Receivers Sue Opes Executive For $14.23m

The Age

Friday June 13, 2008

Leonie Wood

RECEIVERS of the failed Opes Prime Stockbroking group are suing one of the three former directors, Anthony Blumberg, for more than $14.23 million that they claim he drew from an Opes-related company.

The receivers allege Mr Blumberg withdrew or borrowed the funds from Leveraged Capital Pty Ltd when he knew Leveraged Capital's directors, Laurie Emini and Julian Smith, were in breach of their duties by letting him take the money.

At this stage, however, the receivers are not taking action against Mr Emini or Mr Smith for this alleged fiduciary breach.

Instead they appear to be putting the heat on Mr Blumberg to repay the $14.23 million plus interest, or for the court to declare that the vast array of assets he allegedly bought using Leveraged Capital's funds were held on constructive trust.

Leveraged Capital is jointly owned by Mr Emini and Mr Smith, who sat alongside Mr Blumberg on the Opes Prime board.

Leveraged Capital appears to have received Opes Prime funds, which were funnelled to it via a British Virgin Islands-registered company called Riqueza.

After Opes Prime collapsed on March 27, owing more than $1.3 billion to its financiers and stripping its 1200 stockbroking clients of their share portfolios, it emerged that Riqueza owed Opes more than $100 million. Two companies controlled by Opes' directors, Leveraged Capital and Hawkswood Investments, owed Riqueza about $185 million.

Opes Prime's receivers, Chris Campbell and Sal Algeri, of Deloitte Corporate Restructuring, who were appointed by ANZ, are trying to recover assets or funds that could be used to repay the bank. Their writ outlines a series of withdrawals from three accounts Mr Blumberg had with Leveraged Capital.

Among the transactions outlined in the court documents are two payments totalling almost $700,000 to Mr Blumberg's lawyer, Graeme Efron, in the weeks before Opes collapsed.

The first was for $225,234 on February 11, and the second was for $437,400 on March 17, which the receivers described in the writ as a deposit for a property.

About $2.09 million was spent on super luxury cars and sports racing cars, $914,542 on car race sponsorship, $426,115 on customs duties for importing cars and vehicle equipment, and $US80,000 appears to have been paid to Shier Aviation on March 7 as part-payment for a helicopter.

With a declaration of constructive trust in hand, the receivers could make a claim on the assets they say Mr Blumberg bought with Leveraged Capital's funds.

Relations between Mr Blumberg and the receivers so far have been almost non-existent.

Mr Blumberg recently told Opes' administrators, John Lindholm and Adrian Brown, of Ferrier Hodgson, that in Opes' dying days he urged ANZ not to proceed with an already agreed loan of $95 million to Opes because the sum would not cover the gaping deficit.

Mr Blumberg's claims perhaps would help the administrators in their bid to get ANZ to negotiate a financial settlement so unsecured creditors might extract something from the collapse.

But ANZ has said it will not negotiate unless Merrill Lynch and the Australian Securities and Investments Commission are involved.

Mr Blumberg could not be contacted yesterday. The receivers would not comment.

© 2008 The Age

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