Fighting for Subbies Rights
Clearly there is a bit of work that needs to be done for a successful pre pack liquidation and Phoenix but if you could earn say 10 million for a couple of years work with the opportunity to do it all again and repeat the process say 3 or 4 times in the next 10 years, would you do it?
The only requirement is that you have no moral compass and not care one iota for your fellow human beings. Basically all you need to qualify is to be a sleazy low thief, amazingly enough, you don't even need to be a builder.
No qualifications are required, none at all to rip subbies and suppliers off so step right up folks and get your fill-up.
Fraud
The problem we have is that each part of the fraud is in a separate box so that it is very difficult to link all the boxes as a whole.
Each box is a separate components of the whole fraud.
Various boxes are dealt with by different organisations, Liquidators, lawyers, ASIC, the ATO and the QBCC and all of those organisations have their own agenda and rarely work together.
Police hardly ever get a look in and when they do its even too hard for them. They want it referred to ASIC and we all know how completely useless that organisation is.
We need to identify each box or component and then start working on them individually.
The Fraud Family Tree
Following are some of the fraud boxes but please feel free to add to them or do a family tree showing how the separate boxes are linked.
- Minimum Financial Requirement (MFR) laws were changed in 2014 by the Qld Government so that the builder no longer needed an independent analysis of their financials
- Builder wants a larger capacity licence
- Accountants doctor the financials for MFR’s
- QBCC grants builder a bigger capacity licence based on corrupt financials
- QBCC does not check MFR's provided by builders accountants
- Builder takes on more work with more capacity
- Money pours into builders coffers
- Money is not due out for 30 to 60 days, stretch the bastards out and its 3 to 4 months and in some cases like Cullen, they didn't pay some subbies going back almost a year
- At this point subbies expose themselves to preference claims by asking the builder for payment
- Builder starts building his own developments using excess funds that are owed to subbies & suppliers
- The road gets rocky, the builders incoming claims slow down creating a financial vacuum
- Builder replaces first trades with new trades and doesn’t pay first trades. That money will come in handy to finish a level of his own 3 story walk up
- Builder keeps retentions to fund ongoing work
- Unpaid first trades start collection process through courts or QBCC monies owed
- Default judgements are awarded to subbies, builder does not contest the court process and defaults
- Successful first trade default judgements are paid as late as possible to avoid loss of licence or suspensions
- Debts catch up, builder has bled company dry with resources going into his own developments and his asset accumulation
- Builder talks to his accountants and lawyers who are part of the "old boys club"
- They advise him to talk to their preferred pre insolvency advisors
- Builder seeks pre insolvency advice
- Pre insolvency advisors map out an asset protection plan and the way forward
- Builder breaths a sigh of relief knowing he is in good hands, its a tried and true method. They allay his fears with a derisive grin, a wink and a nod and ask him "when was the last time you heard of a builder going to jail for defrauding subbies?" They all have a good laugh, the builder a little nervously but soon loosens up and joins in
- Builder puts asset protection plan devised by pre insolvency advisors into action
- First step, a Phoenix company is set up so he can continue to trade when he pulls the trigger on liquidation and the shit hits the fan
- Builders mates are paid for work not performed with payments to be diverted back to builder at a later date. These are your true voidable preference payments
- Builder starts shifting assets into phoenix including any profitable contracts
- Builders wife is the director of the new Phoenix
- Phoenix has a QBCC licensed nominee builder. The builder was not a builder anyway, he was a company director, anyone can be a builder with a nominee, its rafferty's rules you know
- Phoenix moves into original companies offices for the sake of convenience
- Phoenix uses same computers except the one with most of the files deleted, that one is given to the liquidator for his investigation
- Phoenix uses some of the same staff, same vehicles, same phone numbers, same suppliers, same trades (fools)
- Everything is up and running
- It has been a seamless transition from the old company to the phoenix
- No money is paid by the phoenix to the old company for contracts and equipment, these are non-commercial transactions
- That means there is no benefit to the creditors of the original company
- The pre insolvency advisors preferred Liquidator is appointed, (it could possibly be as an administrator first to buy more time)
- All debt owed to creditors is washed away. Debt is mainly to subcontractors, some suppliers who were unsecured and of course, the ATO
- Director becomes a bankrupt
- ASIC ban director from being a company director for 3 years
- Director cannot be pursued financially as he is bankrupt, his substantial assets very carefully squirrelled/hidden away
- We all know where but they are untouchable, legally in the name of family and friends
- Liquidator says there is no money to be found, 45 million give or take a few has vanished
- Liquidator uses his preferred law firm and sues the subbies for preferences who worked for the old company
- The ATO is target number 1 on the hit list of preferences
- Liquidators call these subbies and the ATO the “low hanging fruit”, they can be easily picked from the ground without even getting the ladder out
- Liquidators are paid substantial fees
- Lawyers are paid substantial fees
- Builder has an almost uninterrupted run and phoenix is going like clockwork
- Money pours in, everyone is happy, buoyed by the ease and success of the operation. Its great when a well orchestrated plan comes together old chap eh?
- History repeats itself, one day in the not too distant future, they will financially cleanse themselves of all debt again. It’s only a matter of time.
There you have it, 50 boxes that have to be linked together. You can see why a liquidator doesn't have the stomach for it but we do.
Is Everybody Happy?
Everyone is happy except subbies, they went to work, poured millions of dollars of their hard earned money into making these buildings rise out of the ground then at the end of the day, they didn’t get paid for the last 3 months of their work. Some who started on the job late never saw a cent.
Worse still, any money paid to these subbies in the previous 6 months may be subject to voidable preferential payment claims.
The builder used subbies to do work they knew they would never pay a cent for. Thats where no moral compass comes into the equation.
When the liquidator is questioned as to why he is suing subbies, the most vulnerable targets, he says:
- “I am doing my job under Section 588FA(1) of the Corporations Act 2001”.
His eyes have changed noticeably, where there used to be pupils in those big sockets, there are now these strange golden coloured $ $ signs and a greedy look, reminiscent of Smeagol in Lord of The Rings who was renamed Gollum because of the terrible swallowing noises he made in his throat , "my precious my precious".
Don't ever try and get between a liquidator and his lawyer when theres a quick buck to be had, you will be trampled in the stampede.
It’s a job they and their lawyers are paid in excess of $600 per hour for being glorified accountants and pillars of society.
Subbies, we are in the wrong business.
Its our duty as participants in this industry to put all the boxes together but anyone who has ever picked up a Rubix cube knows just how hard it is to get all the colours in order on the 6 sides.
This 3 D puzzle known as building industry fraud has so many different facets that without integrity, it is a very difficult task, some would say almost impossible to line up all the boxes.
One huge issue is that to bring this off successfully, there are a lot of people who know about it and the inner workings yet none of them do the right thing. None of them have a conscience and none of them have ethics. They are all ruled by the power of money.
The problem when there is extremely large sums of easy subbies money involved, integrity is as scarce as trying to find that needle in a haystack.
