Power Fail

The young and the restless: Rich List stars fall from grace

Perhaps because of the nature of their fortunes, or the leverage it often took to get there, the BRW Young Rich List appears to have had more than its fair share of scoundrels and failures.

For the young who quickly made it to the top, often their businesses were based on less than stable foundations. This is not to criticise BRW, who do a remarkable job of discovering and tracking fortunes, and the list has certainly had its share of remarkable successes (think the Bassets or Nick Austin of Cotton On or Domino's founder Don Meij), but overall the Young Rich List appears to be two parts curse to one part blessing.

What's especially noticeable is not merely the number of people who fall out of the list due to narrowly being overtaken, but the sheer number of apparently uber-wealthy Australians under 40 who go from hero to collapse in a matter of months.

We present Crikey's Young Failed Rich List (their peak wealth year is in brackets) -- a record of once feted entrepreneurs who flew too close to the sun ...

Eddie Groves (2005, $272 million). "Fast" Eddie Groves headed the Young Rich List in 2006 with a fortune of $260 million, but lost it all after his childcare company ABC Learning Centres collapsed under a mountain of debt in 2008. Before its collapse, Groves managed to pay his brother-in-law upwards of $100 million in untendered maintenance works, as well as a swathe of other related party transactions. After ABC's collapse Groves was accused of forging his ex-wife's signature and was civilly charged by the Australian Securities and Investments Commission, though the charges were later withdrawn.

Peter Hosking and Tony D’Antonio (2007, $270 million). An estimated worth of $270 million in 2007 would soon fall to nothing after Hosking and D’Antonio's Global Machinery Company collapsed after losing lucrative Bunnings and Mitre-10 contracts. A year after BRW valued it at $270 million, GMC was placed in receivership.

Craig Gore (2007, $183 million). The son of failed property developer Mike Gore, Craig (himself a former bankrupt) followed in his father’s footsteps by creating what appeared to be a large empire, only to leave a trail of destruction and furious debtors in his wake. In 2007 BRW valued Gore, the comeback kid, at $183 million -- a few years later Gore was pleading with creditors to accept a payout of $3.3 million for debt of $489 million. Meanwhile, the liquidator of Gore's company accused him of operating a Ponzi scheme and misleading investors. While Gore was avoiding paying creditors, he was moving into a luxury Gold Coast mansion and driving a brand-new BMW X6. Gore is expected to be declared bankrupt a second time by the Australian Taxation Office but appears to be spending most his time running businesses in his wife's name.

Jeremy Reid (2007, $170 million). Reid created Everest Babcock & Brown -- but the high-flying funds manager crashed back to earth with a thud after the global financial crisis. Reid had been bankrolled by father-in-law Stephen Eckowitz, who was himself on the BRW Rich List with an estimated wealth of $300 million. Eckowitz's stake in Everest was funded by debt and his investment vehicle was placed into liquidation (he was also forced to sell his $20 million Vaucluse mansion). Reid's star also dimmed as Everest racked up losses of more than $300 million and its share price fell from $7.80 to 11 cents. (Everest eventually returned around $10 million to shareholders.) Unlike Everest shareholders, Reid didn't lose everything -- BRW valued his wealth at $25 million in 2012.

Matthew Perrin (2007, $132 million). The former lawyer turned executive took the reins at Billabong in 1999 after founder Gordon Merchant was searching for investors. Perrin successfully managed the company's float but soon fell out of favour after selling $60 million worth of shares in 2002 without telling the board. Perrin's woes didn't end there -- after leaving Billabong, he made a disastrous investment in a Chinese supermarket business and declared personal bankruptcy in 2009. If you thought things couldn't get any worse for the former wunderkind, in October 2012 he was charged over a $13.5 million fraud which involved forging his ex-wife's signature on loan documents.

