Unable to sell his struggling Richmond cafe, Bill Katsabis had a windfall when he received a $580,000 insurance payout after a fire destroyed the property, a court has heard.
But instead of using the money to pay off his creditors, Katsabis transferred money into his wife and children’s bank accounts as well as buying nearly $60,000 worth of gold bullion and four wrist watches for more than $20,000.
Katsabis pleaded guilty in the County Court on Wednesday to one count of dishonestly using his position as a director by taking $536,418 from the company account, and one count of failing to disclose the company’s assets to the liquidator.
Judge Felicity Hampel jailed Katsabis for two years and three months but ordered he be released on a good behaviour bond after serving six months.
‘‘This is serious dishonesty by a director,’’ the judge told Katsabis.
‘‘The fire put what was an ailing, loss-making business, which you had unsuccessfully tried to sell, out of operation.
‘‘The insurance funds were more than enough to pay out the creditors and leave you with a substantial sum left over.
‘‘In that sense, the insurance payment was a windfall.
‘‘By your conduct, your dishonesty as a director, you denied creditors the monies they were owed, and used the company’s funds for your own benefit and that of your family.’’
Katsabis had been the sole director of PG & N Enterprises, trading as Degani at Botanica cafe in Swan Street, Richmond, when he tried to sell the business in March 2011.
He had received no offers when a month later fire severely damaged the cafe and it was never opened again.
Judge Hampel said an insurance claim was promptly lodged and Wesfarmers General Insurance paid the company $580,000.
The money was paid into a new bank account opened by Katsabis after the fire.
Katsabis was the sole signatory to the account and withdrew $536,418.53 between June and November 2011.
‘‘At the time of the fire and in the period of your offending that followed, the company was being pursued by creditors, as it had been in the period from 2009 up until the time of the fire,’’ the judge said.
Katsabis transferred $140,000 to accounts in his wife and children’s names; spent $59,964 on gold bullion and $20,600 on four wrist watches.
The judge said that of the $286,700 withdrawn in cash, Katsabis claimed the money had been spent on “living expenses” save for $49,100 used to purchase more gold bullion.
Katsabis later claimed the gold bullion and the wrist watches had been stolen during a burglary at his home but an insurance claim for these items was rejected.
The judge said Katsabis had since repaid some of the money but there was still $241,218 outstanding which he had agreed to repay.