In the second part of an investigation into colourful Gold Coast Mayor Tom Tate, managing editor Dave Donovan reveals the Mayor's connection to the trade of fraudulent forestry bonds and asks the question — why have no charges been laid over this deeply troubling scandal?
[READ PART ONE: ‘The mystery of the mayors and the phoenix with four names’]
AMANDA DUNCAN-STRELEC: So, that’s $1.6 million, plus 11 forestry bonds?
TOM TATE: That’s correct.
DUNCAN-STRELEC: With a face value in ten years of $1 million?
TATE: Yes.
DUNCAN-STRELEC: Had you done any due diligence on those bonds, Mr Tate?
TATE: No.
DUNCAN-STRELEC: Why not?
HIS HONOUR, NICHOLAS J: I reject that question….
~ Amanda Duncan-Strelec and Ors v Thomas Richard Tate & Ors, Supreme Court NSW Equity Division, 29 June 2010 (official transcript, day 2, p157).
INTRODUCTION
Prior to becoming Gold Coast Mayor, Tom Tate engaged in some very questionable activities with a bankrupt alleged fraudster possessing multiple aliases, Frank Kovacevic. For reasons that cannot be easily explained, all the evidence of those alleged frauds was overlooked by police in multiple jurisdictions, the corporate regulator and Kovacevic’s bankruptcy trustees. This scandal was detailed in Part One: ‘The mystery of the mayors and the phoenix with four names’.
In this chapter, we will look at one of the most outrageous alleged rip-offs, relating to Tate’s business partner trading in worthless “forestry bonds”. These scrips were used in the alleged fraud of at least three different parties. Tom Tate was personally involved in two of these three alleged frauds — either wittingly or unwittingly.
These forestry bonds have received a degree of infamy in Queensland and on the Gold Coast, including in newspaper articles in the Gold Coast Bulletin; speeches by opposing Gold Coast City mayoral candidates; on a website run by former Albury Mayor Amanda Duncan-Strelec; and even with the allegations being tabled in the Queensland Parliament last year.
But only now, here, after several hundreds of hours of investigation and scores of interviews by Independent Australia, can a clear picture of the whole tawdry affair be drawn. It would appear clear a number of serious crimes have been committed. But despite this and even after numerous official complaints, no authority has ever taken any action against any party involved.
Part One of my INVESTIGATION into Tom Tate: The mystery of the mayors and the phoenix with four names https://t.co/oMZXnjMPGc @IndependentAus
— Dave Donovan (@davrosz) October 15, 2018
THE 'PIGGY' FORESTRY BONDS
In April 2005, Francis Kovacevic (other known aliases: Frank Kendt, Frank Kaye and Francis Zadro) acquired a company called Radiance Jewellery Pty Ltd. This company owned a couple of hundred acres of land just outside of Kingaroy, in South-East Queensland. According to an employee of Kovacevic at the time, he secured the loan to purchase the land after tendering to the bank inaccurate financial statements.
After inspecting the property, Kovacevic decided he wanted to set up a paulownia plantation on the site. It was not, according to IA's sources, initially intended to be a snare for the unwary — Kovacevic allegedly set off quite sincerely about the project. At the time, companies such as Timbercorp and the Great Southern Group were making vast fortunes for wealthy city investors in managed investment schemes, largely by allowing them to access generous primary producer tax deductions. Frank Kovacevic apparently had similar aspirations.
Francis Kovacevic had soil tests done, plans drawn up and hired an earthmover to ready the land for planting. He was also in the process of arranging for two dams to be constructed on the land.
So far, so good.
In September 2005, Kovacevic changed the name of the company to the rustic sounding Kingaroy Piggeries Pty Ltd.
Extract from the land title for the Kingaroy "plantation"
And then "Frankie Four-names" set to work to fund his dream.
With the help of his in-house lawyer, he prepared some documents he described as “forestry bonds”.
Kovacevic was allegedly used to trading in non-cash financial products. Since the late 1990s, Kovacevic had been trading in Bartercard and also other, more “exotic”, financial products.
A former business associate of Kovacevic told IA he had been allegedly trying to sell dubious looking “bonds or shares” out of his then so-called “office” ‒ in fact, a Surfers Paradise restaurant ‒ since the late 1990s:
It was in the late ‘90s. I had a franchise with TradeBanc in NSW — a reciprocal trade exchange in opposition to Bartercard … I met him at his so-called “office”, which was that Mexican restaurant or something on the left-hand side of the bridge heading to Southport.
