SFO investigates failed firm; bank owed millions

The Serious Fraud Office is probing an Auckland fashion firm co-owned by a senior navy officer after receivers flagged concerns that stock and creditor levels had been misstated, leaving the company’s bankers millions in the red.

Receivers James Greenway and Andrew Bethell were appointed to fashion designer and wholesaler Catherine’s Fashionwear in July last year after the company defaulted on $2.3 million in loans from the Heartland Bank. The company went into liquidation in November.

In their first report released in September, Greenway and Bethell said the company had raised $863,000 in invoice financing, despite invoices having already been pledged as security to Heartland.

The receivers’ first report said the subsequent withdrawal of Heartland credit facilities led to the business’s collapse, with employees not being paid and abandoning their jobs.

It said the company’s main book asset comprised $1m in debtors and $1.5m in stock. But in their second report in January, the receivers said these amounts were ‘‘considerably overstated’’.

‘‘Due to concerns that we had over the company’s records, including its invoicing and stock recording practices, we have referred certain matters to the relevant authorities for further investigation,’’ the receivers’ said in the second report.

Receivers report the sale of stock netted only $281,875.

The Serious Fraud Office confirmed this week it was investigating the case, but declined to provide further details.

The sole director of Catherine’s Fashionwear is Catherine Casey. She owns the business jointly with her husband, New Zealand Navy Lieutenant Command Dave Casey. He is the commanding officer at the Hobsonville airbase’s Limited Service Volunteer bootcamp programme.

The Caseys didn’t respond to a Sunday Star-Times request for comment.

Several other businesses connected to Catherine’s Fashionwear have been drawn into the collapse.

Children’s princess party firm Club Girly Girlz, also sole-directed by Catherine Casey and owned by the couple, had liquidators

appointed by shareholders in August last year.

Liquidators Derek Ah Sam, of Rogers Reidy, reports creditors of Club Girl Girlz totalled $439,322, including $280,000 owed to ANZ. Asset recoveries to date have totalled only $17,555.

Related companies Apparel House, Club Girly Girlz (Sylvia Park) are also in liquidation.

The collapse of the fashion company has also drawn in the Casey’s multi million-dollar mansion on Auckland’s North Shore, with Heartland moving to freeze the property.

According to property records, the couple paid $2.3m for the 468 square metre home on a twohectare section in 2009.

The couple’s family trust became owners of the Albany property in May 2013.

In August 2013, a month after receivers were appointed to Catherine’s Fashionwear, Heartland placed a caveat claiming an interest in the property.

That caveat was lifted in April, and the property is listed for sale.

The subsequent withdrawal of Heartland credit led to the business’s collapse, with employees not being paid and abandoning their jobs.

Questions to Heartland over why the caveat was lifted went unanswered.

A spokesman said: ‘‘You’ll appreciate with client confidentiality issues, we are limited in what we can say.

‘‘With the SFO investigation running, that makes it even more difficult for us to say anything.’’

Real estate listings for the sixbedroom property, featuring a pool and self-contained guest wing, describe it as a ‘‘luxury residence constructed with pride and perfection’’.

The listing said sellers were ‘‘willing to meet the market!!!’’.