Ari Lewski can’t recall fate of Prime Trust’s missing $27 million

The Australian
December 21, 2016

Business reporter

The founder of failed retirement village empire Prime Trust, Bill Lewski, couldn’t remember what happened to $27.6m the group paid him, and it appears his son is also none the wiser.

In evidence to the Victorian Supreme Court a fortnight ago, Mr Lewski said he couldn’t recall what happened to the cash, the lion’s share of a $33m fee he received after Prime Trust listed on the ASX in 2007.

Prime Trust collapsed in 2010, burning investors who had tipped $550m into the company and sparking an investigation by the corporate regulator and two civil lawsuits — including one seeking to recover the listing fee.

Mr Lewski said his 33-year-old son, Ari, was now in charge of the company that received the $27.6m, Direct Fitness.
But, giving evidence in the court this morning, Ari Lewski was also unable to put his finger on what had happened to the cash.

Mark Korda and Craig Shepard, the receivers of Prime Trust’s controlling entity, Australian Property Custodian Holdings, will now seek an order from the court asking Commonwealth Bank to trace a series of multimillion-dollar withdrawals that took place in 2008.

This morning’s hearing was the latest in a series of examinations the receivers, who are also in charge of the listing fee litigation, have been conducting into the affairs of the company.

Ari Lewski said he didn’t have any documents older than seven years relating to four family companies because “they have not been retained”.

Nor did he know what had happened to the documents, except that he had not destroyed any of them during the two-and-a-half years he was the sole director of the companies.

“My father takes care of the documents, so you’d have to ask him,” Mr Lewski said.
It was a similar story with the other three other companies — Retirement Guide, Carey Bay and APA — that Mr Lewski Jr took over from his father when Bill Lewski was banned as a director in 2014.

That ban, imposed by the Federal Court, was overturned on appeal, but the companies remain in the younger Lewski’s hands.

Counsel for the receivers, Jonathan Moore, QC, told the court Direct Fitness received the $27.6m on July 1, 2008.

Then, on August 6, the company withdrew $10m from the account. Further withdrawals of $6.5m and $13m followed, draining the bank account until by July 1 the following year it contained about $430,000.

Asked by Mr Moore if he could explain what the withdrawals were for, the younger Mr Lewski said he could not.

“It appears these transactions occurred prior to me becoming a director so without access to company financials, then no, I cannot,” he said.

Nor could he explain a deposit of $10m in Retirement Guide’s account on March 7, 2008, and its withdrawal, via cheque, on the same day, or a similar pair of transactions on March 14 in which $40m whisked through the account.

However, he was reasonably sure he didn’t get any large sums of money — nothing over $1m — from his father in 2008.
“I don’t believe so,” he said.

He said he was “not aware” that destroying documents when they were likely to be required in legal proceedings was a crime, saying his understanding was that paperwork only had to be kept for seven years.

The trained accountant also had difficulty with the phrase “working papers”, asking Mr Moore to define it for him.

He said the balance sheets for Direct Fitness were prepared by an external accountant called Debbie Mizrachi, to whom he had occasionally forwarded emails.

However, he could not recall the firm she worked for or her email address. Nor had he asked her if she had any of the older documents sought by the receivers.

“My father collates and prepares the documents, the documentation for the accountant to then prepare the financial statements,” he said.

Registrar Julian Hetyey adjourned the examination until February 3, when both father and son will appear.

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