Sydney businessman Andrew Sigalla was arrested yesterday charged with dishonestly using his position as a company director to repay gambling debts and loan repayments of $6 million.
The former chairman, director and chief executive of TZ Limited was arrested at the Intercontinental Hotel before appearing in Sydney’s Central Local Court on 16 charges of dishonestly using his position to funnel $6,151,317 from the company.
The Australian Securities and Investment Commission alleges that on 16 occasions between March 2008 and March 2009, Sigalla took money from the company’s bank accounts and used the majority of the cash to repay bookmaker Tom Waterhouse and pay off his mortgage.
ASIC also alleges that, on top of fraudulently taking the money, Sigalla failed to properly record the payments in his accounting books and TZ’s records, did not obtain shareholder approval for the payments, and did not disclose the payments in any published accounts and company annual reports.
The maximum penalty for each offence is a five-year prison sentence and/or a $220,000 fine.
Gambling is often a major factor in business fraud according to professional services firm Warfield & Associates.
The firm conducted research into million-dollar fraud in Australia from 2001 to July 2012 and found of the 93 people (in 89 cases) convicted of fraud of over $1 million, 46 of the cases involved people with gambling problems.
These cases equated to over $164 million being stolen from Australian businesses out of a total of over $398 million.
Chief executive of Warfield & Associates Brett Warfield told SmartCompany gambling is the most prevalent factor motivating million-dollar company fraud.
“Gambling addiction usually goes hand in hand with the person doing something funny at work. Some will say it’s a personal issue and what they do in their private life is a personal thing, but you need to question if they’re using their own money or the business’s money.
“People with easy access to money tend to lose it all to the bookmakers if they have a gambling problem,” he says.
The report uncovered a range of ‘red flags’, which indicated possible fraudulent activity.
Some of these warning signs are heroin or gambling addictions, retrenched workers volunteering to keep working for free, and unexpected purchases of expensive cars, luxury goods or holidays.
When determining a person’s sentence, Warfield says the judge takes into account a range of factors:
“If they’ve shown any remorse or repaid the money, and over what period of time the money was taken – was it just a one-off event? And if they helped with the investigation, for example by showing investigators how the money was stolen.”
Sigalla’s time at TZ, a company that makes electronic lockers, was rocky. In mid-2009 he was replaced by this year’s Celebrity Apprentice personality Mark Bouris.
Under Bouris’ leadership, TZ launched a $7.5 million legal action against Sigalla, which was settled out of court.
In July 2010, Sigalla was made bankrupt by Tom Waterhouse in the Victorian Supreme Court, as he owed the bookmaker $2.6 million.
The businessman has also been in trouble with ASIC before, with the NSW Supreme Court convicting him last year of contempt of court after he breached a court order by failing to disclose to ASIC almost $30,000 in credit card payments to escort agencies. He was ordered to complete 120 hours of community service.
In yesterday’s court action, Sigalla was not required to enter a plea but was made to surrender his passport. The matter will return to court on July 16, 2013.
SmartCompany attempted to contact Sigalla for comment but did not receive a response prior to publication.