I remember he wore a black singlet, had a sharp haircut, but [I never did any business with him because] he was too dodgy. He was like Mr Invincible. I couldn't work out where he came from or anything. He, like, popped up and was this Mr Big in deals, but it all seemed dodgy.
…. He was trying to pass off those dodgy bonds or shares, from memory.
The forestry bonds produced by Kovacevic in 2005 looked reasonably authentic.
Front page of one of Kovacevic's forestry bonds
They were stamped on the front with the common seal of two companies and made the following representation:
Upon presentation and authentication, this Bond will be redeemed after Ten (10) years from the date of issue in cash to the face value of this instrument. This bond is issued without coupon, and is protected against counterfeit by several security measures, including DNA. It is issued upon and subject to the terms and conditions on the reverse side hereof, and in accordance with the Trust Deed and Company Constitution more particularly referred to therein.
Some clients may have been impressed by the fact these certificates were protected from forgery by "DNA", because Kovacevic allegedly sold quite a few, mostly to self-managed superannuation funds. Nonetheless, they were most probably worthless right from the very start, because the land title reference given on the back of the bond was 182710, whereas the accurate title reference was 18271090.
A close business associate of Kovacevic’s during this period told IA the bonds were “just a piece of paper”:
The forestry bonds that were offered as part of the deal were just a piece of paper, as Kingaroy Piggeries had not started and no trees had been planted.
It would have taken a lot of money to get the land ready for the specific trees they wanted, as the soil needed to be treated first to ensure healthy growth. David Lind-Mitchell [Kovacevic’s lawyer and employee] told Frank that the bonds shouldn’t be used except as “this is what we will be able to offer”.
WHAT WERE THE “PIGGY” BONDS?
Bonds are effectively an IOU. One in which the issuer, after due consideration is paid, owes the holder a debt.
Depending upon the precise terms of a bond, the issuer is obliged to pay the holder interest (the “coupon”) or the face value at the maturity date. Kovacevic’s bonds were issued “without coupon”, meaning he was obligated to repay the bearer $100,000 face value after the ten year maturity date. Because no interest is paid, a “zero-coupon” bond is almost always traded at a heavy discount.
Given the amount that could go wrong over the ten years an unplanted plantation took to mature, such bonds would usually be sold at a very big discount. Kovacevic was reportedly selling these bonds to self-managed superannuation funds for $50,000 — a 50% discount. Yet for an investment of $50,000, one would require less than a 7% per cent rate of return for the asset to grow to $100,000 after ten years. So, even if Kovacevic was a scrupulous and good businessman, his bonds were significantly overpriced.
However, importantly, since Kovacevic was bankrupt from June 2004 until June 2007 under his alias “Kendt”, the bonds were really worthless — if not illegal. This indeed proved to be the case for Kovacevic’s victims, who never recouped a single cent of their investment.
After the Global Financial Crisis hit in 2008, Francis Kovacevic immediately sold his Kingaroy “plantation”. Nevertheless, as you will see, he continued selling these fake forestry bonds up until 2010 — and maybe even later.
*****
Let’s now look at three of Kovacevic’s victim’s stories, two of which closely involve the current Gold Coast Mayor, Tom Tate.
FERNANDO DA COSTA AND THE FLATS THAT WEREN’T
In 2008, elderly married couple Fernando and Rosina da Costa were comfortably retired, living on the beach in sunny Queensland. Unluckily for him, Fernando then had the misfortune to encounter Frank Kovacevic carrying a fistful of forestry bonds. What happened afterwards could only be described as criminal. What is, perhaps, most interesting is the deep involvement, in this alleged rort, of Tom Tate.
The following is an excerpt from a signed affidavit from Fernando da Costa:
- In March 2008, I was living on the Sunshine Coast Queensland and was referred to a Mr Kovacevic, who lived on the Gold Coast, for me to sell some of my valuable paintings.
- Mr Kovacevic came to my house with a Mr Bruce Watling from Watling Galleries and showed them some of my paintings. Kovacevic then asked if my Picasso and an Andy Warhol paintings [sic] were for sale.
