One of the most sacred rules within our precious legal system has recently been broken by a Sydney law firm and this firm has connections to the highest office in Australia.
It involves the practice of defrauding people by creating what is known as a phoenix company (sending a company deliberately 'broke' and transferring its assets into a new 'phoenix' company).
Phoenix companies are a $3 Billion problem in Australia. To date, neither our current government or ASIC have taken any action in this particular case, but Australians can now view the evidence for themselves, right here below in just a few minutes, to see why an urgent independent investigation is needed.
On Friday 31 March 2017, there was a judgment in the NSW Supreme Court which, among other things, ordered Sydney-based company Live Board Holdings Limited to pay $250,000 as 'Security for Costs' in order to proceed to a trial against its former director, Mr Pierce Cody and his new phoenix company Cody Live Pty Ltd.
In over 3 years, Live Board Holdings has yet to be able to get to a trial against Mr Cody for its main case.
Unlike any typical case, Live Board Holdings has been impacted by serious malpractice from a Sydney law firm named Whittens & McKeough Lawyers, who as you will see, have actively contributed to Australia's $3 billion problem of phoenix companies.
So let's see what this firm - with links to the NSW Wentworth Liberals, has done. So illegally, so confidently.
Whitten's & McKeough Lawyers are the former lawyers of Live Board Holdings Limited. They have been systematically assisting this director named Mr Pierce Cody, to defraud their very own client (subsequently its former client) Live Board Holdings.
To see their initial client representation for yourself, click here for an extract of a letter from Whittens Lawyers 'acting for' Live Board Holdings.
It wasn't too long before their conflict of interest as legal practitioners became reckless. So reckless in fact, Whittens even commenced proceedings representing other parties against their own client Live Board Holdings. To view that click here.
Here they are, acting for Live Board Holdings as their client again, appointing administrators to it.
In one of the biggest abuses of solicitor/client trust, here they are assisting Mr Cody (and his self-named phoenix company Cody Live ) purchase all of their client's assets, whilst its client was in administration.
To top off the phoenix scam and ensure their 'now-former' client, was also left without evidence that can be used in court against its new client (and themselves), here are Whittens Lawyers confirming in a letter that all of Live Board Holdings documents (in addition to its assets) had now been sold to its new client, Cody Live.
If that wasn't enough, here are Whittens & McKeough Lawyers, filing a Security for Costs motion against their now-former client, Live Board Holdings, for the benefit of themselves and their new client.
This firm acts as if they are above the law.
So, in order to learn why Whittens acted so illegally, so confidently, I had to dig a bit deeper.
Whittens Lawyers were founded by former Wentworth Liberal vice president, Mr Ray Whitten. He runs this legal practice alongside Mr Alistair McKeough. Mr Ray Whitten was revealed by the Daily Telegraph to be involved in the NSW 'Jobs for Mates' saga. An extract of that article is here:
I don't know why Whittens & McKeough Lawyers have acted with such shameless disregard for the law.
However in my view, it appears that creating a phoenix company is quite normal for this legal firm.
In 2016, a letter was provided to the Prime Minister by the Deputy Opposition Leader Tanya Plibersek, on behalf of the parties affected by the conduct of Mr Pierce Cody and Whittens Lawyers (if you haven't already seen that letter, you can view it here).
Nothing was done to assist Live Board Holdings. Nothing was done to end Australia's $3 billion problem of phoenix companies.
We can now reveal that Mr Cody has previously assisted the funding of the NSW Liberals, including hosting Mr Turnbull and others, as confirmed in a promotional flyer below. It appears that Mr Cody may have met with the PM soon after Mr Turnbull had received that 2016 letter, an extract of an email I received about this, is also below.
We don't know if Mr Turnbull or the other politicians in this flyer are fully aware of the extent of Mr Cody's tendencies, or the intricate details of Whittens Lawyer's operations.
What is now very clear, is that when Mr Cody needed a law practice to break the law for him, he turned to the law firm of the former vice president of the NSW Wentworth Liberals.
Live Board Holdings has now been left in court proceedings, without key evidence (it has been 'sold' to Mr Cody's new phoenix company) and is the subject of serious malpractice by its now-former legal representatives Whittens & McKeough Lawyers.
As for the 'Security for Costs' judgment of March 2017 - the judge that delivered the decision against Live Board Holdings on 31st March 2017, Justice Stephen Robb, is the Liberal Party's former barrister.
He had also been previously revealed by the Daily Telegraph to be part of that same NSW 'jobs for boys' saga as Mr Ray Whitten.
