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REVEALED: Accused "phoenix developer" behind collapsed SA construction companies

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SPECIAL INVESTIGATION | The director of three SA construction companies liquidated over the past year, leaving a devastating trail of unpaid debts to local tradespeople, was accused of criminal corporate behaviour as early as 2002.

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InDaily can report that the latest failed businesses had been stripped of their building licences before liquidation, and South Australia’s corporate watchdog is circling.

“Today I bring to the attention of the House Stephen and Angela Thomas, who can best be described as phoenix developers,” declared then-Labor MP Dr Lesley Clarke.

“Each time a company has failed, they have emerged phoenix-like, moving onto the next project, showing no regard for the creditors left in the ashes.”

Clarke was addressing the Queensland Parliament on the first day of August 2002 – nearly 17 years ago – by which time: “They have thumbed their noses at the law for far too long, exploiting loopholes for their own advantage.”

“I hope that Mr and Mrs Thomas will, at the very least, be banned from being company directors for a very long time so that they cannot continue to profit at the expense of honest subcontractors.”

But the corporate empire that Angela and Stephen Thomas had been building since the mid-1980s would only expand further, and eventually find its way to South Australia.

Last year, two construction companies collapsed, leaving dozens of local tradespeople unpaid for work done, products installed and materials delivered to residential construction sites north and south of Adelaide.

Liberty Homes Australia and Panoramic Homes SA each owe South Australian subcontractors hundreds of thousands of dollars.

A third construction company, Omega Homes SA, was liquidated by order of the Queensland Supreme Court last month.

The financial and personal damage inflicted on local subcontractors by that collapse is not yet clear.

Angela Thomas was the director of all three companies.

Under Australian federal law, national corporate regulator ASIC can ban a person from future directorships if they lead more than one company that falls into liquidation within seven years.

Liberty Homes, Panoramic Homes and Omega Homes fell into liquidation within a period of eight months.

Port Pirie builder Michael Lynch says he considered re-mortgaging his family home after Liberty Homes failed to pay the $123,360 owed to his small business, Lynch and Saracino Constructions.

“We were on a knife-edge,” the 35-year-old father of two tells InDaily.

“We hung out on our bills till we were overdue on them all.

“I thought I was going to have to re-mortgage my house.”

He and business partner Ryan Saracino eventually decided to re-mortgage their entire stock of construction machinery instead, to cover the shortfall.

“It’s not a good situation,” he says.

They will be paying the machinery back over the next decade.

In total, Liberty Homes owes $451,042 to 41 unsecured creditors – most of them small subcontracting businesses like Lynch’s, based in Adelaide or regional South Australia.

But according to a November 2018 liquidator’s report, obtained by InDaily, the company’s largest single unpaid debt was to taxpayers: the Australian Tax Office is owed $126,383.

Liberty Homes also owes $48,710 in superannuation to its employees, according to the document.

And it’s unlikely any of them will ever see the money they are owed.

By the time liquidator Chris Cook was appointed, Liberty Homes owned almost nothing of value: no motor vehicles, no stock, no plant and equipment, no property, no loans, no debts due to it, no cash on hand and only $4 in a Westpac bank account.

The liquidator observed that the company appeared to have been trading at a loss for at least a year before he was appointed.

Cook’s report reads: “My preliminary assessment is that the company was insolvent from 30 June 2017,” noting later in the document that directors have a legal duty to prevent their companies from taking on new debt when they cannot pay existing debts.

It says 34 companies are “associated” with Liberty Homes.

Angela Thomas is, or has been, a director of 23 of them.

Stephen Thomas is a current or former shareholder of eight.

***

InDaily can reveal that South Australia’s corporate watchdog, Consumer and Business Services, is investigating the activities of Liberty Homes and “and its related entities”.

CBS confirmed the existence of the investigation to InDaily, but declined to identify which “related entities” are under investigation.

Liquidator Stuart Otway, of BRI Ferrier, says Panoramic Homes is one of them.

The company was placed in liquidation by Federal Court order in October last year, owing $298,743 to 31 unsecured creditors.

Most of them are subcontractors based in regional South Australia or outer suburban Adelaide.

Ben Virgo says he and business partner Jedd Talbot are $22,440 out of pocket. An October 2018 report on Panoramic Homes, submitted to ASIC and seen by InDaily, backs his claim.

“We were probably about four weeks without income,” he recalls, adding that the failure to pay was particularly difficult on Talbot, who was supporting a pregnant partner and who has a mortgage to repay.

But Virgo says the episode has also caused him ongoing stress and fear.

“You’ve got your guard up on every job you do now because you are just worried it’s going to happen again,” he says.

“You don’t know if you want to do the work.”

