What would make a successful poker pro risk everything by getting involved in a massive, multimillion dollar bank fraud and Ponzi scheme plot? That’s the question many are now asking regarding Australian poker pro Bill Jordanou, who is under investigation by Victoria police for his alleged role in a bank fraud that went on for years, according to reports.
While details on the reported Ponzi scheme are sparse, the $70 million bank fraud operation was reportedly carried out with Jordanou’s business partner, Robert Zaia, 45. The two allegedly ensnared Zaia’s wealthy clients, via his accountancy firm Zaia Arthur & Associates, into an undetailed Ponzi scheme, while simultaneously forging bank documents to secure loans, at times in Zaia’s clients’ names, which they then comingled with property and development loans they also received from the bank, for projects that either never existed or were never started.
Bank Holds Victims Hostage
But the caper gets even crazier from here. The bank used for all these transactions was Australia’s largest: Commonwealth Bank. That bank is now holding Zaia’s allegedly scammed clients hostage over the loans secured in their names, without their permission. One of these former clients, Rita Klapanis, says Commonwealth served her with a $6 million demand note, even though she only heard about the loan’s existence when contacted by Commonwealth for repayment, and promptly contacted the police.
Undeterred, apparently, by the logic here, Commonwealth is still going after Ms. Klapanis’ Toorak property, and even charging her ongoing interest on said loan at the reported rate of $1,135 per day. Ms. Klapanis has now filed an affidavit with the Supreme Court, saying she is not responsible for a loan fraudulently obtained, without her permission, in her name. Her wealthy family had been one of Zaia Arthur & Associates’ financial clients.
Again, there are no details on the reported Ponzi scheme, or how much any clients were supposedly defrauded or what was promised; only that 20 such well-to-do clients were involved.
Also named in the Supreme Court affidavit are an additional eight alleged victims of the accounting firm, which Ms. Klapanis is now suing for damages in what is referred to as a “conspiracy” in the case. Other victims are expected to follow suit shortly with legal action.
Bank Didn’t Check Loan Forms
And the tentacles of this financial octopus keep on coming; a property developer who claims to have lost millions is now accusing Commonwealth of gross negligence.
”The bank did not check the validity of tax returns or whether they had been filed, they did not check employment representations that were made, they did not undertake valuations on the properties to be secured. They accepted anything completed on the loan application without question,” the attorney for the developer said.
If only we could get those bankers working for the IRS.
Commonwealth, not surprisingly, isn’t saying a word about any of it. But it’s not the first time their ethics have come under scrutiny; earlier this year, it was reported that the bank had covered up major misconduct from within its own financial planning division, which allegedly put thousands of clients’ savings at risk.
The Australian Securities and Investments Commission (ASIC) subsequently banned seven of the bank’s financial planners, and forced Commonwealth to shell out tens of millions in damages to the victims.
And as if that weren’t enough hot water to be in, it now appears Commonwealth brought in an international security firm, whose job it was to conduct undercover surveillance on Michael Fraser, a prominent anti-banking lobbyist, as well as several other politicians (but not, we are assured, Germany’s Chancellor Angela Merkel. Hey, we have to amuse ourselves here sometimes). The secret spying included National Senator from New South Wales John Williams, who is involved in a Senate inquiry into the ASIC’s own conduct after bringing the Commonwealth scandal to light.
Good lord, all we need are Anthony and Cleopatra to make this any more dramatic.
Jordanou has made 15 career poker tournament cashes, including taking 3rd for $300,000 in the 2010 Aussie Millions $100,000 Challenge in Melbourne.
The two-year investigation is expected to be completed by the end of the year.
Named for early 20th century scammer Charles Ponzi, these schemes actually first started long before he lent his notorious name to them. The goal of these financial scams is for the perpetrator to collect vast sums of money based on insanely ambitious promises of riches to the “investors,” after which the instigator takes off, with everyone’s cash in tow.
Typically, Ponzi schemes involve several predictable elements. The first is a far-above-average promised rate of return on investments, accompanied by a seemingly plausible explanation of how these rates will be achieved; usually, the scammer will say they either have insider information, or are engaged in an elite investment opportunity not open to the public.
Next, the perp makes sure that some of the initial investors do indeed get the promised returns, to create buzz and credibility, and obviously to bring in yet more investors, who are needed to make the scheme profitable to its creator. However, subsequent investors will not be so lucky, and are typically left completely wiped out when they not only receive no returns, but lose all of their initial investment as well.
Bernie Madoff, of course, is probably the most infamous Ponzi schemer in history. After defrauding everyone from elite nonprofit institutions to celebrities to banks out of more than $50 billion over the course of decades, he is now serving what is tantamount to a life sentence. His ripoffs left many of his investors penniless, including countless senior citizens.
Whether an actual Ponzi scheme was allegedly committed by Jordanou and Zaia is not entirely clear from the reports released so far; but if a scheme was indeed perpetrated on Zaia’s wealthy accounting clients, it most likely left a financial Cat 5 hurricane in its wake.