Former West Coast Eagle Andrew Donnelly is facing allegations he rorted millions of dollars from his national insurance broking firm, Australian Reliance.
And he looks set to lose his multimillion-dollar house in Perth’s elite beachside suburb of Cottesloe after falling into arrears of just over $89,000.
Mr Donnelly and business partner Kim Hanson face multiple civil lawsuits before the Supreme Court of WA, predominantly over claims they unlawfully shifted money and shares belonging to clients and shareholders to pay down company debts from 2013 until 2016.
Andrew Donnelly debuted for the West Coast Eagles the same year as Ben Cousins.Credit:Facebook
In January 2016, Mr Donnelly lost control of all his companies to board directors Jon Fogarty, Keith Muller and Jonathan Asquith, and his business assets worth up to $5.5 million were frozen.
At the time, he and Mr Hanson had been on the verge of a $31.57 million deal to sell the Reliance Group, also made up of 33 franchise operations, to the publicly-listed Melbourne-based insurance group PSC.
But initial due diligence investigations allegedly found $5.1 million had been taken from company trust accounts to service accruing company debts.
Among the alleged debts was $1.39 million interest on a reported $15 million loan provided by Mr Fogarty’s company Fopar Nominees for Reliance’s national expansion.
Shareholders in Reliance’s parent group Vantage Holdings are suing Mr Donnelly and Mr Hanson for losses and damages incurred.
They allege the pair breached their duties as the chief operators by accessing close to $16 million in clients’ invested funds from two protected trust accounts.
It is alleged Mr Donnelly and Mr Hanson moved the funds into adjoining operational accounts and used them to prop up their franchise operations, according to court documents. Almost all of the trust money was recovered.
In emails presented to the Supreme Court, Mr Donnelly allegedly wrote to Mr Hanson on October 22, 2014, saying: “Now I find out somewhere near $3m of trust fund monies have been used on top of the monies raised and then get informed by you that if we don’t repay this ASAP we will both lose our houses.”
It was also alleged $2.34 million was misappropriated in 2014 through loan agreements between Australian Reliance and two other companies controlled by Mr Donnelly and Mr Hanson. The loans were allegedly structured to write-off the money so that it could be used to help pay down debts, according to sworn affidavits before the court.
There was also a court claim that more than 1.2 million shares Australian Reliance held in Australian insurance broking giant Steadfast Network were misapplied by Mr Donnelly and Mr Hanson in 2013/14. The pair allegedly diverted the shares to a third company controlled by them, from which they were eventually sold.
Andrew Donnelly’s Cottesloe house is now the subject of a mortgage repossession claim by Macquarie Bank.Credit:Aja Styles
Part of the lawsuit also pointed to Mr Donnelly and Mr Hanson’s then-accountant Mark Anthony English.
He and his company PA Audit stands accused of not declaring the “misappropriations” when auditing the companies from 2013 to 2016, with the claims going as far as accusing him of “knowingly participating” in the alleged breaches.
All parties deny the allegations, with Mr English and his company PA Audit arguing that the loans were genuine loans and there was no evidence they had any knowledge of Mr Donnelly and Mr Hanson’s “contraventions” over the share transfer.
They appealed a decision by Supreme Court Justice Jennifer Smith that they could be held culpable in an upcoming trial, with a decision due to be handed down shortly.
Mr English’s barrister refused to comment.
Flying close to the sun
So who got burned?
In 2010, at the height of his success, Mr Donnelly used his Eagles connection to seal a lucrative two-year sponsorship deal between Australian Reliance and the AFL team, which allowed him referral rights to the football club’s network of corporate contacts and business partners.
Among those to rub shoulders with Mr Donnelly was Eagles’ number one ticket-holder and Morley Ford dealer Denis McInerney.
His company, McInerney Holdings, invested in Reliance’s linked insurance equity fund, Vantage Investment Fund.
Donnelly in 2001 as No.29 West Coast football player.
McInerney Holdings are among 23 private investors to separately sue PA Audit, Mr English and Mr Donnelly over the collapse of the fund in 2016, which left no money.
Other big name investors among the self-managed superfunds and corporate trustees are the Mark Hohnen Superannuation Fund, belonging to one of the founding brothers of Margaret River winery Cape Mentelle; the Warburton Family Trust, belonging to Perth mining stalwart Neil Warburton; the Jones Family Trust belonging to the founder of English education provider Navitas, Rod Jones; and one of Elders agribusiness’ now defunct arms Midridge Investments.
They claim the auditor and Mr Donnelly were negligent, misleading and deceptive in their conduct over the health and management of the fund. Most of which centred on the 2013 audit and 2014 valuation reports.
It was a time when Mr Donnelly’s relationship with his financial backers had begun to sour and privately he took on more debt.
In December 2014, Mr Donnelly took out a mortgage loan agreement of $2.3 million with Macquarie Bank against his Cottesloe property.
He originally bought his two-storey, four-bedroom home for $985,000 after his five-year career at the Eagles ended in 2001.
It has been significantly renovated in recent years, likely taking it above its estimated worth of $3 million for a 1980s build on a 668sqm lot.
Mr Donnelly was paying 6.72 per cent in monthly principal and interest payments, according to the bank.
In a recent Supreme Court writ, the bank accused Mr Donnelly of falling into arrears of just over $89,000 since September last year.
Now the bank is looking to claim the property for the amount owing and interest on the loan agreement with a hearing scheduled later this month.
Mr Donnelly’s lawyers have been contacted for comment. WAtoday was unable to get in contact with Mr Hanson.
All the civil actions are ongoing.
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