the scope of what was being sought about Vlahos’s employment was too wide.
“Our main problem with this category is that we have 2 million documents on a hard drive compiled by the police for the prosecution of the bankrupt,” he said.
“It would be very difficult to search on a category of potential income of the bankrupt.”
“If Mr Moller wants to capture the income of Mr Vlahos we’ve offered the tax returns,” he said.
There were also Newman’s reports to creditors and his analysis of the NAB account through which all funds investors gave to Vlahos passed which could be made available to the applicant, Fenwick said.
The second category in dispute related to evidence of how the scheme that was a scam was marketed.
“The trustee himself has said the scheme was marketed,” Moller told the Registrar
“We’ve asked for the marketing material and apparently that’s difficult. We have said others participated in the scheme on the same terms as my client. We’d like to see it.
“We are calling other witness who were members of the sub group about their own arrangements but the marketing material will explain how the Edge Scheme operated and that will demonstrate that the scheme was operated on the terms we have pleaded in our Concise Statement,” he said.
Senior Registrar Alison Legge however was concerned that too broad an order might capture all sorts of “informal” communications like e-mails and texts.
“I doubt Mr Vlahos would’ve lodged a Prospectus or PDS with ASIC,” Moller said.
“We don’t know what the marketing material comprised. The trustee said on oath that the Scheme was marketed. We just want anything Mr Vlahos said in marketing the scheme or explaining its operation.
“I don’t know what the trustee had in mind when he said the scene was marketed.”
“It could’ve have been oral conversations with people,” Registrar Legge surmised.
“It might’ve been promoted by word of mouth,” Moller agreed. “If it was the Trustee can say so.”
Newman did not return calls or respond to emails prior to iNO’s deadline.
The main problem to date is that PCI, while working to recover profits, have spent EVERY cent recovered. It kinda feels like a legal version of what Vlahos did to us in the first place.
Question for PCI Partners director, Philip Newman – has any of the recovered monies been distributed back to anyone that “invested” in the scheme and lost money?