An extract of that article is here:
You can view the 31 March 2017 judgment, by Justice Stephen Robb against Live Board Holdings here.
In my view, it appears as though there is an ideology among certain sections of the NSW Liberals, which needs to change, in order to work towards ending the problem of phoenix companies, which affects thousands of people each year.
In any case, there needs to be an urgent independent investigation into Whittens & McKeough Lawyers and the events in this matter. In my view, the public is at risk.
Let's end Australia's $3 billion problem of phoenix companies. It starts here.
The real test for any improvement to ASIC, includes solving Australia's $3 billion problem of phoenix companies. This letter below was recently provided by the Deputy Opposition Leader Tanya Plibersek to Prime Minister Malcolm Turnbull, on behalf of Australian Entrepreneur & Inventor Costa Koulis, in light of the National Innovation Agenda and the issue of phoenix companies...
Malcolm Turnbull MP
PO Box 545
14 March 2016
Dear Prime Minister,
The Deputy Leader of the Opposition and the Shadow Minister for Foreign Affairs and International Development, The Hon Tanya Plibersek MP, has provided this letter to you on my behalf, in support of Australian Innovation and in support of ending the practice of illegal ‘phoenix companies’, which remains an ongoing threat to innovation and our economy.
I am writing to you in particular Mr Turnbull, to let you know of a phoenix company matter involving Australian Innovation, that continues to unravel more each day.
What makes this worse Mr Turnbull, is that this has unfolded right in your very own Wentworth Liberal backyard.
It involves a man who only as recently as this past weekend, continues to mislead the public, at the expense of innovation in Australia, using a phoenix company to do it.
You may even know this person, but I don’t know how well you know him.
This phoenix company is located just down the road from your office.
‘Phoenix company’ activity is described by ASIC as serious and costs the Australian economy up to
$3 billion per year. Phoenix companies affect countless Australians every day.
Our precious court system cannot solve the problem of phoenix companies on its own, which is why we have ASIC to assist, but ASIC does not always assist.
Without ASIC intervention, innovative companies that find themselves faced with misconduct by directors or administrators that execute phoenix company schemes are at serious risk, because challenging misconduct or anything at all in the civil court, requires a company to have funds.
Innovative companies are typically rich in Intellectual Property assets, but low in funds to fight effectively in court, and this makes them the perfect target for phoenix company schemes, especially when ASIC does not assist.
Mr Turnbull, we need to fix ASIC.
I am an Australian entrepreneur and inventor, I created a product known as ‘Live Board’ for the real estate industry, which is the world’s first digital real estate ‘for sale’ sign. My innovation however, was taken through a phoenix company and renamed to ‘Cody Live’.
This brief summary below, starts off with a lie.
The Cody Lie
In 2012, I appointed a director named Pierce Cody to assist with commercialising my invention, but instead of fulfilling his appointment contract, he illegally diluted my majority shareholding, enticed creditors to pursue bankruptcy against me, renamed the product after himself, from ‘Live Board’ to ‘Cody Live’ and created a deliberate voluntary administration to take the company’s assets, through a newly created phoenix company ‘Cody Live Pty Ltd’.
Cody Live is a Cody lie.
Whittens & McKeough Lawyers
Mr Cody could not do this on his own. There is a law practice that helped Mr Cody create this phoenix company. It is a Sydney law firm, Whittens & McKeough. Its directors include Alistair McKeough, Andrew Whitten and Ray Whitten, a former Wentworth Liberal Vice President.
Whitten’s law firm used to be the lawyers of Live Board Holdings Limited, but instead of protecting Live Board Holdings as their client, they actively acted against their own client, to assist Mr Cody with executing a scheme to take the assets of Live Board Holdings and transfer them to phoenix company Cody Live Pty Ltd.
The Friendly Administrators
Mr Cody simply caused a voluntary administration at Live Board Holdings Limited by issuing shares illegally and then spending the majority of $1.05 million investment funds obtained. He appointed friendly administrators Manfred and Justin Holzman to sell him back the assets of Live Board Holdings, who also actively assisted Mr Cody and his co-directors with their misconduct and this phoenix scheme.
Collectively, Mr Cody, Whittens & McKeough Lawyers and administrators Manfred & Justin Holzman, not only assisted with taking the assets of Live Board Holdings, but they also set the unfortunate precedent that any Australian Innovation can be taken through a phoenix company, using a 'friendly administrator’ and civil court procedures to do it.
This is what can happen in the absence of ASIC.
