THE FALL OF HEDGE FUND BOSS KEN GRACE
paid for by the purported hedge fund.
All the while, very little actual investment was taking place.
Grace did not keep his generosity in the family, launching a homeless youth charity, Sleep Safe Sleep Sweet, with World champion surfer Joel Parkinson, Mcewen and boxer Jeff Horn as ambassadors.
Parkinson was also an investor, however he pulled his money out before the collapse.
There was no suggestion of wrongdoing by the sports stars.
Smiling for the cameras with glamorous wife Jane, a sharp-suited Grace pledged $100,000 to kickstart the purported philanthropy, and promised 25 per cent of Goldsky’s ongoing client fees to the cause.
“An investment in Goldsky is an investment in curtailing the challenges faced by Australia’s homeless youth,” Ms Grace said at the time.
The charity, registered in the name of The Jane & Ken Grace Foundation, never lodged a financial report.
The Goldsky dream dissolved from October 29, 2018, when ASIC successfully applied for receivers to be appointed to the Goldsky companies.
Supreme Court-appointed receiver Anthony Castley found $23.4m had been raised from investors with about $14.9m returned to a lucky few.
Mr Castley estimated investors were owed $12.9m, but there was only $314,124 left in the Goldsky accounts.
The receiver’s affidavit said $6.85m had been paid out of Goldsky’s bank accounts including payments for the Kingscliff home and other personal costs.
More than $1.6m had been paid directly to Grace’s family members and subsequently spent on “jewellery, groceries, cosmetic procedures, beauty treatments, restaurants, clothing, furniture and home expenses, and entertainment tickets”, the receiver said.
Assets of the Goldsky companies and the Graces’ joint bank accounts were frozen in November and, by December, the companies were wound up and liquidator Chris Baskerville was appointed.
Mr Baskerville would later tell the Federal Court Goldsky had been used by Grace “as a vehicle to operate a Ponzi scheme”.
In January 2019, Grace and Goldsky’s legal woes went global, with the United States corporate regulator fining them $US75,000 ($107,000), finding the Us-based Goldsky was being run there as a Ponzi scheme.
In May 2019, ASIC struck another blow.
Supreme Court Judge Peter Flanagan ruled three Goldsky companies had broken the law by running a financial services business while unlicensed.
The Judgement said “large sums of money” were transferred between three Goldsky accounts and personal accounts of Ken and Jane Grace.
A shortfall of $12.55m in investor funds remained, the Judgement said.
In July, Mr Baskerville petitioned for the couple to be declared bankrupt.
Three months later, Grace was shooting a hole in the casino room telly.
The couple, by then living on the Isle of Capri at Surfers Paradise, was declared bankrupt in December.
In Southport court over The Star gun drama in January 2020, Grace pleaded guilty to five charges.
Defence solicitor Michael Purcell, of Potts Lawyers, said his client was suffering from mental health issues at the time of the drama, describing it as a “personal matter”.
The court heard he had sought help for his illness.
Grace was sentenced to three months in prison, wholly suspended, and two years of probation for the five charges, which included dangerous conduct with a weapon, unlawful possession of a weapon, threatening violence and related offences.
Less than a month later, he was back in court.
At Brisbane’s Federal Court for a public liquidator’s examination in February 2020, all trace of the oncepowerful glamour couple were gone.
A clearly frazzled Ms Grace gesticulated at waiting photographers, while a bearded Grace hid under an umbrella – but the real show was yet to unfold inside the courtroom.
“It looked like a Ponzi scheme, but it wasn’t,” Grace told the court.
Ms Grace, who is not accused of wrongdoing, claimed the situation was a set-up and that the accounts had been hacked, a notion attacked as nonsense by ASIC’S lawyers.
When shown examples of the cosmetic clinics where the funds were spent, she said she “believed it was our money we were spending”.
A former Goldsky staff member and witness at a second liquidator’s examination in July 2020 told the court he was still in touch with Grace who was by then “on the dole”.
As well as hearing about the Graces’ extravagant spending, the court heard some of what had happened in the wake of the companies being wound up.
Mr Baskerville alleged the couple had handed over jewellery, luggage, clothing and a Mercedes-benz that had been bought with Goldsky funds to the liquidator – however many were cheap fakes.
The liquidator allegedly found many items, including a Rolex watch and Louis Vuitton loafers, were fake and as such held minimal value.
The returned items were only allegedly worth $18,000 and included a Rolex watch, an Audemars Piguet watch, Louis Vuitton luggage, seven Tiffany jewellery items and a Mercedes-benz C200.
On 12 April 2021, four years after investors began pouring money into Goldsky, Grace was slapped with nine criminal charges.
Each of the eight counts of engaging in dishonest conduct carries a maximum penalty of 10 years’ jail.
Operating a financial services business without a licence carries a maximum of two. Ms Grace was not charged. After eight adjournments, Ken Grace pleaded not guilty to all counts and the matter was listed for a six-week trial in May.
However the players in this drama look to avoid another act as last Friday, Kenneth Charles Grace, 58, pleaded guilty to five of the dishonest conduct charges after striking a deal with ASIC.
A date for sentencing on the five guilty pleas is yet to be set, with the case set for further mention in Sydney District Court on May 26.
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