The similarities between Eddy Groves and disgraced former tycoon, Alan Bond, continue to grow. Both gained significant public attention as their empires expanded from nothing. Both migrated to Australia (Groves from South Africa via Canada and Bond from the UK) and both had a significant interest in sport. Bond famously won the America’s Cup for Australia in 1983 (and was briefly the President of the Richmond Football Club) while Groves once owned the Brisbane Bullets basketball side.
Both Bond and Groves were national heroes for building businesses from scratch. Both presided over multi-billion dollar global empires which collapsed under a sea of debt amidst questionable financial disclosures (and in Bond’s case, alleged outright theft).
As Crikey can further reveal today, Groves now appears to be displaying Bond’s skills in maintaining a large amount of wealth while shareholders and creditors in ABC Learning Centres, the company he founded, are left with virtually nothing. (Despite being declared bankrupt in 1992 owing almost $2 billion, Bond managed to reappear on the BRW Rich List in 2008 with a fortune of $265 million, largely due to his holding in Madagascar Oil and Lesotho Diamond Corp).
Last week, ASIC sought a Federal Court order to freeze Groves’ Australian assets (and the assets of Groves’ brother-in-law, Frank Zullo). Zullo was the recipient of upwards of $100 million in untendered maintenance work from ABC. ASIC noted that it would take a further one year for the regulator to complete its painstaking investigation of ABC Learning, specifically, whether the company misled investors regarding disclosure of “development fees” as revenue. Last week, Groves agreed to the asset freeze until 27 July 2009, when the matter is heard by the court.
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In an affidavit, ASIC alleged that Groves still owns a $2.5 million property in France. Groves is also believed to have retained an interest in his food distribution company, Quantum Food Services, as well as an interest in on-line betting website, Sports Acumen. Groves also owns the Distinctive Homes Dome in Adelaide which he acquired several years ago for $3.95 million, a 4.1 percent ownership interest in ABC’s former broker Austock and property in a Canadian ski resort.
However, like Bond, Groves appears to be adept at moving assets to other, ostensibly friendly, third parties.
It is understood that Groves recently transferred ownership of his Gold Coast home to Zullo. The residence includes three homes, tennis court, swimming pool and horse stables. Zullo is believed to have paid $2.7 million for the property. (Groves also offloaded $12 million worth of property in 2007, shortly before ABC’s financial woes became public.)
ASIC has also alleged that Groves was behind the transfer of a $5 million Palm Beach property to new wife, Viryan Collins-Rubie in March this year. The property was transferred to a trust, known as Perfection Too — of which Collins-Rubie is the sole director and Groves’ children from his marriage to Le Neve Groves are the beneficiaries.
Crikey can also report that it has viewed property transfer documents relating to the sale of Las Vegas property by companies associated with Groves to a corporation linked with a man by the name of Grant Cadee. Cadee is well-known in basketball circles, a former player and CEO with the Melbourne Tigers, CEO of the Sydney Kings and leading player agent (Cadee represented Andrew Gaze and Shane Heal). Cadee was also an ABC Learning executive and is believed to be a personal friend of Groves. In ABC’s 2004 Annual Report, Groves told shareholders that “Grant Cadee, who brings with him a wealth of knowledge and experience, has been appointed as the new Head of the Marketing Division.”
Documents viewed by Crikey indicate that Jaleisha Group Trust (which was previously called Cadee Holdings Pty Limited) acquired a ranch located in Nevada from a company called Castle Development Group for US$2 million. Groves executed the documents as the managing member of Castle (and was one of the company’s founders in 2004). Sources have told Crikey that Groves recently spent time in Melbourne with Cadee. (Documents also revealed that Castle Development sold another Nevada property for US$1.575 million in 2006 to Adam Bold, a resident of Nevada.)
Interestingly, the co-owner of Castle Development Group is American businessman Kenneth S Krynski. Liam Walsh in the Courier Mail reported earlier this week that ABC entered into a lucrative development deal with Krynski in 2006 which guaranteed Krynski a US$20 million annual profit. ABC Learning has subsequently brought a legal claim against Krynski and RCS Capital (which acquired Krynski’s American Child Care Properties). Krynski and RCS have launched a counter-claim alleging that ABC failed to honour lease agreements and acquire properties as previously agreed.