The problem of appointing ‘friendly administrators’ was highlighted by His Honour Justice Lindgren back in 2006, but the Government still allows it to happen today. ‘Friendly administrators’ destroy lives and destroy innovation.
The ‘Side Deal’ During the Administration
Just to confirm the extent of this particular phoenix scam, after Mr Cody, through Cody Live Pty Ltd, ‘purchased’ the assets from the same company he placed into voluntary administration, Cody Live Pty Ltd subsequently received a series of payments that totalled more than half their own ‘purchase price’ back into their own bank account from the administrator.
To top it off, under this ‘deal’, we discovered that Mr Cody had purchased the assets of Live Board Holdings for $305,000, but was owed back approximately $1.05 million after the sale.
The phoenix company took the assets for free, with money still owing to it.
Administrators and directors can do just about anything when we don’t have ASIC intervention.
Concealment of Documents and Attempting to Avoid trial
Not only did the phoenix company ‘buy’ the assets of Live Board Holdings, but also all its documents, right in the middle of civil court proceedings.
Imagine robbing a bank and then being able to purchase the evidence you left behind.
The way they used civil court procedures to take the assets of Live Board Holdings without yet being tried for misconduct, is a method open to anyone appointing a ‘friendly administrator’, when you don’t have ASIC intervention.
After deliberately causing a voluntary administration of Live Board Holdings, they then sought ‘Security for Costs’ against Live Board Holdings, in a ‘procedural hearing’ with missing evidence against them, in an attempt to stop the case from going to trial.
We have yet to get to trial for director breaches and it has been over 2 years.
On 8 December 2015, just a week after a ‘procedural hearing’ decision, throughout which Mr Cody was claiming to have purchased the assets at a ‘legitimate’ price of $305,000, Mr Cody then filed a 1 year overdue ASIC document which confirmed the true value of the Live Board Holdings assets that he purchased, to be valued at approximately $9.7 million all along.
This would have been used against phoenix company Cody Live Pty Ltd in the procedural hearing, had it not been for their failure to lodge it with ASIC a year earlier.
This is what can happen to any innovative company when it doesn’t have ASIC’s assistance.
Let’s End Phoenix Companies
I did not ever anticipate, as part of innovation in the real estate industry that I will also need to embark on a cause to end phoenix companies in Australia. However, I am now committed to using what I have learned first hand, to end this practice and to help the countless Australians, who find themselves impacted by phoenix companies every day.
In order to boost Australian innovation and excel our economy globally, I believe we need to make the term ‘friendly administrator’ a thing of the past and improve ASIC’s ability to enforce the corporations law.
We often hear the same reasoning for a lack of enforcement again and again, for example that ASIC has limited resources. I say, we either have a corporate regulator or we don’t. We must improve ASIC.
We need a corporate regulator that has the ability to protect the electronic cash and intellectual property held by our companies, especially our innovative companies, just like our police force does an excellent job in protecting our physical property or cash held in our homes. It’s the only way we can truly compete globally as a nation.
In any case, no matter what the final solution may be, any National Innovation Agenda should come complete with additional law enforcement protection, to ensure we prevent the events at Live Board Holdings from happening ever again to other innovative companies, startups and entrepreneurs.
Live Board Holdings has yet to receive assistance from ASIC. It remains open for ASIC to take action against these former Live Board Holdings directors and administrators, who have used corporate procedures within the civil court system itself and relying on a lack of legal funds, to assist them in executing their phoenix company scheme.
These former Live Board Holdings directors and administrators are still dealing with the public today.
Mr Turnbull, I ask you to walk out of your office on New South Head Road, Edgecliff, look down towards the Cody lie in your own Wentworth Liberal backyard, and ask yourself, is this how we are going to encourage our Australian entrepreneurs to innovate?
We are now able to use what we have learned at Live Board Holdings to formulate policy, help our future entrepreneurs and tackle the ‘phoenix company’ issue head on.
It’s time we fixed this $3 billion problem.
I am open for consultation to the Government on this matter.
Director that contributes to Company collapse, sends smiley face text to those affected, then shares in $3.8 million gain
Typically when a Company goes into Voluntary Administration it is considered a catastrophic event for it's Company Directors. However, that didn't seem to be the case for the Director I appointed to Live Board Holdings Limited - a former APN News & Media Director, Mr Pierce Cody.
After Mr Cody and his Co-Directors placed the Company into Voluntary Administration, Mr Cody sent me a private smiley text message to my phone.
