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Italian Connection comes under scrutiny
Kate McClymont and Jacquelin Magnay | July 4, 2009
Kate McClymont and Jacquelin Magnay trace a tangled web of failed property deals that all lead back to Eels chairman Roy Spagnolo.
Despite having a multimillion-dollar property empire, the Parramatta Leagues Club chairman, Roy Spagnolo, has had an extraordinary run of bad luck, with a string of his property development companies failing, leaving debts including more than $1 million to the Tax Office.
Among Spagnolo's more colourful business partners are a man jailed for insurance fraud and one named by the Woodward royal commission as a money launderer for the Griffith Mafia, while another was convicted for assaulting a photographer at the funeral of the Griffith drug boss Robert Trimbole.
A Herald investigation has uncovered at least eight property development companies in which Spagnolo has been involved that have gone into liquidation, which could put in jeopardy Spagnolo's continued association with the Parramatta Leagues Club and the Parramatta National Rugby League club.
Spagnolo is such an avid Eels fan his car sports the numberplate "Parra" and years ago he called one of his personal trusts "The Eels trust." The 54-year-old accountant was initially introduced to the Eels' dressing room inner sanctum by the former Parramatta manager Tony Zappia around 2000.
The now-disgraced Zappia and his accountant Spagnolo were often joined by property developers Vince Lombardo and George Gaitanos. The group became known as the "Italian Connection" and regularly wined and dined the Eels players.
Long lunches were held at Spagnolo's sprawling residence in Horsley Park. Whenever the Eels play the Brisbane Broncos, the team has dinner and post-match drinks at St Pauls Tavern in Spring Hill - owned by Lombardo. Pre-season trial games in Griffith see the team lunching at the Westend Winery, part-owned by Spagnolo.
Up until being made chairman earlier this year in a well- publicised election coup, Spagnolo was also the manager of two Eels players, Fui Fui Moi Moi and Luke Burt, and was an adviser to Eric Grothe junior.
While Spagnolo boasts of an astonishing property empire, over the years many of the companies he has been associated with have gone down the gurgler, often leaving both Spagnolo and the Tax Office out of pocket. Under the Corporations Act, a person may be banned from being a company director for up to seven years if two or more of the companies in which they are an officebearer fail or if the company fails within 12 months after the person has left.
Spagnolo was a director of Westside Property Developments which went into voluntary liquidation. In at least one other company, Spagnolo resigned three months before the company collapsing. In the other failed companies Spagnolo was replaced as a director by relatives, employees or business associates.
The pattern in the failed companies is remarkable. The same liquidator is appointed, the same people are left out of pocket - usually the Australian Taxation Office, Spagnolo and his friends and relatives. And the same person, Xavier Lo, turns up controlling the proxies at the creditors' meeting.
Lo happens to be an employee at Spagnolo's Fairfield accountancy firm Spagnolo and Associates. Lo was a director of the controversial fund Beyond Sharks Foundation secretly set up by the disgraced former Cronulla Sharks boss Zappia.
One of the property development companies Spagnolo has been involved in was Wavey, which spent almost $2 million buying industrial land in Mascot. In 2002 Spagnolo and his business partner Frank Carioti were replaced as directors by Spagnolo's client Giuseppe Barbaro, a baker from Hall Place, Fairfield West. Barbaro, a relative of Trimbole, was convicted of assaulting a photographer at Trimbole's funeral in 1987.
A year after Barbaro took over the company, it went belly-up owing $64,000. Creditors included the Tax Office, owed $57,000, and the law firm of Patrick Agostino (Spagnolo's brother-in-law), owed almost $1000. Barbaro himself was owed $1750 and Spagnolo's company $3300. Peter Ngan was appointed liquidator.
Agostino has suffered a similar misfortune. Ngan liquidated his company Pasad, which collapsed in 2002 owing the Tax Office $295,000 and his brother-in-law's company Spagnolo and Associates was owed $3000.
Ngan was also appointed liquidator when Westside Property Developments went down in 2002, one of the shareholders of which was the controversial Labor minister Joe Tripodi. The directors at the time included Spagnolo and Pasquale Sergi. Born in Plati, Italy, in 1944, Sergi was named in the Woodward royal commission into Drug Trafficking as a money launderer for the Trimbole crime syndicate.
