Chasing the money trail of fraudster Newcastle accountant Ray Walker

FAMILY: Ray Walker's daughters Kate Hertogs, left, and Sarah Walker, right, outside court with their mother Jennifer. Inset: Ray Walker
FAMILY: Ray Walker's daughters Kate Hertogs, left, and Sarah Walker, right, outside court with their mother Jennifer. Inset: Ray Walker

FOLLOWING the money trail of Newcastle fraudster Ray Walker reveals a litany of extravagance for a simple suburban accountant.

When his eldest daughter, Sarah, returned to university full-time, he indulged her in 2007 by buying a $238,000 two-bedroom apartment in New Lambton in her name where she lived rent free.

Ms Walker, a Newcastle family law solicitor, served as executor of her father’s estate after he stabbed himself to death in the heart in July 2015 following the discovery he’d stolen more than $10 million from his mainly Hunter-based clients.

The former Newcastle Law Society secretary was giving evidence on Wednesday in Sydney’s Federal Court on the second day of a bankruptcy trustee hearing trying to piece together a picture of where the missing millions went and how much, if any, is left for creditors.

Ms Walker was forced to admit “it did not cross my mind” to disclose on a “statement of affairs” form - used by the trustee to help trace the money trail - the apartment that her father paid the deposit for and made the mortgage repayments on while she lived there.

When the property was sold in 2012 for $280,000, Ms Walker said the mortgage was paid out and the remaining money, about $40,000, was given to her father.

Asked if her father provided any similar “properties or chattels” to her sister Kate Hertogs, Ms Walker said she did not know.

BANKRUPTCY HEARING: Accountant Michael Hart, right, outside Sydney's Federal Court on Wednesday.

BANKRUPTCY HEARING: Accountant Michael Hart, right, outside Sydney's Federal Court on Wednesday.

“I went back to university on a full-time basis,” she said. “I couldn’t get Austudy and dad offered to assist me by financially supporting me with the purchase of the property.” 

She agreed “none” of the money for the property came from her and her father’s interest in the unit should have been disclosed.

Under questioning by barrister Anthony Spencer, for the bankruptcy trustee, Ms Walker conceded as executor she did not “thoroughly scrutinise” her father’s assets and failed to recognise it was a “conflict of interest” for her to oversee the sale of her father’s business to her accountant brother, Brett Walker.

“I didn’t see it at the time [as a conflict of interest], no,” she said. Asked by Mr Spencer if she should have seen it, she responded: “In hindsight, yes”. 

Emotions were running high in the courtroom with 20 of Walker’s victims, many who lost their life savings, turning out to hear evidence by Ms Walker and Michael Hart, who worked as an accountant alongside Walker and his son Brett.

When Ms Walker responded to a question saying she was “not sure how to answer that”, there was an audible groan from the public gallery and one of the victims yelled: “Honestly”.  

Mr Spencer questioned why it took “more than a year” for the bankruptcy trustee to be appointed when it was apparent much earlier the estate was insolvent.

“The estate owed a lot of money to a whole lot of people and didn’t have the money to meet those debts,” he said.

ADVICE: Sarah Walker leaving court on Wednesday with lawyer Ross Mason, of Mason Lawyers.

ADVICE: Sarah Walker leaving court on Wednesday with lawyer Ross Mason, of Mason Lawyers.

Ms Walker said in the “early days” she estimated the debt was up to $4 million and the estate’s assets were “at one stage about” $1 million. 

“It did reach the point when it was apparent I didn’t have the requisite skill or knowledge to continue to administer the estate,” she said. 

“Also, the conflict noting my mother and brother’s position.” 

After Mr Spencer pointed out it was “common experience” for lawyers to encounter conflicts of interest, Ms Walker replied: “Obviously I did not think about that”. 

The court heard the estate received $25,000 from the sale of Walker’s Triumph motorcycle just weeks after his death and Ms Walker, as executor, approved the majority of the funds to be used to pay legal bills to Mason Lawyers. 

Ms Walker said she relied heavily on Ross Mason’s advice during her time as executor. 

Mr Hart told the court the day after Walker killed himself the company’s website was changed to delete the word “partner” when referring to senior staff. This was done after Brett Walker received legal advice and employed a public relations firm to manage the scandal.

Partners in an accounting practice can be held legally responsible for a firm’s debt.

Mr Hart conceded his email signature and business card previously described him as “partner”, but said the four accountants operated under the R W Walker “brand” as separate business entities.