article in The Australian about TBH founder, page-2

A deadly tale of Ponzi betrayal The Australian HEDLEY THOMAS The Australian12:00AM September 9, 2017 Right before his bloody death from a stab wound to the heart, self-inflicted in the family’s luxury beachfront holiday unit at Soldiers Point north of Newcastle, Ray Edward Walker — a trusted accountant, husband, father of three and grandfather of seven — was cornered. He knew he faced a personal and financial catastrophe more destructive than the individual disasters awaiting his unknowing clients, many of whom were fleeced and defrauded for years in a Ponzi scheme that blew more than $10 million. Finally, the scam was about to unravel. He would almost certainly have gone to prison. Ten days earlier, he had received a powerful letter from a solicitor, Rob Brook, putting Walker on formal notice while demanding the return of an elderly woman’s retirement funds of more than $600,000. The letter, describing in exhaustive detail many suspicious anomalies over his handling of money from the woman — “a patient, conservative and non-greedy investor by nature (who) has never invested in the stockmarket” — was also copied to his son, Brett Walker. He correctly interpreted the thinly veiled legal message: “We see fraud. Our next letter will go to the police.” As one of the city’s senior and long-time professionals, Ray Walker had stature in the business community. He was, according to even some of those he defrauded, a very capable accountant. He worked for the great and the good, and those just doing their battling best in Newcastle, the central coast, and the lower Hunter Valley. They helped grow a practice he ran with Brett, also an accountant, who had worked alongside his father for more than 25 years. Ray Walker. Ray Walker. Ray Walker lived very comfortably but not with ostentatious extravagance. He liked vintage cars; he owned a 1962 E-type Jaguar (missing its bonnet and chassis stamping). He lived with his wife, Jennifer, in a smart $1.5 million-plus home in a sought-after tree-lined avenue near the heart of Newcastle, and enjoyed weekends at the water-facing $1.3m Soldiers Point weekender. The properties were in his wife’s name and in the name of an entity she controlled. But he rarely missed an opportunity to try to part his clients from hard-earned funds or redirect their nest eggs from self-managed super to his own doomed ventures even near the end. As investigations into the myriad money-trails show, fresh cash from new clients would not be invested as pledged; it was used to pay some small portion to existing clients who were asking why they were yet to receive the sums of interest they were promised. As with all Ponzi schemes, Walker’s clumsy version would implode when new cash stopped coming or a client wised up. Clients such as Jim Todhunter, a hard-working owner-driver of Newcastle taxis, who saved the fares from too many late nights on the road and found $200,000 for one of Walker’s “blue-chip” commercial property investments to ensure a daughter with autism might have a steady rental return and solid asset. Or carpenter Richard Galloway who, on the recommendation of his wife Michelle’s coalminer brother, put $200,000 in Walker’s “pooled investment” for a higher interest rate on deposit with one of the big banks. Galloway only wanted to improve his quality of life with asbestos disease but his funds never touched the sides of a bank term-deposit account. There are many retirees and small business owners still too distressed, and embarrassed, to put their personal stories into the public arena. The frailty of some is such that their children have not told them of their losses because of concern it will kill them. Walker, 67, was an undiscriminating thief. He drained millions of dollars from the elderly and infirm, the well-paid and the self-made, and funnelled it through trusts and black-hole accounts until it was frittered away. “Some had given their entire savings to Walker, at his suggestion, for him to invest on their behalf,’’ says Todhunter, who will be working well into his 70s to recoup the losses. His wife, Mary, is unsurprised. She says she “never trusted Walker” — he could not meet her eye, and reversed down the aisle to avoid her in the supermarket. In a letter to the dozens of people on a spreadsheet listing Walker’s losers, Todhunter says: “The reason white-collar crime succeeds is because the victims suffer the embarrassment of losing what rightfully belongs to them and then don’t want to publicise the circumstances by which they lost their money. “It is in everyone’s interest to follow this to the end and not just say ‘I’ve moved on’. “Do you really move on? Those, if any, who have benefited from (Ray) Walker’s disgraceful behaviour should be discovered and not permitted this benefit, if any benefit is so proved.” Michelle Galloway adds: “Our trust was placed in Ray — to us, he seemed more like a friend than an accountant. To befriend someone and then steal from them is a huge betrayal … he was aware of Richard’s recently diagnosed condition, and yet when we asked to withdraw our funds, he talked us out of it by stating ‘You need the funds to be safe’.” Brett and Renee Walker. Brett and Renee Walker. These clients believe “Brett benefited from Ray’s dishonesty. Brett knew, or should have known, that the client money was being used improperly”, and Brett and staff of their office should have known “that the late Mr Walker was operating like an unlicensed bank, taking money from clients, paying ‘interest’, and releasing purported ‘principal’ payments to those who requested it”. It is why Brett Walker — still coming to terms with his father’s defrauding over many years in which they were in a formal partnership and, after a 2008 restructure, working in the same office but with separate legal entities — knows his own assets are being examined in a new and sceptical light. “I understand it totally, and the simple fact is that my father has done a terrible thing and it has affected everyone,’’ the 45-year-old says. “My father has devastated a lot of people financially, and he has devastated our family. All I can say is that not a cent of the money that my father took has gone into anything in which I’m involved. “I will not be held responsible for my father’s wrongdoing.” Ray Walker’s wife of more than 40 years, Jennifer, has received angry letters from investors. One told her in writing: “As you say that you were unaware of what Ray was doing, we will make you aware that your children and their partners hold very substantial property holdings, numerous companies and large shareholdings in companies. That Ray was referred to as ‘the banker’ when Ray and his children were together at house auctions buying investment properties.” At the heart of this story about fortunes scraped together, squandered by a man who was meant to manage his clients’ money with exquisite care, and perhaps repurposed in