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CBA staff part of alleged Ponzi scheme
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CBA staff part of alleged Ponzi scheme
Cameron Houston explains how Commonwealth Bank employees are believed to have been complicit in an elaborate fraud worth $76 million.
Commonwealth Bank staff were allegedly complicit in a $76 million Ponzi scheme and received secret commissions for their role in the alleged fraud, which was ignored by the bank's management for almost five years - until police were alerted.
The alleged architects of the scam, professional poker player Bill Jordanou and accountant Robert Zaia, will face court in February 2017 and have indicated they will plead not guilty to almost 100 fraud and deception offences.
Mr Jordanou and Mr Zaia are accused of using forged documents to borrow millions of dollars for several property developments that never got off the ground.
Funds were allegedly siphoned from clients' accounts without their consent.
Documents obtained by Fairfax Media reveal the extent of the bank's involvement and its alarming probity failings.
The CBA initially blocked the release of internal documents and emails, but was compelled by a court order to hand them over to one of the victims - Melbourne property developer Nick Fotopoulos - who lost more than $5 million and has launched a civil action against the bank.
A CBA spokeswoman declined to make any comment while the matter was before court.
Australia's biggest lender also refused to explain why it failed to alert police of fraud allegations involving Mr Jordanou and Mr Zaia until 2011, despite being aware of them in February 2007.
At least two mobile lenders, employed by CBA to visit clients at their home or place of work (and whom Fairfax has decided not to name), were involved in the alleged fraud but were never charged with any offences.
Several other bank employees processed dozens of loan applications, which were supported by allegedly forged documents.
One of the mobile lenders died suddenly from a brain aneurysm in 2007, while the other is expected to testify against Mr Jordanou and Mr Zaia in court next year.
In an email on August 11 2010, one of the mobile lenders was asked by Mr Jordanou to provide the undrawn balances and monthly loan repayments of eight CBA customers.
Professional poker player, Bill Jordanou.
Allegedly forged documents were provided and CBA staff arranged for funds to be transferred between accounts in an apparent bid to avoid detection by customers or bank security.
A bank employee warned Mr Jordanou that one client was in arrears and said: "I don't want to do a mock application for him, as it may automatically place him in a lower category and therefore be declined on the spot."
The payment of secret commissions to mobile lenders appears to have been confirmed during a recorded interview between Mr Zaia and a lawyer on November 23, 2011.
"Yeah he was our contact, he would come into our office ... and he would get paid a commission on the side which is undisclosed," Mr Zaia said to a solicitor at Frenkel Partners.
Two sources linked to Zaia Arthur & Associates told Fairfax Media that both men spent significant amounts of time at the accountant's Scoresby office and received secret payments.
The sources said one of them was also given overseas flights, televisions and alcohol during his decade-long association with Mr Jordanou and Mr Zaia.
One of the CBA lending managers lived in a Narre Warren South home that was later transferred into the name of Mr Jordanou's wife, Sue Jordanou.
Mr Jordanou was a pallbearer at his funeral in 2007.
Mildura plasterer Jim Barker and wife Debbie were the first to raise the alarm when two unauthorised withdrawals totalling $26,000 were made from Ms Barker's account.
The couple also reported to the CBA's fraud investigation unit that a document that stated Mr Barker was paid an annual salary of $343,000 had been forged with the complicity of bank staff to obtain a loan of $1.5 million.
Mildura plasterer Jim Barker and his wife Debbie were the first to raise the alarm - in 2007. Photo: Louise Donges/Sunraysia Daily
At the time, Mr Barker earned about $80,000 and was unable to service the loan
CBA assessment analyst Andrew Rutherford confirmed their suspicions in an email in May 2007.
"From my initial review of this matter the original loan document ... contains a false statement of employment."
"I am now pursuing the fraud matter of the loan documents, and have requested they report the matter to Scoresby police and present the bank with statutory declarations with their version of events," Mr Rutherford said in the 2007 email.
But the CBA did not contact police until 2011.
While the bank agreed to refund $26,000 for the unauthorised withdrawals, the Barkers were eventually forced to sell their 38 hectare property after the CBA refused to accept the loan documents had also been forged.
Despite a recent claim to be the nation's most "ethical bank", the CBA has rejected requests for compensation and pursued legal action to repossess homes from at least four other customers who claimed their loans were acquired with allegedly fraudulent documents linked Zaia Arthur & Associates.
These latest allegations come as CBA remains under scrutiny from the corporate regulator and Commonwealth government over serious misconduct inside its financial planning division from 2003 to 2012 that put the retirement savings of thousands of customers at risk.
Several CBA financial planners have been banned from practising by the Australian Securities and Investment Commission for providing inappropriate advice, overcharging on commissions and fees, and in some cases, allegedly committing acts of fraud.
CBA recently revealed its review has found more than 1 in 10 files are "missing" for customers who have applied to have their records, accounts and investments reviewed as part of its compensation scheme.
A CBA spokesperson said "CBA has zero tolerance to bribery, corruption and facilitation payments across the business and will continue to cooperate with the police and the legal process as this complicated issue unfolds in the courts."