DO YOU KNOW MORE ABOUT THIS STORY? Contact the reporter at bsiebert@solsticemedia.com.au or via encrypted messaging app Wickr at the username @safesource

Phoenix activity, as defined by national regulator ASIC, is when the director of a company deliberately tries to avoid paying its creditors, often by moving assets into a second company before the first company is liquidated.

Although it’s unclear exactly what assets Liberty Homes and Panoramic Homes once had, creditors have told InDaily both had been earning progress payments – such as a fee for when the foundations of a house were completed – paid by investors who bought house and land packages.

Despite this, Panoramic Homes – like Liberty Homes – owned nothing of value by the time it was placed in liquidation.

InDaily asked Otway whether he found any evidence to suggest that assets had been stripped from Panoramic Homes before liquidation.

He declined to comment, saying that he did not want to prejudice any potential future legal action.

Liberty Homes liquidator Chris Cook did not respond when InDaily asked the same question of that company.

ASIC was not prepared to comment to InDaily.

***

Bailey Thomas, 22, was the director of Panoramic Homes from May 2018 until August.

Angela Thomas took over the directorship two months before the company was liquidated, according to ASIC records.

Cody Thomas, 24, was a director of Omega Homes – also until August 2018, when Angela Thomas replaced him.

Five months later, window and door manufacturer Dowell Windows applied to the Queensland Supreme Court to wind up Omega Homes because of unpaid debts – a bid that succeeded last month.

Omega Homes rented a serviced office on Greenhill Road, Wayville, in Adelaide last year, but no-one actually attended the office, a representative of Offices On The Park told InDaily.

“They never came in – they just asked for their mail to be directed here,” the representative said, adding that after two-to-three months, “they just stopped paying” and Offices On The Park cancelled their tenancy.

According to Otway’s January 2019 report to creditors, it is “understood” that Bailey is Angela and Stephen Thomas’s son.

InDaily has been unable to establish whether Cody also has such a family link.

But the two companies are clearly connected.

Panoramic Homes was to Omega Homes as Liberty Homes was to yet another related company, InFocus Homes, according to Otway’s report.

“I understand that Panoramic, along with another company Omega Homes SA … were set up to take over and complete a number of building contracts entered into by related building companies Liberty Homes Australia and / or InFocus Homes,” the liquidator’s report reads.

“I am advised that InFocus was the subject of a complaint to Consumer and Business (Services) which led to an investigation which expanded to all of the companies.

“The investigation is still underway and … the building licences of all of these companies have been suspended by CBS.”

InFocus Homes was liquidated in April last year, owing $485,955 to 68 unsecured creditors, plus more than $20,000 in superannuation to employees.

Site work sheets obtained by InDaily show that Liberty Homes was building houses on the same five streets – in Wallaroo and Kadina, and on Hindmarsh Island – as InFocus Homes, during the same period.

Often these houses were built on adjacent blocks and using the same subcontractor or subcontractors.

Joshua Aaron Thomas, 25, was the director of InFocus. The exact connection he has with Angela and Stephen Thomas is unclear, although Otway’s report also says the directors of the four companies are Angela Thomas and her and Stephen’s children.

According to ASIC’s records, Joshua Thomas lives just out of Toowoomba, Queensland on Recreation Reserve Road in Highfields (InDaily has chosen not to publish the street number).

The same property is also registered as the home address of Angela Thomas and Stephen Thomas, and the headquarters of more than 20 companies of which they have been office holders, or shareholders.

A South Australian creditor to both Liberty Homes and InFocus Homes told InDaily that the two companies were essentially working as one.

The subcontractor, who spoke on condition of anonymity, said work was often commissioned by one company and then paid for by the other, and vice versa.

“There would always be one of them that would owe me,” the creditor said.

On average, according to the creditor’s records, Liberty Homes paid for works on average 129 days after the works were completed.

And InFocus paid an average 80 days after work was completed.

Like both Liberty Homes and Panoramic Homes, InFocus Homes possessed no valuable assets when it was liquidated last year.

InDaily contacted Angela Thomas for comment.

We also contacted Stephen Thomas, who was director of Panoramic Homes for a period of less than one month early in 2018.

We received no response.

***

In February, the Morrison Government introduced two bills into federal parliament aimed at combatting phoenix activity by tracking directors across failed companies.

If passed, the laws would create a national Director Identification Number (DIN) regime, requiring all Australian company directors to apply for a DIN.

The new regime would also make it an offence, punishable by a $21,000 fine or a year in prison, to knowingly apply for multiple DINs.

Tracking an individual director under the current registration system can be both difficult and confusing.

InDaily attempted to discern Angela Thomas’s corporate history, using extracts from ASIC’s database.

They showed the following:

Angela Thomas was born on January 12, 1957, in the small town of Ballina, just south of Byron Bay, New South Wales.

Another entry for Angela Thomas shows a birthdate under the same name, for the same town, but exactly a decade later – January 12, 1967.