- A week later at Watling Galleries on the Gold Coast, we met and went to a restaurant for lunch with Kovacevic, me and Maggie Buell, Kovacevic’s secretary, where we agreed on a purchase price of $3,178,000.00 for the Picasso and Andy Warhol paintings.
- I accepted from Kovacevic a deal for payment for the paintings which is contained in the Agreement dated 6 March 2008, attached hereto as Annexure 1 (the Sale Agreement).
- The $300,000 cash referred to in clause 1 was tendered by way of a cheque drawn by AAA Club Management Pty Ltd, with no ACN recorded and dated 11 March 2008. The cheque bounced on 14 March 2008. A copy of the Cheque is attached hereto as Annexure 2.
Cheque signed by Kovacevic employee Maggie Buell
- A couple of weeks later, Kovacevic arrived at my Sunshine Coast house with a man now known to be Tom Tate, Mayor of the Gold Coast. Kovacevic still wanted the paintings desperately and tendered to me a list of all the properties that he said he owned, most notably 2 [two] units at Coffs Harbour, NSW, still under construction.
- At the meeting in Clause 6 above the Sale Agreement was varied as follows:
- He would give me a cheque for $50,000 then. I accepted the cheque which was drawn and presented by Tom Tate. [Tate also apparently took an Andy Warhol print as security.]
- I could hold the bounced cheque for $300,000.00, because he believed it would ultimately be honoured.
- Before Kovacevic and Tate left the Sunshine Coast, they came back to my house and I handed over both paintings to Kovacevic and Tate. [Tom Tate reportedly helped Kovacevic load the paintings into the car. They wouldn’t all fit, so they left and Kovacevic came back later that day in a van.]
- Subsequently I found out that the 2 [two] units in the apartment development referred to in para (c) of the Sale Agreement did not exist, as the property was an old house which was owned by a party unrelated to Kovacevic. The sale contracts I received listed AAA Club Management P/L (ACN 099 029 080) as the Vendors and showed that I owed nil on a purchase price.
- I never received the two units in the apartment development. [The title was in someone else’s name.]
- In respect of the Forestry Bonds listed in (a) and (b) of the Schedule 2 of the Sale Agreement, I received them, dated 11 March 2008, but later learned that they were worthless at the time I was given them. Attached as Annexure 3 is a copy of one of the bonds.
The $3 million worth of art Fernando passed over the Kovacevic for, in the end, just $50,000 was meant to provide for him in retirement. The da Costas did attempt to sue Kovacevic for damages, but ran out of money. Fernando da Costa now lives with his wife in straitened circumstances in Northern NSW.
The valuable Picasso painting has never been recovered and its whereabouts is still unknown, although some have reported seeing it at Tom Tate’s residence.
As for the land, according to one of Tate’s employees at the time, this was simply a “hook” to get Fernando’s artwork:
‘The land at Azalea Avenue, Coffs Harbour, Frank used as a hook for the artwork he got from Fernando, in which he signed over two units on completion. To the best of my knowledge the land was foreclosed on and no construction was ever undertaken. There were plans and site works done on the property, however.’
Kovacevic used the development plans on the land he had already lost to convince Fernando the asset was his to dispose of. It was a con that led to Fernando losing the bulk of his life savings. If the facts are as presented, it was also a crime.
DUNCAN-STRELEC AND TOM TATE
Gold Coast Mayor Tom Tate has been a friend and business associate of Frank Kovacevic since 1998. (The nature of their long relationship was detailed in Part One, ‘The mystery of the mayors and the phoenix with four names’.)
In 2006, soon after Kovacevic started his forestry bond scheme, Tate began working with Kovacevic to manipulate an Albury land development to his advantage.
From Part One:
In 2005, Tate had gone into the property development business with the former Albury mayor, Amanda Duncan-Strelec and her civil engineer husband, David Strelec.
On 11 November 2005, Tate and the Duncan-Strelecs bought a block of land on the outskirts of Albury for the purpose of sub-division and sale. The land was purchased through a company called Wamego Pty Ltd, in which each side was intended to own half. The joint venture was designed so that Tate would provide the initial capital, Amanda Duncan-Strelec would look after marketing and David Strelec would look after the practical side of the project.
By 26 February 2006, however, Tate had already begun secretly negotiating to sell the property to Frank Kovacevic.
