The word “fraudulent” with regard to the collapse of Kenyon and Charlotte Clarke’s Duval Group has now been used by senior MP, Andrew Bayly.
A word that was always coming.
We are now also aware of a “suspicious transaction” that did NOT appear to make “commercial sense” according to a Cabinet paper released yesterday.
The transaction in question is the $15,000,000.00 IP (Intellectual Property) claim made by the Clarkes, via their Trust.
We know of other transactions, the loan to Charlotte Clarke’s sister, the way in which the Clarke’s $8,000,000.00 in ’so called’ equity for the BTR fund are also suspicious, but easily unravelled. s252 of the Crimes Act 1961 will be an easy start for the Regulators and Prosecutors once they get going.
A few questions…
How big was Du Vals outstanding tax bill? (We know that most of the $5.1m that Kenyon claimed made Du Val solvent was in fact for outstanding unpaid GST, and that itself was already on a payment plan).
How big was Kenyon and Charlotte Clarke’s outstanding tax bill?
Just how overdrawn was the Clarke’s current account?
Enter a match made in heaven… an Intellectual Property lawyer with an answer to solve an insolvents tax issues. All Kenyon needed to do was roll out his Instagram account and become a man of substance.
Consider for a minute that Lawyer, Owen Culliney, who’s home was also raided by the FMA, has a background in IP Law, and that both Culliney and his practice partner, Alysha Foley grew a corporate and commercial practice specialising in intellectual property.
In order to claim IP, as the Clarkes have attempted to do, they would need a brand. A BIG brand. A global brand. They settled on a version of the family name that is mis-spelt.
Kenyon and Charlotte Clarke ramped up their social media activities, and flaunted wealth and extravagance. Thus the “illusion was created”.
Growing the brand meant new business opportunities, new entities, new markets. That meant Du Val Clubs, Du Val Gyms, Du Val Fashion, Du Val Heath Supplements, Du Val Gin, and the all conquering Proptech – All going global. All amounted to nothing.
We heard about living in Fiji, the UK office, an office in Singapore, and stock exchange listings in NZ, and Singapore.
Then there was Kenyons ‘huge’ Instagram following – those lapping up his Rolls Royce, the Ferrari, the Rolexes, the Private Jets. A closer inspection of the said Instagram account showed what we already knew, it was fake, a ‘bot’ fed bunch of nobodies from Pakistan and Nigeria.
All seemed like a “Billion Dollar” empire was here. Du Val the brand was here.
But there was a problem. Du Vals property development arm was a dog. A mis-managed debt laden train wreck that made ZERO money.
Everything was a Fugazi. A con. A fraud.
Off the back of such a sizeable business failure, the IP purchase from the Clarkes was simply a fraud. Ultimately it is tax evasion in our view.
When it comes to valuations we know Kenyon and Charlotte Clarke make up their own valuations. That is now very apparent by the demise of the company, and in particular the suggested $400m valuation for the purposes of those who foolishly converted their debt to shares in Du Val.
We will go out on a limb here and suggest that the debt for share swap was a very cunning and deliberate scam, only to serve as a last ditch attempt to create the value to claim the $15,000,000.00 valuation for the IP purchase from the Clarke’s Trust. In essence to dupe the IRD / tax payers of NZ.
Was the IP transfer to be in perpetuity with a yearly payment to the Clarke’s Trust the end goal?
Was IP legal guru, Owen Culliney to enjoy a clip of Kenyons IP ticket?
Did Culliney think he could fool the IRD and FMA with the size and scope of his elaborate scheme, a man who created something so complicated it must be real. A Fugazi.
Certainly in commentary from PWC, they allude to the fact they’ve never seen anything like this.
There is no way to justify the IP purchase price, as for a start there needs to be IP. What IP does Kenyon Clarke even have to offer? A few Instagram posts in leased cars giving advice that even he does not take!
Our view is that the “IP” deal was an elaborate scheme devised to avoid paying tax on any of the Du Val development profits. That said, there appeared to be no profits anyway, so that just leaves it as an instrument to offset the overdrawn current account issues.
What we all now know is there is no billion dollar business, there is no $400m net wealth for Kenyon and Charlotte Clarke, but all the investors funds and any residual value is now gone.
Our view (and others) is the scheme (scam) was simply to deceive the IRD, and avoid paying any tax. That is tax evasion.
The past 5 years have been fascinating to watch. The Clarke’s, busy creating a digital footprint to span the globe, but off the back of a business that was only ever going to crash and burn.
We talked about the tax implications here in previous post with regard to the various charges likely coming, with the one being Section HK11 of the Income Tax Act 2004.
To quote Kenyon Clarke “This is just this weeks problems”
More to come on the tax implications…