a city, Newcastle, with a history of boom-bust cycles, is a remarkable gamble. In late 2015, RBW Nominees Pty Ltd controlled by Brett Walker’s wife, Renee, a dietitian, emerged from corporate obscurity to be the largest shareholder of a new digital race-wagering and sports-betting company, TopBetta, on the eve of its listing on the Australian Securities Exchange. TopBetta, once a thought bubble for its founder and chief executive Todd Buckingham and now a profitably growing asset with a market capitalisation of more than $60m, had issued just over 96 million shares on December 11, 2015. Its registered address was the Walker accountancy practice in Newcastle. RBW Nominees ranked in late 2015 as No 1 on the list of top 20 shareholders with 11.93 per cent of the issued capital, or 11,495,033 shares. As corporate trustee for the RBW discretionary trust, RBW Nominees’ stake has been diluted since late 2015 by capital raisings and transfers. However, it is worth about $4m at the latest closing price of shares in TopBetta. The trajectory of the start-up as it gains scale could see Renee Walker’s shares worth much more — perhaps more than $10m — to rival corporate bookmaking firms. RBW Nominees was formerly controlled by Ray Walker, while son Brett was its director until 2013 when he resigned and was replaced by Renee. This was during TopBetta’s costly start-up phase when several million dollars had to be sourced from investors to fund the computer hardware, software and framework for a speculative foray into digital bookmaking, masterminded by Buckingham. His accountant, friend and longtime supporter is Brett Walker. The Galloways, the Todhunters and other clients trying to trace the trail of their own cash struggle to understand how, and why, the largest equity stake in what was a risky start-up, TopBetta, came to be funded and controlled by Renee and Brett Walker. “Brett runs a small business,” Todhunter says. “He knows me as someone who has run a small business (owning a taxi and being general manager of Newcastle Taxis). It isn’t easy to make a quid in small business. How did they accumulate that much money to not just help start this company, TopBetta, but to be the largest shareholder when it listed?” If it can be shown that funds invested, in good faith, by Ray Walker’s clients were wrongfully diverted to his son, Brett, or related equities on a circuitous route to TopBetta, clients will have a legal claim to the Walker shareholdings in the betting business. A mandatory two-year escrow period means the shares controlled by RBW Nominees can be sold after mid-December. For Brett Walker, who faces being cross-examined under oath in November by the trustee in bankruptcy for his father’s estate, questions about TopBetta and his knowledge of his father’s frauds, the questions are deeply personal but unavoidable. “All I can say is that not a cent that has gone into TopBetta has come from those investors or from my father, and I’m happy to provide the evidence,’’ he says in a long interview. “TopBetta has never had anything to do with my father. My father and I had run separate businesses for a long time with separate bank accounts. We operated in the same physical premises but my father was not a very approachable person — he was a very distant father, and the fact of us being in the same premises was what he considered an emotional relationship. He was not a very available person and he did not show much of himself. He never wanted me, as his son, to know about what he was up to; he was a very secretive man. “People want to direct blame and I know I’m an easy target. All I can do is legally prove that it had nothing to do with me. We had different clients. “I am not my father and it is not my fault. Unfortunately, I am guilty of being my father’s son.” There are, however, inescapable links in their business dealings. Investor clients of Ray can show that it was Brett’s registered tax agent number, not the number relevant to his father, that went into filings with the Australian Taxation Office. Father and son directed companies together, worked together, and shared IT and email systems. Brett Walker said he neither borrowed money from his father nor put funds into his investments. Ray Walker’s clients believe it implausible that none of the thousands of dollars flowing into his “pooled investment” fund in a bank went to his son, or to TopBetta. Clients such as the Todhunters and Galloways are suspicious that local media led by the Fairfax-owned Newcastle Herald have refused to report on Walker’s fraud. They are suspicious, too, about Walker’s violent death; suicide by “stab wound to the heart” is rare, and difficult. Any police inquiry was conducted in great haste as cremation occurred a week later. Brett Walker said: “It sounds terrible to say but the man was a fraudster, and even if it meant putting his son’s tax agent number on something, he did it. The first I heard of (his conduct) was when I got the legal letter about my father not repaying these funds.” He says after reading and appreciating the force of Brook’s legal letter, he emailed his father warning “You don’t have a son if this is true”. “It’s not pretty, and I have questioned whether my attack — if it’s viewed as that — forced him to do what he did,’’ he said. “He was so desperate at that stage he couldn’t keep it together. “I fronted him on the allegations. He said he was dealing with his solicitors. I said ‘Have you told my mother?’, he said ‘No’, and I said ‘We are going to have a meeting with my mother’. “He didn’t turn up and we could not think where he was. We went up to the holiday place and found him. “He had left notes. Mine said something like: ‘Sorry for what I’ve done. Look after your mother.’ I understand how furious people are but I’m not going to take responsibility for his actions because I don’t deserve that. “Nobody suspected a thing — everyone was floored by this. I have been honest with everyone. I have sat in an airport and watched my 10-year-old son being abused and told ‘Do not grow up a thief like your father’. “But I will be able to prove that no money crossed over. I am a good accountant, I have done nothing wrong, and I have been upfront with clients.” On August 8, 2015, a week after his death, the Newcastle Herald published a funeral notice. It said Ray Walker “stepped out too soon”. Mourners at his low-key funeral service included friends and investor-clients, unaware the man they were lamenting had misappropriated their live savings. The trustee in bankruptcy, Ray Tolcher, believes the evidence is overwhelming that Ray Walker operated “in a manner resembling a Ponzi scheme” dating back many years. In his investigations, Tolcher is yet to see evidence in the many files provided by Brett Walker of any “leakage” of funds directly from investors to other family members or their entities. Some large sums in cash withdrawals, however, may never be reconciled or traced to their end