THE man at the centre of the Harvest Homes collapse, convicted fraudster Oliver Roths, failed to make his much-anticipated court appearance on Wednesday, calling in sick due to an infected tooth.
Lawyer Stefan Briggs, assisting liquidator Thomas Dawson of DCL Advisory, told the Sydney Federal Court that he had received a text message at 9.40am from Roths indicating he had a toothache.
The public examination is picking over the bones of the failed Newcastle builder, that collapsed in 2019 owing creditors millions.
Roths' no-show, at the public examination into the liquidation of GLFB Pty Ltd (trading as Harvest Homes NSW) and Harvest Homes (Properties), means the matter will head back to court later this month.
The second day of the hearing, which saw the internal workings of the companies exposed for all to see, detailed how Roths - who spent time in jail for fraud and perjury - was not the only white-collar criminal working in the business.
Harvest Homes co-founder Steve Taylor revealed on Wednesday that the general manager Roths installed after he became a "major shareholder" and took control in mid-2017, Adam Hinchliffe, was also a convicted fraud.
Mr Taylor explained how he and his business partner Dean Turner had no idea who Roths - also known as Oliver Banovec - was when he came to them with a proposal to buy a 51 per cent stake in Harvest Homes NSW.
Not long after he bought into the business, Roths began to "micro-manage everything" and installed Hinchliffe as general manager, responsible for internal finances and the day-to-day operation of the group.
Mr Taylor told the court he was unimpressed with Hinchliffe and later discovered he had been "convicted of embezzling $1.7 million" from unrelated companies in 2013 and spent time in jail.
"To be honest we had complained about Mr Hinchliffe from the start, we didn't believe he had the necessary knowledge of the building industry," he said.
Mr Taylor described how he went "ballistic" when he discovered Hinchliffe had made a major purchase and charged it to the company account.
"Mr Hinchliffe bought himself a $130,000 BMW and organised for the lease payments to be taken out of the GLFB accounts," he said. "So that was pretty much the last straw."
Hinchliffe, who was also summonsed to appear at the public examination, said he started with Harvest Homes in 2017 and was dismissed by Roths in early 2019.
He told the court the pair met through a friend named "Wally", whose surname he couldn't recall, and he initially worked for another builder Roths controlled called Hyperbuild, that is also in liquidation.
Under questioning from Mr Briggs, Hinchliffe revealed his criminal convictions, but denied he met Roths in jail.
"I pleaded guilty to some fraud charges in 2013," he said. "It was first a non-custodial sentence, but on appeal I received three years and nine months, with time served 21 months.
"I never met Mr Roths during that time. He left the prison system during the time I was there."
Both men described how Roths' partner at the time, Nadine Marando, who often referred to herself as the Duchess of Ludlow, was brought in to manage design and marketing for Harvest Homes.
Mr Taylor said Ms Marando's presence caused further problems for himself and Mr Turner, both still directors of the business.
"We put forward our suggestions and certainly suggested that some of the things Nadine Marando was suggesting were not suitable for the market we worked in, because we were building things that were probably more fitting to be built in Vaucluse rather than Raymond Terrace or Teralba," he said.
"So the issue with that is the cost of such fixtures and fittings is not recoverable and not necessary. We expressed that view but were basically overruled."
He said Mr Roths "never got tired of pointing out that he was a majority shareholder and he could do what he liked".
Mr Turner and Mr Taylor started Harvest Homes in 2008 and built it from nothing to turning over almost $20 million and completing up to 100 homes a year.
The court heard things came to a head when Mr Taylor received a phone call in early 2019 and learnt Roths was Oliver Banovec, who was sentenced in 2010 to seven years' jail for fraudulently using $500,000 of an investor's money to support his business.
"We got to the point where we obviously wanted to separate from Mr Roths," Mr Taylor said.
"Mr Roths had extracted a great deal of money from the sale of two properties the company owned. The company was in a fair bit of financial stress thanks to that."
Mr Taylor described how a major dispute erupted as the co-founders battled to take back control of the company.
"Mr Roths wanted $300,000 or $370,000 paid to him," he said.
"We had to pay subbies and suppliers, we had decided to pay subbies and suppliers instead of Mr Roths because at that stage we realised we were being defrauded. He went berserk and threatened all kinds of legal action."
Mr Turner said as the major shareholder in the companies they had no reason not to initially trust Roths, but after they discovered who he was everything changed.
"He instructed the accounts department to pay money in the bank account, about $370,000, directly to him and not company creditors," he said.
"We understood his intentions were not honourable so we instructed the accounts department to pay the creditors and that enraged him."
The court heard that Roths then tried to remove Mr Turner and Mr Taylor as directors. The pair were then informed that Harvest Homes had defaulted on a loan, that had been organised by Roths, because the initial six-month term had expired.
"We only had loan terms for six months, we were never going to make the six months," Mr Turner said. "He [Roths] would say don't worry about it, I've got that covered. It would have been in default for a long time. The dispute arose and the issue of the default arose."
The pair negotiated a settlement deed in an effort to get Roths out of the companies and keep them "afloat", but it failed.
The agreement would have seen Harvest Homes build 61 dwellings on 38 blocks of land at Warnervale, on the Central Coast, and Roths, via AXL Financial, provide the land and funding.
According to the directors, Roths told them that AXL Financial - that is now in liquidation - owned the land at Warnervale.
"The property was never actually owned at the time by AXL," Mr Taylor said.
"At the time we didn't know that, they told us they owned the land...we walked on the dirt. We were told originally we would be building on there in a number of months."
Mr Turner said "none of the agreed considerations in the deed ever came to fruition" and Harvest Homes never got "a cent under the agreement".
Weeks later the companies were placed in the hands of the liquidator.
"I think the one thing that has probably got to be pointed out is that both Mr Roths and Mr Hinchliffe ... had no idea about running a company, certainly not a building company," Mr Taylor said.
"They had no experience, no background. When you look at the companies they have been involved in ... they're all in liquidation and gone bankrupt, so certainly no expertise in that area."
The court also heard from Tim Wang on Wednesday, who was employed by Roths initially to work at Hyperbuild, then his finance company AXL and later he did work for Harvest Homes.
Mr Wang described Roths as "the guy running the show" at Harvest Homes.
"I think Dean and Steve pretty much reported to him," he said.
Mr Wang described going to the Double Bay offices of Moshav Financial to meet principal Tal Silberman with Roths on several occasions between 2016 and 2018.
Mr Wang said Roths and Mr Silberman would discuss obtaining visas for overseas workers.
On Tuesday, Mr Taylor told the court he first met Roths when he offered to provide cheap Chinese labour to Harvest Homes.
The court also heard that Harvest Homes had finance through Mr Silberman's private finance company, Moshav Custodian, that had been organised through Roths.
When pressed by Mr Briggs if Moshav Custodian was in the business of sponsoring employees to work in Australia, Mr Wang said he knew the finance company simply as "Moshav" and it was "not a migration agent, but as a business they have sponsored employees".
Mr Wang said he left AXL Financial in early 2019.
"I was not being paid and I was personally taken advantage of in a financial way," he said.
The hearing continues later this month.
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