How could he be happy after being a Director of a Company that has just gone broke. Did he know what was to follow?
Well, before you read about the new event that started to unravel before my eyes, I’ll give you a background of the events leading up to the Voluntary Administration:
I appointed Mr Pierce Cody as a director of Live Board Holdings Ltd in May 2012, after I had invented the ‘world’s first digital real estate ‘for sale’ sign', called ‘Live Board’.
On September 3rd 2013, Mr Cody, along with his Co-Directors Mr Richard Ochojski and Ms Finola Burke, issued shares without proper authority.
Following their unauthorised share issue, my majority control of Live Board Holdings Limited was diluted, I was fired from the Company, my invention and the business were renamed from ‘Live Board’ to ‘Cody Live’ and Mr Pierce Cody then presented himself as the creator of the 'world’s first digital real estate sign’ to the media, to the public & to the real estate industry. (click here to view Sydney Morning Herald article)
On February 17th 2014, the NSW Supreme Court ruled against Mr Cody and his Co-Directors by refusing an application by Mr Cody, Mr Ochojski & Ms Burke to declare their share issue of September 3rd 2013 valid. (click here to view full decision)
Following the Supreme Court's refusal, Mr Cody and his co-directors were set to face further matters in Court including alleged personal liability for the unauthorised share issue and oppression. On February 18th 2014 however, Live Board Holdings Ltd was placed into Voluntary Administration.
Back to the Smiley Face Text I Received on March 3rd
In a further Court decision on March 3rd 2014, I was unable to block the external Administrators (Holzman Associates) from being appointed as Administrators of Live Board Holdings Limited. The majority of the Company funds derived from the unauthorised share issue ($1 million), had been spent by Mr Cody and his Co-Directors including a significant amount spent between the date of the hearing in December 2013 and the date that the Court handed down its decision regarding the unauthorised share issue on 17 February 2014.
It was immediately after the Court’s decision to allow the appointment of the Administrators on March 3rd 2014 that Mr Cody sent me that smiley face text.
But I still could not confirm what Mr Cody was smiling about.
After all, it was noted on March 3rd 2014 by the NSW Supreme Court that it is possible Mr Cody and his Co-Directors may be personally liable and that the (my) frustration lies in the fact that the Company has indeed gone into administration. (click here to view full decision)
It was also argued by the Administrator to the Court, in their pursuit of being validly appointed “that to return the Company to these Directors (Cody, Ochojski & Burke) would be a disaster”.
The reason why the Company collapsed was due to the unauthorised share issue on September 3rd 2013, that was subsequently refused to be declared valid by the NSW Supreme Court on Feb 17th 2014. (click here to view full Feb 17th decision) I did not see this as a happy position for any Director involved in such an event.
The smiley face text I received from Mr Cody on March 3rd 2014 had me thinking.
However it wasn't long before I started seeing the possible reason for him sending me that smiley face text.
Mr Cody & his Co-Directors buy Company assets at a vastly reduced price and benefit by $3.8 million
On March 17th 2014 & subsequent to that day, I received a creditors report from the Administrator (Holzman Associates) recommending that Live Board Holdings Limited accept a ‘Deed of Company Arrangement’, which includes the sale of all the Company assets for only $305,000, to a new entity, of which the shareholders (directly or indirectly) were Mr Pierce Cody, Mr Richard Ochojski & Ms Finola Burke.
The Live Board Holdings Limited assets had an estimated value over $4.1 million, just prior to the unauthorised share issue by these Directors.
As a result, on my calculations, these Directors benefited by approximately $3.8 million from their unauthorised share issue of September 3rd 2013, which led to the company collapse.
We are still in the process of assessing any benefit to other parties from this transaction.
New Public Events of April and May 2014
These Directors are now promoting ‘Cody Live Pty Ltd’, to the real estate industry, to the media & to the public, using the assets of Live Board Holdings Limited, benefiting by an estimated $3.8 million, obtained as a result of their unauthorised share issue of September 3rd 2013 as Directors of Live Board Holdings Limited.
Back again to that smiley face text of March 3rd
Ok, so what have I discovered since I received that smiley face text after the Company collapsed?
That even though ‘Voluntary Administration’ is typically a catastrophic event for most Directors, that is not always the case.
In this instance, these Directors benefited by a share of approximately $3.8 million.
I have even more reason now, to continue to fight this vigorously for all those affected.
I think it is important that we protect Australian innovation & Corporations from these type of events ever happening again in the future.
For the record, below is that smiley face text I received after the Company collapsed. The case continues.