The royal commission found that Sergi, a real estate agent, was involved with Trimbole in the purchase of properties in Sydney's west which was "undoubtedly a money-washing operation" to launder funds improperly obtained from Griffith drug crops.
Both Sergi and Spagnolo were singled out for praise in Tripodi's maiden speech to Parliament.
Another Spagnolo company, Sinister, also failed within months of Spagnolo leaving. After completing the sale of land in Fairfield for $8million, Spagnolo was replaced by his long-term business partner Frank Carioti and his wife Maria. Ngan was appointed liquidator and Spagnolo's employee Lo turned up on behalf of the creditors which were Carioti's family trust and his boss Spagnolo's family trust. The two trusts claimed to be owed $200,000. A smaller creditor was Spagnolo's brother-in-law Agostino who was owed $5000.
Three months after he left, another of Spagnolo's companies, Ispa, went into liquidation, owing the Tax Office $339,000.
As well as being a proxy for creditors in the various collapsed companies, Lo had his own misfortune when his company Fairfield Investment Corporation went belly-up in 2004. Among the unsecured creditors were the Tax Office ($36,002) and his boss Roy Spagnolo and Associates, owed $5500. Lo, who had his application to be a licensed auditor rejected by ASIC, continues to work for Spagnolo despite being involved in one of his boss's most spectacular failures which left Lo's company Secured Capital out of pocket to the tune of $19 million.
Sine Two, owned by Spagnolo and Frank Carioti, went into liquidation in 2007 owing in excess of $21 million.
Only a month before his appointment as Sine Two's liquidator, Richard Albarran had refused to answer 37 questions put to him in a disciplinary hearing in relation to his administration of a company unrelated to the Spagnolo group. He was subsequently suspended for nine months.
Unlike other creditors' meetings involving Spagnolo-associated companies, Lo did not control all the proxies in the Sine Two creditors' meeting. According to ASIC documents, Robert Fielding representing Cavasinni Constructions, owed $1.877 million, asked some serious questions such as how Sine Two, a company "with $1 of capital worth" could have obtained such large secured loans. The minutes show that Albarran stated that "he is unaware of how these loans came about and added that it could just be that the directors were wealthy individuals".
Fielding also wanted to know if there was any relationship between Lo, Spagnolo and Carioti. Albarran is reported as saying "he is not aware of any other prior relationships".
The minutes show that Spagnolo and Lo did not volunteer the fact that Lo worked at Spagnolo's accountancy firm. Fielding also received no joy when he inquired as to where Lo's company received its funds in order to loan $19 million.
Also owed money when Sine Two went into liquidation were Spagnolo's brother-in-law, Agostino. He was owed $24,200. Other companies connected to Spagnolo were owed $200,000.
Yet another company of Spagnolo's, Nearov, also went down the tube owing creditors $64,000. Curiously, on the ASIC form signed by Spagnolo, a different birthdate and home address appear.
Although Spagnolo had resigned as a director before liquidator Ngan was appointed, Spagnolo's replacement director was Michelle Douglas, an employee at his firm. She also appeared with Lo as a director on the Beyond Sharks Foundation. Creditors to Nearov include Infac Finance, which later also went into liquidation with Ngan as the liquidator. One of the directors of Infac was Chris Crawley. In 2001 he helped Spagnolo save Club Marconi from entering receivership.
Crawley, 49 from Winmalee, owned the successful racehorse Excellerator along with Agostino, as well as racing identities Tony and Frank Mittiga. A relative of the racing Mittigas, Roy Mittiga, is another friend of Spagnolo. Roy Mittiga went to jail in 1992 over a vehicle insurance fraud.
The Herald has obtained a 1987 report of the insurance investigation. It examined the relationships between Roy Mittiga, insurance broker Ian Frith and their accountant Spagnolo. The report noted that Spagnolo had himself lodged several motor vehicle insurance claims with the key players.
Frith became close to various Griffith identities, including Bob Trimbole as a fire inspector with an insurance company at the time Trimbole made an insurance claim. The report noted that Frith had become a shareholder in Trimbole's steakhouse business.
Frith and Spagnolo have continued to be involved in a business relationship.