(Image via Border-Mail, including original caption)
After a lengthy and tortuous dispute, Tate succeeded in transferring the land to Kovacevic. He did this via the sale of shares in the company owning the land, Wamego Pty Ltd, to Kovacevic, even though the Duncan-Strelecs had a court-issued sequestration order over the land at the time. Before sealing the deal to Kovacevic, Tate had also signed a share sale agreement with one of Kovacevic’s employees, Christopher David Lind-Mitchell, which was witnessed by Kovacevic under his alias of Kendt. Lind-Mitchell, a lawyer, who had initially prepared the forestry bonds for Kovacevic, subsequently got cold feet and pulled out of the deal.
There can be little doubt that Tate was operating in a secret partnership with Lind-Mitchell and Kovacevic to squeeze the Duncan-Strelecs out of the land they owned in partnership with Tate.
For one thing, Tate, Kovacevic and Lind-Mitchell all used the same solicitor at Hickey’s Lawyers to act for them. Ironically, Hickey’s Lawyers later succeeded in getting the Duncan Strelec’s lawyer David Skinner to recuse himself in their dispute with Tate, because Skinner had acted for both of them in the original purchase of the Wamego land and therefore, they claimed, he had a conflict of interest.
One of Kovacevic’s victims, Glenn Bottrill, also confirmed the conspiracy in a signed affidavit:
Excerpts from an affidavit signed by Bottrill on 28 June 2010 [IA emphasis]:
4. I say that on or around September 2007 I advanced Frank Kovacevic of 128 Slatyer Avenue, Bundall, Queensland, an amount of over Three Hundred Thousand Dollars.
5. I also know Frank Kovacevic by the name of Frank Kendt….
12. I say that as payment of part of this debt I was to receive three paintings from Frank Kovacevic.
13. Frank Kovacevic informed me that he had purchased these paintings from Thomas Richard Tate.
14. I also say that he told me that he and Tate were going to develop the Wamego land together.
15. Frank Kovacevic told me that Tate asked Kovacevic to purchase the land from him due to a dispute Tate was having with the ex-Mayor of Albury, only known to me at that time by the name of Amanda.
16. I say that Tate confirmed to me by email dated 16 July 2008, that Kovacevic was purchasing the paintings from Tate to use as part payment of Kovacevic’s debt to me.
Needless to say, Kovacevic never gave Bottrill any paintings nor repaid any money.
Tate with another business partner, Kelvin Gersbach, when he was trying unsuccessfully to purchase Albury's Lavington Sports Club in 2004
In a later court action, Tom Tate ‒ an experienced and successful businessman ‒ claimed to have done no due diligence at all regarding the 11 forestry bonds, which made up a substantial portion of the proceeds of his sale to Kovacevic.
From the official transcript, page 157, of Amanda Duncan-Strelec and Ors v Thomas Richard Tate & Ors, Supreme Court NSW Equity Division, 29 June 2010:
AMANDA DUNCAN-STRELEC: If I can move on to the injunction. What happened with the share agreement that you had made with Mr Lind-Mitchell, where you don’t recall whether there was a deposit paid, yet you do recall that it was sold for the same amount of money that you had previously been negotiating with Mr Kovacevic. Would that be correct?
TOM TATE: Yes.
AMANDA DUNCAN-STRELEC: So, that’s $1.6 million, plus 11 forestry bonds?
TOM TATE: That’s correct.
DUNCAN-STRELEC: With a face value in ten years of $1 million?
TATE: Yes.
DUNCAN-STRELEC: Had you done any due diligence on those bonds, Mr Tate?
TATE: No.
DUNCAN-STRELEC: Why not?
HIS HONOUR, NICHOLAS J: I reject that question.
Nicholas J rejected all the questions that related to the forestry bonds, even though six of them were put in trust by the court as part of the injunction settlement. In fact, Nicholas J rejected a great many questions that might have been helpful to the Duncan-Strelec’s case, which they eventually lost, along with almost everything they possessed.
TOZZI TO THE WOLVES
On 30 June 2010, Canberra mechanic Nick Tozzi paid $100,000 for a certain number of Frank Kovacevic’s KP Plantations bonds. He had been sold on their worth by Kovacevic’s associate John Finch. Tozzi received a letter confirming the transaction from AAA Credit Unit Bonds Pty Ltd, another of Kovacevic’s companies, by Frank’s daughter, Natalie Kovacevic. Back then Natalie worked in Frank’s business and was an officeholder in many of his businesses.
