Former Kleenmaid director sentenced for fraud and insolvent trading
Following a trial which lasted for 71 days, on 5 August 2016, the jury found Young guilty of:
- one count of fraud by dishonestly gaining loan facilities from Westpac Bank in November 2007 totalling $13 million;
- Two counts of criminal insolvent trading of debts totalling $3.5million relating to two additional loan facilities from Westpac Bank in July 2008; and
- 15 counts of criminal insolvent trading of debts totalling more than $750,000 that were incurred during the period October 2008 to April 2009.
The jury found Young not guilty on one count of criminal insolvent trading.
Young was sentenced to nine years imprisonment for the Westpac fraud and a total of three and a half years imprisonment for the insolvent trading charges. The court ordered that Young's parole date in respect of the fraud be set at 5 February 2021 and for the insolvent trading charges was to be 21 months later.
At the time the offences were committed, Young was the Managing Director of EDIS Service Logistics Pty Ltd, which, following a corporate restructure in November 2007, was licensed to import, wholesale and retail Kleenmaid appliances.
Prior to the restructure, EDIS had been the spare parts distributor for Kleenmaid appliances.
During the trial, the court heard that it was Young who proposed the plan whereby EDIS would obtain funding from Westpac to acquire inventory from Orchard KM Pty (formerly known as Kleenmaid) which was the main trading company in the old Kleenmaid Group, and that at the time, Young was aware of the dramatic loss-making and indebtedness of the Kleenmaid Group.
The Crown's evidence was that Young, along with fellow director Gary Collyer Armstrong failed to disclose to Westpac that EDIS and Orchard KM did not trade at arms-length and concealed the serious debt position of Orchard KM.
The court also heard that by the time administrators were appointed to the Kleenmaid group of companies, on April 9, 2009, Kleenmaid's consolidated debts amounted to approximately $96 million which included $26 million in customer deposits that had been paid for appliances yet to be delivered and that Kleenmaid's balance sheet deficit was approximately $83 million. ■