David Walsh 730 interview

no worries Gatespeed - interesting he said it loses millions a year, i hope that turns around and it survives long term, haven't been yet but it looks facinating

memoir would be a good read

noted 2 lines given to the excessive rebates given to their group.

Yes David we realize you could win without the rebates, of around 1.5 - 2.5% of turnover on the Australian pari mutuel systems (estimated turnover in Australia of 1 billion) but hey the 7% rebates and at one stage 12% through the Tassie TAB certainly helped the bottom line no end.

i was expecting jfc to be all over this thread ?


and spot on Loggy - this AFR link below has the group admitting to the massive rebates - massive in the US, massive in Tassie


“I invent a gambling system. Make a money mine. Turns out it ain’t so great getting rich using someone else’s idea. Particularly before he had it. What to do? Better build a museum; make myself famous. That will get the chicks,” he wrote.


http://www.afr.com/p/national/the_gambler_GwoSmf5IXaVFjmpyYXNu9J

Educational thread. I had no idea what an aesthete was until I read this thread and googled the word.

so all of Walsh's moral high ground that he portrayed in the show the other night about giving something back because gambling is basically unethical and immoral comes crashing down around him.

MONA has applied for a casino license to cater to the high rollers

Yep-seriously!!

http://www.themercury.com.au/news/tasmania/philanthropist-david-walsh-wants-to-build-casino-at-mona/story-fnj4f7k1-1227073315002

Consider this precise quote from the transcript from the Leigh Sales junket:

DAVID WALSH: Well, I made my money gambling. It's a zero-sum game.

What rational person will buy that? Or say that!

It's damning evidence that something is not what it seems.

Perhaps Leigh can be excused for not stopping Walsh dead in his tracks then and there.

But what excuse is there for using that as a promo?

And then some days later when she had an opportunity to reflect, she concludes with:

LEIGH SALES: That was really fun.

There's ample material in Hansard, or the AFR Walkley winning articles and elsewhere to facilitate responsible journalism.

Instead she Leighs back and thinks of easy street when she can crack a spot on the pragmatic commercial channels.


http://www.abc.net.au/7.30/content/2014/s4096979.htm

Boy this latest extract is long and tiresome to get through.

And so much of it is dead wrong.

At least it demonstrates that there is no excuse for her appalling interviewing, given that zero-sum gaffe appeared in the memoirs.

So why didn't Leigh prepare a question along the line of:

"You say gambling doesn't produce anything.

What does MONA produce?"

http://www.dailytelegraph.com.au/news/australian-multimillionaire-gambler-david-walsh-spending-his-winnings-to-bring-art-to-the-people/story-fni0cx2y-1227085027762

.

http://www.youtube.com/watch?v=e2ZW_uTlhEQ

excellent ... david will be happy to pay the taxes ... no deductions no kickbacks just all for good ol tassie

Honestly this beggars belief!

We can't win on a level playing field at these high Rakes.

So please give us a double-digit kickback.

Sure, good luck to you.

Hope that helps your Porn Museum morph into a full scale bordello.

How about you Walsh well-wishers take the slightest effort to become informed?

Start with this direct quote from Kate Carnell recorded in Hansard:


The representation by VITAB that its purpose was to attract Asian punters, and the concealment of the involvement of Alan Tripp and the Zeljko-Walsh group, was the fraud which resulted in ACTTAB entering the VITAB agreement.

http://www.hansard.act.gov.au/hansard/1997/week14/4695.htm

If Kickbacks and the tilted play field arrangements were abolished tomorrow then a lot of people would finally find themselves sustainable winners.

Turnover would surge because in this caper it's the quick or the dead.

And a number would start approaching Leviathan levels.

Unless they're completely irrational, they will have no qualms whatsoever about paying the full price.

Because they know that paying the full price is why they have finally become successful.

How ex-wives’ club nailed David Walsh

Nine days after leaving her husband, Elizabeth Steicke contacted the Australian Federal Police........