The bonds were sold as part of a Bartercard deal via Kovacevic’s ACT franchise and an official looking receipt headed 'Currency Alternative' was also issued.
Of course, the bonds were utterly worthless, given KP Plantations no longer even owned the land on which the trees were meant to be, but never were, planted.
Title documents obtained by Independent Australia reveal the land had been sold to someone called Robert John Crawford on 14 January 2009.
About five or six years later, Tozzi went to cash the bonds in. He first tried looking for Natalie or Frank Kovacevic, but no amount of searching could find either.
Tozzi then called his contact John Finch, who allegedly claimed to not know anything about the transaction.
The hapless mechanic then contacted Bartercard, who informed him Kovacevic came down to Canberra every month or so to check on his ACT franchise. Tozzi asked Bartercard to contact him next time Kovacevic came down to Canberra, but he never heard from them again.
He also tried to contact now Mayor Tom Tate after reading news reports that he’d had dealings with Kovacevic. Tate was similarly unhelpful.
After five years, everyone associated with the forestry bonds had disappeared and Nick Tozzi, a struggling small businessman, was left with a worthless piece of paper for which he had, in good faith, paid $100,000.
COMPLAINTS UNHEARD
All affected parties made complaints to various relevant authorities. No action was ever taken by any of them.
Queensland
Complaints were made to the Queensland Police about the da Costa matter in 2009 and, again, in 2016. Independent Australia visited the Surfers Paradise Police Station to enquire about the status of both investigations last year and was told it was “still ongoing”.
For any diligent Police wishing to follow up this matter, the reference number we received from the Queensland Police relating to this complaint was QP0900542359.
In addition, documents entitled ‘Gold Coast - Tom Tate fake Bonds’ (Ref #1550) were also tabled in the Queensland Parliament by then Independent MP Rob Pyne on 5 September 2017. This document may be read HERE.
Federal
Amanda Duncan Strelec also made complaints to ASIC and the Commonwealth Ombudsman regarding the fraudulent forestry bonds and associated matters, but both declined to investigate. (Amanda Duncan-Strelec’s initial complaint and ASIC’s utterly inadequate response may be read HERE and below.)
CONCLUSION
The forestry bond scam of Francis Kovacevic is one of the biggest scandals in Gold Coast history. It involves a string of serious alleged frauds, some closely involving the City Mayor, and has, seemingly, never been properly investigated by the authorities.
The fact Tate denied doing any due diligence on the bonds and was a long-time business partner of Kovacevic suggests he may have known the bonds were worthless. These bonds were intrinsic to the defrauding of the da Costas, in which Tate was an active party. He was also involved in the alleged plot to separate Tate’s former business partners the Duncan-Strelecs from their Albury assets. Tate’s involvement deserves greater scrutiny by the authorities, as it comes on the back of a great many allegations of improper conduct.
As for the main perpetrator of these alleged frauds, Francis Kovacevic? He still conducts business on the Gold Coast with apparent impunity.
Frankie Four-names and Natalie Kovacevic — still living large
That most people have never heard about the outrageous scandal of the fake forestry bonds is suggestive of a long and highly effective cover-up. One can only wonder whether Tate and/or Kovacevic’s establishment connections have worked to stymie any effective investigations.
In any case, as detailed in this account, at least three innocent families have had their life savings ripped away as the result of brazen confidence scams. The authorities, through this investigation, now have all the facts at their disposal to conduct a proper investigation and, it is hoped, throw the full force of the law at the alleged perpetrators.
*****
AMANDA DUNCAN-STRELEC: Had you done any due diligence on those bonds, Mr Tate?
TATE: No.
DUNCAN-STRELEC: Why not?
HIS HONOUR, NICHOLAS J: I reject that question. What is the relevance of the value of the forestry bonds? What do they have to do with the particular issues you are concerned with in this case?
DUNCAN-STRELEC: The forestry bonds were put in trust as part of the injunction settlement.
NICHOLAS J: We are not running the injunction case.
DUNCAN-STRELEC: I am aware of that.
NICHOLAS J: Let us stick to the case that you and your former husband are seeking to establish to get you the relief that you are claiming.
Do you have any more information about this story? Contact us, in confidence, HERE.
Follow managing editor Dave Donovan on Twitter @davrosz.
Follow Independent Australia on Twitter at @independentaus and on Facebook HERE.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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