On the face of it, the serendipity is extraordinary, since Ballina only had a population of about 4600 people at the time.

Fast-forward to January 12, 1999.

On the day of her 42nd birthday, the elder listed Angela Thomas registered as the director of three Queensland construction companies: Pacific Villas Group, Thomas Property Holdings and Pacvil Developments.

That same Wednesday, the younger Angela Thomas, apparently celebrating her 32nd birthday, also registered as a director of two of those companies.

By then, the elder had already clocked up more than a decade worth of management experience with another company – Lindran – where she was listed as both secretary and director between the years 1987 and 1998.

Two others are listed as directors and secretaries of that company during that period.

They are Angela Mary Thomas, born in Sydney, New South Wales on December 15, 1967 and (another) Angela Mary Thomas – also born in Sydney on December 15, 1967.

In all, nine separate “Angela Thomas” entries, or a minor variation on the name, are lodged in the database – and they appear to be linked.

Each is registered as an officeholder and / or shareholder in dozens of related corporate entities that have been established over the past three decades.

A screenshot of a personal name extract from ASIC’s database, produced by ASIC information broker Equifax.

 

Another screenshot of a personal name extract from ASIC’s database.

InDaily’s analysis of ASIC’s records suggest that each of these “Angela” entries is linked to at least one other – either through a shared directorship or directorships, or through companies based at identical addresses.

The timeline below shows how the “Angela” identities have been used in different ways over the decades.

Over several years and on multiple occasions along the timeline, more than one “Angela” is registered to a single company.

It is plausible that the multiple name entries were made in error, and InDaily is not suggesting the records indicate illegal behaviour or wrongdoing.

(The “Angela” numbers in the timeline refer to the same numbers as in the first Equifax screenshot earlier in this article. Numbers 1, 2, 3, 4 and 5 in the second Equifax screenshot are referred to in this timeline as Angela 5, 6, 7, 8 and 9 respectively.)

Birth records in New South Wales are only publicly available up to the year 1918 and InDaily has been unable to establish the true identity of Angela Thomas.

However the majority of the directorships are registered to Angela Maree Thomas, born in Ballina on January 12, 1967.

***

Most of the companies linked to Angela and Stephen Thomas are registered to residential addresses – suburban houses – in cities and towns across Australia: in Adelaide, Canberra, Sydney, Perth, Brisbane, the Gold Coast and with the highest number clustered in and around Toowoomba.

One of those is the Recreation Reserve Road property registered as Joshua Thomas, Angela Thomas and Stephen Thomas’s place of residence.

The tree graph below shows the number of companies registered at that address, and the array of links from those companies to Angela, Stephen and Bailey Thomas, via directorships and shareholdings.

Graphic: Bension Siebert / Paige Mewett / InDaily (MindMup)

When Lesley Clarke condemned Angela and Stephen Thomas as “phoenix developers” on the floor of the Queensland Parliament 17 years ago, she took specific aim at failed construction company Riaps, declaring: “they must be made to pay their creditors every last cent of the $1,079,660.74 that they owe”.

Clarke claimed there was evidence that, although Angela Thomas was registered as director of Riaps, Stephen Thomas – at that time a bankrupt – was actually running the company, as “a shadow director”.

An annual report of Queensland’s Building Services Authority says the regulator provided funding for the liquidator “to enable him to conduct a public examination into the affairs of the company (Riaps) and obtain legal advice”.

The liquidator did not respond to InDaily’s repeated requests for comment and the results of that examination are unclear.

What is clear, however, is that the company’s 52 unsecured creditors – still owed $1,079,660.74 – never saw a cent.

A table from the final accounts of Riaps shows 52 creditors were owed more than $1 million, none of which was ever paid.

Finally, the MP reserved particular scorn for the fact that that the pair “could not pay creditors in full when they were still involved with other businesses”.

“Stephen Thomas continues to develop properties in Port Douglas,” she told the chamber. “Yet another (Stephen Thomas) company, Maddison Resort Pty Ltd, is seeking approval for another development in the Douglas shire, repeating the now well-known pattern.”

By 2010, Maddison Resort was, itself, liquidated.

It had no assets. It owed creditors $42,581. They were also never paid.

By November 2018, Angela Maree Thomas remained listed as a director of 15 companies (including the SA-based construction companies that failed most recently).

Stephen John Thomas was, by then, the director of four.

***

InDaily attempted to contact Cody Thomas, Bailey Thomas and Joshua Thomas for comment. We also tried to contact Omega Homes liquidator Steven Staats, of Vincents Chartered Accountants, and Lesley Clarke, for comment. Note: Liberty Homes Australia is distinct from Melbourne-based Liberty Homes (Vic) Pty Ltd. Top image: supplied photograph / Paige Mewett / InDaily. 

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