Rick Munday (2009, $132 million). The pub baron sold the Taverner Group to Bruce Matheson and Woolworths in 2005 for $380 million, and owned Melbourne and country Victorian pubs but still managed to guide his group into receivership in 2010. At the time of its collapse Munday's group owed $55 million to creditors, including $48.5 million to NAB. The former apprentice chef told BRW in 2007 that "I can't really see myself doing anything else". Sadly for Munday that decision was made for him. Munday, once described as one of Geelong's greatest success stories, filed for personal bankruptcy in 2011.

Peter Mavridis (2007, $74 million). Mavridis owned web business SCentral and was valued at $74 million in 2007. By 2010 the assets of SCentral had been sold to rival IT company Brennan, and four months later was placed in liquidation with reported debts of $10 million. Mavridis bounced back quickly, becoming CEO of the Chandler Group, a recruiter and construction services business (a role which lasted 18 months) before becoming an executive with Mavcorp. Macridis' LinkedIn page refers to him as a "Business Builder", "Banking Leader", "Technology Leader" and "Awarded Entrepreneur".

Christina and Richard Matta (2011, $58 million). The couple burst onto the Young Rich list in 2006 with an estimated wealth of $23 million, based on their Perfume Empire chain. By 2011 BRW had increased their valuation to $58 million. But six months later Perfume Empire was placed into receivership. In 2006 Richard Matta offered wisdom to BRW, noting: "To succeed you need to spend big. If you don't go in thinking this is all or nothing, don’t bother." Looks like for the Mattas, it was nothing.

Wayne Ormond (2011, $38 million). Wayne Ormond fell from $38 million in April 2011 according to BRW to placed in administration only months later, owing 119 creditors almost $10 million. The former high-flyer, who owned three Rolls Royces, an Audi A7, boat and jetski, told BRW in 2011 he was "a big boy, so … needed a big car" and that his jetski was "about as exciting as it gets". Maybe not -- a creditor's report prepared in May 2012 indicated Ormond's company may have traded while insolvent.

Mark Alexander-Erber (2006, $20 million). The former Pubboy struck it rich and made it to the Young Rich List in 2006 with an estimated fortune of $18.5 million. A tabloid favourite (who once dated Princess Mary's bridesmaid Amber Petty), Alexander-Erber's empire collapsed in 2007 with debts of more than $20 million. A few months earlier BRW noted that "the tattooed motorcycle-riding publican has cleverly positioned his chain of hotels above the private family pub operators, but below the radar of huge multinationals [and] Alexander-Erber has been busy restructuring the business, appointing a new chief financial officer and directors of operations and human resources -- all aimed towards listing on the Australian Stock Exchange by the end of 2008". Alexander-Erber joined the exclusive club which included Alan Bond as one of the few people in Australia to go broke selling beer.

Jarrod McCracken (2009, $42 million). The former rugby league star made a fortune in Queensland property, and was valued at $42 million by BRW in 2009. Things started to go awry after McCracken pleaded guilty for "assaulting an ex-business partner on the Gold Coast on his wedding day after a multimillion-dollar deal went sour", before borrowing money from Sydney loan sharks to allegedly fund gambling debts. In 2012 McCracken was declared bankrupt after a court found he owed a Townsville construction company $2 million.

Nathan Tinker (2011, $1.13 billion). While Tinkler is far from bankrupt (at the moment), no one has ever fallen harder and faster than the coal magnate and bloodstock owner. Tinkler's downfall was spurred by a dampening commodities market, but was also self-inflicted. After spending more than $300 million buying up bloodstock Tinkler failed to sell the lot to Sheik Fahad for $200 million a year later. His main stake, a $600 million holding in Whitehaven Resources, is believed to be carrying a substantial amount of debt, however BRW still valued Tinkler at $400 million. Tinkler is currently embroiled in a series of legal actions over unpaid debts (including a $28 million claim from Blackwood Corporation), but recently settled a $17 million dispute with Mirvac.

*This piece was originally published by Crikey.


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