What did fraudster Newcastle accountant Ray Walker, who stabbed himself to death in the heart, aged 67, do with the life savings and super funds he stole from 70 known creditors, mainly ageing Hunter residents?

The bitter wrangle over the missing millions spilled into the Federal Court on Wednesday with almost 20 victims attending the first day of Walker’s bankruptcy trustee hearing that saw his widow Jennifer, long-time receptionist Gayle Wheatley and brother-in-law Ronald "Tony" Evans give evidence.

The court heard of the "large lifestyle" led by Walker and his family including "lavish shopping trips", European cars, private schools, holiday homes and a farm at Gresford.

Mrs Walker detailed a string of property purchases, including a waterfront home at Coal Point bought for a suburb record of more than $900,000 in 2001, and a Soldiers Point holiday home that was sold because the family rarely used it.  

When questioned at length by barrister Anthony Spencer, for the bankruptcy trustee Ray Tolcher, about accounting records dating back decades for a company - Bowen Properties - that she was a director of, Mrs Walker conceded she signed paperwork without looking at it.

She said her husband did "all the financials" and she "trusted him". "It was a long time ago, I can't remember," she repeated numerous times.  

When asked about a $5000 expense for cattle recorded in company books, she shed some light on the purchase. "We did decide to buy a farm," she said. "A lot of other people we knew had hobby farms and things. It wasn't for very long we had it."

The public hearing, set down for three days in February and May, is seeking to establish how much people knew of Walker’s conduct and whether any losses can be recovered.

For decades Walker, who had offices in Lake Macquarie and Newcastle, was a trusted accountant and friend to his victims. One extended Lake Macquarie family is owed more than $1.3 million collectively.

Walker's victims, mainly middle-class people who saved a lifetime to build nest eggs and superannuation funds, only to have them stolen, turned out in force for the first day of the investigation.

Walker’s self-inflicted fatal stab wound to the heart came 10 days after Newcastle solicitor Rob Brook put him on formal notice about the misappropriation of $650,000 from a client, who was in court on Wednesday.

Her debt, that led to the unravelling of Walker's ponzi scheme, was only a fraction of more than $10 million tallied so far.

Mrs Walker told the court of considerable property assets purchased in her name but said she was unaware exactly where the money came from, or the size of the mortgages. "If he said we could afford it, naturally I believed him," she said.

Under questioning from Mr Spencer, Mrs Walker agreed her husband serviced the debt on assets she owned as she stopped working in her early 20s to start a family.

But when Mr Spencer told the court there was "every likelihood" that "some part" of the misappropriated funds were used to help pay for assets in her name, Mrs Walker disagreed.

"I don't think that he used it for his own purposes," she said. "What you are forgetting is he was earning an income... I don't think it crossed over to the houses."

Angry victims shook their heads and voiced disapproval from the public gallery at the response.

Mrs Walker said she knew nothing of the missing money until after her husband's death at their beachfront Port Stephens holiday home in July 2015.

She was also unaware, at the time, of professional disciplinary action against Walker in 1991.

Register searches show Walker was brought before the Company Auditors and Liquidators Board, resulting in his registration as an auditor being cancelled in October 1992 as disciplinary action.

He was banned from managing a corporation for five years from September 1991. 

Mrs Walker told the court she didn't "think it was ever brought up" and she couldn't remember what Walker told her when she asked about it.

"I don't think I found out for quite a while and I don't know who told me," she said. "I knew there was something, but I don't know what it was about."

In earlier evidence, Mrs Walker's sister's husband, fellow accountant Tony Evans, told the court he audited Walker's trust account in 2005.

When asked if his relationship with Walker "interfered" with the audit, Mr Evans said it did not.

He told the court he kept no records, including his own working notes, of the audit and said everything was given to Walker once the job was completed.

"It seems inherently odd that you would return to Mr Walker your own workings on the audit," Mr Spencer said.

"It left you in no position to demonstrate to anyone that you had done your job." 

Mr Evans told the court the trust account he audited did not include money deposited by investors. He said other documents bearing his company's letterhead, detailing that Walker's trust account was being audited in later years, were fraudulent.

One document on Mr Evan’s company letterhead was signed by somebody else.

At the time of his death, Walker was practising alongside fellow accountants including his son Brett, Michael Hart and Brett's brother-in-law David Woods.

Walker's longest serving employee, receptionist Gayle Wheatley, described how in the days before Walker’s death she received many phone calls from clients trying to recover money.

She said Brett Walker, who worked with his father for decades, got her to check the "receipt book" and collate a list of money invested with Ray Walker.

The hearing was adjourned to February 28.