....
Further, it’s been suggested that MONA itself might be at risk. Walsh has been talking to anyone who asks about the unfairness of it all and giving interviews around the clock. He’s trading on his philanthropic profile and the applause of the elite for his artistic triumph in an effort to underline the outrage of the ATO’s action.

Yet when he first drew public attention with his ambitious gallery, he came from nowhere with his millions. It emerged that his wealth was built on gambling systems but not a word more would he say about the subject.

It is only now that the public has a glimpse down that well.

Meanwhile, he has been rustling up support from Tasmanian politicians such as independent Andrew Wilkie and former Greens leader Bob Brown, and there is a Facebook campaign.

Yet Walsh may find it hard to beat off the ATO, which has a history of aggressive litigation.

That said, there is talk a settlement may be on the cards and that the Tax Office is trying to strengthen its negotiating position.

Walsh told the Weekend Financial Review  he was fighting the tax assessments, which added nearly $18 million to his tax bill for the years 2004-06, on moral as well as legal grounds. He believes the imposition of retrospective taxation is unfair, as does the Parliament of the European Union, he says.

He is now spending countless dollars on lawyers, an experience familiar to Steicke.

What is quite different, however, is that her battle has been to wrestle some of the gambling millions from her former husband’s winnings.

For although she has had a starring role with the ATO, Steicke has yet to see the money she wants.

Like the man she married, 50-year-old Steicke played a high-stakes game by going to the authorities. In offering up her former husband, she bet they would find any offshore assets, thereby allowing her to make a claim against them – after the ATO took its share.

But so far, it has not turned out that way. Evidence of vast offshore riches is yet to materialise, even though David Steicke had a 15 per cent stake in the Punters Club which should have delivered him more than $10 million each year. He is thought to no longer be a member of the cliquey syndicate.

The club maintains there are no “shares”, only a percentage of the betting floats, but Elizabeth Steicke is said to be convinced otherwise.

She believes the moving of money overseas could mean, on top of yearly winnings, the club could be worth more than $1 billion.

Steicke is thought to want half her former husband’s share. And that’s on top of properties scattered around the world.

The result has been an emotionally charged battle.

In taking the fight to each other, the Steickes have become famous in legal circles for conducting what is said to be the most expensive divorce in Australian history.

Bitter does not even go close to describing it.

In 2010, Robert Lunn, South Australia’s Supreme Court master and a District Court judge, said Elizabeth Steicke had spent a staggering $10.5 million on “various lawyers, investigators and forensic accountants”.

“She understands her husband has incurred costs of about $26 million,” Lunn said. He was presiding over a case Steicke had brought against her former lawyers.

And those figures are now two years old.

Steicke spent millions on forensic accountants in an attempt to track down her husband’s assets and hired private investigators to tail him in Hong Kong.

But little has come of her efforts, it seems, other than a record-breaking legal bill.

It appears she is still yet to uncover any hidden assets. But she didn’t miss out entirely.

If Steicke wants half the asset pool of $200-odd million, the couple will need to split seven houses in southern Europe, one in Switzerland, a truffle company, and Steicke’s mansion at Happy Valley in Hong Kong.

Since the divorce, Elizabeth looks to have concentrated on caring for her children, including the pair’s disabled child, while her former husband remarried and soon after had another baby.

Elizabeth Steicke refused to comment, but did tell a photographer her husband had left her with the kids eight years ago.

The spending from both sides is evidence of the vast riches contained within the club, which started out above an inner-city pub in Hobart.

Steicke, with all his impressive wealth, held only a 15 per cent share in the club, which these days resembles a multinational corporation.

Indirectly, the club employs hundreds of people, mainly in Sydney, and has betting operations in Australia, Hong Kong, Japan, Europe and the United States.

The ATO has identified three service providers which employ about 250 people, but there are thought to be another 20 plus service providers scattered across the globe.

