A former BRW rich lister and tech entrepreneur has appeared in the Melbourne Magistrates’ Court having allegedly orchestrated a multimillion dollar fraud against the National Australia Bank.
Peter Mavridis, formerly the chief executive of S Central Group, allegedly defrauded NAB of $3 million through false invoices in order to obtain credit for companies within the group.
Following an investigation by the Australian Securities and Investments Commission, Mavridis has been charged with 24 counts of obtaining financial advantage by deception, 10 charges of false accounting and one charge of dishonest use of position as a director.
The offences are alleged to have taken place between January and October 2009.
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S Central ceased trading in October in 2009 and its assets were sold to rival IT company Brennan. By February 2010 liquidators had been appointed to the company.
Prior to S Central’s collapse, company employees who were owed unpaid entitlements set up a website to criticise Mavridis.
In 2007 Mavridis had been on the BRW Rich 200 list, valued at $74 million.
ASIC now alleges Mavridis, either directly or through his financial controller, submitted duplicated and falsely inflated invoices to NAB, as well as falsifying other documents required by NAB to support the fake invoices.
Mavridis is also said to have used his position as a director to allegedly use $20,000, held on trust for NAB, to clear a personal credit card debt. If found guilty, Mavridis could face 10 years in prison.
Warfield and Associates chief executive Brett Warfield told SmartCompany false invoicing is one of the most common types of fraud.
“False invoicing is a very common type of fraud, especially when it comes to large amounts of money. I’ve seen cases involving hundreds of thousands and millions of dollars,” he says.
“False invoicing would be in the top three types of major frauds.”
Warfield says the fraud tends to be orchestrated in two ways, either by an individual in a position of authority or through collusion with a third party outside of the company.
“If it’s an individual they will create an invoice for a service for which they have the responsibility, send the invoice to accounts and then accounts will approve the payment and it will be processed, so long as the invoice is within that person’s responsibilities,” he says.
“The higher you are in the organisation, the more money you can typically sign off. The second way is for the individual to collude with an external party. For example they could approach a supplier, become friends with them, and then propose the supplier inflate an invoice and then they split the difference.”
Warfield says false invoices are often difficult to detect until a business collapses.
“When a false invoice aims to dupe the financing company, the person often exaggerates their assets and they will provide the bank with false invoices supporting the purchase of these assets,” he says.
“If the company collapses corporate recovery liquidators will come in and when they go to reconstruct the books, they tend to find out what was behind the collapse and will pick up on the false invoices.”
According to Mavridis’s LinkedIn account he is currently chief executive of Telecom NBN. SmartCompany contacted Telecom NBN, but received no response prior to publication.
The case has been adjourned until June 10, 2014.