The club’s main game is horse racing, but football, basketball, Keno, poker machines and possibly online poker have attracted its attention over the years. Although gambling is its business, when betting on horses, it’s more like a hedge fund that relies on high-frequency trading for its success.

To the surprise of many, it actually makes most of its money from losing bets.

In Walsh’s appeal statement filed in the Federal Court, he talks of a staggering 95 per cent of losing bets.

The group manages to offset the losses, he says, because “it would win both regular bets and a number of ‘exotic’ bets”.

The club’s reclusive boss, Zeljko Ranogajec, who also goes by the name John Wilson, explained this strategy to a Sydney court in 2008.

“You bet to lose, so that you actually turn over more money and the win comes from the rebates,” he told the Federal Magistrates Court during a dispute with a former business partner. “If you bet $100 and lost $5, but you get a 10 per cent rebate, you still make 5 per cent.”

It sounds simple but in practice, the club relies on a series of complex algorithms and high-speed computers to place thousands of bets on a single race.

The idea is that over time, the syndicate will come out roughly even from wagering, but will be well ahead when the rebates, which can be as much as 10 per cent of turnover, are paid.

That means it’s more about maths than gambling and all about turnover.

In this area, the syndicate has shown impressive growth.

Court documents tendered by the ATO show that turnover increased from $555 million in 2004 to $2.453 billion in 2006.

Since that time, the club has regularly bet more than $2 billion a year.

According to the ATO, the club received a profit of $66 million in 2005 and the operation has continued to grow.

It’s unclear if this figure comprises just the Australia operations or includes the club’s overseas activities.

What is clear is that the club has found itself uncomfortably exposed to the ATO’s gaze.

Absolute confirmation of there being a mole within took seven years after Elizabeth Steicke made contact with the AFP.

In May this year the club knew for sure it had been played.

And it was only due to a mistake from the ATO. By accident, the tax authorities disclosed they had documents containing legal advice on the club and the intricacies of how it operated.

While the material had been in its possession since 2005, the ATO had kept its secret weapon hidden until this year when the slip-up occurred.

The scope of what the ATO knows is unclear and it has hotly contested any further disclosure.

.....

To this day, the ATO has still not revealed where the information came from, referring only to a confidential source.

It is by piecing the puzzle together that suspicions emerge about a disgruntled ex-wife, although there is now thought to be a question mark over how useful Steicke’s testimony is.

With the explosive documents in hand, the ATO has thrown around accusations that secret board meetings were designed to deliberately avoid a paper trail and to conceal effective control of the club’s international operations through service providers.

This fits with what the Federal Magistrates Court heard about how Ranogajec operated according to his former business partner Karl O’Farrell.

“We like to keep our dealings secretive. Nothing in writing,” Ranogajec told O’Farrell, according to his written evidence. By mid-2007, it appears David Steicke and possibly other members of the club may have feared something wasn’t quite right.

Recently, they discovered Elizabeth Steicke’s lawyers had written a number of letters to the AFP and the ATO beginning in February 2005.

Even before the ATO had received the letters, its serious non-compliance section was investigating the group.

Curiously, not long after Steicke contacted the ATO, the matter was bounced to Michael Monaghan from serious non-compliance, who later became involved in Project Wickenby, the multi-agency tax evasion inquiry.

It is now clear the club was not investigated by this operation.

But they wanted Zeljko Ranogajec in for an interview.

It was not until two years later, in 2007, four years after the audit began and after prodding from the group’s lawyer, that the ATO told them the “review may have to take much more time than previously envisaged”.

But by this point, the blow had been delivered. The authorities knew how much the club was turning over each year, how it conducted business and that it employed sophisticated encryption software to ensure privacy.

Most crucially, however, the ATO believed it had evidence showing the Punters Club was not just a collection of mates, but a highly organised business which, in its opinion, should be paying tax.

From this point on, it was about damage control.

And so when another potentially volatile situation came about in June 2009, the club looks to have managed it far better than the Steickes did.

The 2009 incident was not pretty and had all the makings of an explosive tabloid story – booze, a fast car, a younger woman and the Las Vegas strip before dawn.

The club member involved was Peter Bowen.

Despite having only a small stake in the syndicate, Bowen, his wife Megan and five children lived in a grand historical house on 5500 square metres of land at Wahroonga in Sydney.

In a previous life, Bowen had compiled data and rated horses for AAP’s racing service. It was the early days of computerised form guides and using sophisticated data to predict the performance of horses.

That made him a natural fit for what Walsh and Ranogajec were trying to achieve at the Punters Club and he is thought to have joined them in the early 1990s.

If his Wahroonga house, with its putting green, tennis court and pool house was any guide, the years had been good to Bowen.

The family lived a prosperous but private life – the only mention in the media was a $20,000 reward offered for the return of a stolen laptop in 2007.

Some time in 2009, Bowen’s wife, Megan, left him.

Brokenhearted, the usually conservative Bowen headed to Las Vegas to compete in a poker tournament.

He never came home.

According to police, Bowen was a passenger in a high-powered Pontiac that went through a stop sign and was involved in a head-on collision just before dawn on the Las Vegas strip.

“The pick-up truck hit right in the passenger seat where Peter Bowen was sitting,” detective Sean Lethbridge from the Las Vegas police told the local media.

The driver was a young woman, 30 years Bowen’s junior, who was eventually charged with drink driving.

Lethbridge said he was “unsure” how the pair knew each other.

Bowen died from his injuries four days later, after Megan and her sister Susan flew from Australia and instructed doctors to switch off his life support.

It was an ugly end to a lavish weekend gone wrong, but such hedonistic tendencies were not uncommon, according to a source familiar with members of the club.

Some, according to the source, became dysfunctional via a combination of too much money and a belief that the rules didn’t apply to them.

“They thought they were untouchable,” said the source.

When probate was granted over Bowen’s estate, there were few signs of his apparent wealth.

Bowen listed his occupation as “sports journalist” and he left just a second-hand Mercedes, a modest share portfolio and a few thousand dollars in cash.

But there was clearly some money elsewhere, as his widow was granted a complicated private tax ruling by the ATO.

She sold the house on Lucinda Avenue for about $4 million last year but it had been on the market and vacant for two years after she bought an equally impressive house in a nearby suburb.

It appears Megan Bowen did not inherit her late husband’s stake in the operation, as no one technically has “shares”. But she has been looked after and is still understood to have some role with the club.

It is thought members wanted to make sure she was not in financial trouble. Put another way, the club didn’t want another aggrieved wife talking to the authorities.

By this point, it was already too late for that.

It was not long until the ATO, through its small to medium enterprise section, would make its move. Revised assessments of up to $40 million in income, for a three- year period, were issued to club members, including Walsh and Ranogajec.

By this time, the reclusive Ranogajec was living in London, at One Hyde Park, said to be the most expensive apartment building in the world.

Walsh claims he should not have to pay the backdated tax and the ATO’s backflip should only apply for future years.

That is an argument that may not succeed unless it can be shown that a decision about the group being a business was deliberately concealed.

It is not enough to show the ATO was not clear, or one section made a decision overruled by another. The support of politicians and a Facebook campaign won’t do much either.

According to government policy, politicians have no power to waive a tax debt.

Walsh maintains he will fight hard, and does not have the money to cough up millions for inflated assessments for the past seven years.

His argument about retrospective action, according to one legal expert, could face hurdles although another more technical argument that the ATO took too long to audit Walsh and others could succeed.

First will come an argument about the legal privilege attached to the stolen documents and when it’s all finished, Elizabeth Steicke’s legal fees may seem modest.

The Australian Financial Review

http://www.afr.com/p/national/how_ex_wives_club_nailed_david_walsh_DjMG12faGOxlyMZHjBzVSP