Background of past Sampi operations.
Summery of the Sampi swindle
This is the sad story of how Terry Romaro and Charles Franchina, via their companys Fishtrade and "21 Pine Freezers road Pty Ltd" and Hollywood style accounting, managed to cheat all the other Sampi shareholders out of their shareholdings.In short, Peter Laughton was assured that the 2 to 1 voting advantage would never be used by the other directors to give them an undemocratic advantage and would only be used for administrative purposes such as signing of company formality's.
Peter Laughton then made a fatal mistake in trusting Terry Romaro and Charles Franchina, and allowed them both as directors, which gave them 2 votes to his 1 while having exactly the same % ownership of the company [SAMPI].
Since the inception of SAMPI, directors meetings have been very few and very far apart, a total of 4 meetings over 5 years, all called for the main purpose of formalising of legal manipulation of reducing Laughtons ownership % of SAMPI.
Peter Laughton requested on several occasions that a shareholders meeting be called, but Fishtrade constantly delayed it.
After several months when it appeared obvious that the SAMPI secretary was avoiding calling a shareholders meeting, Laughton eventually legally forced a shareholders meeting at the Freemantle Chamber of commerce meeting room, with an independent conflict resolution practitioner hired to act as chairperson.
Fishtrade had refused to use their premises for this meeting.
On the legal paperwork to force a meeting, Peter Laughton gave the option for either Fishtrade director to have voting rights removed, allowing that choice to be made between themselves.
A lawyer acting for Fishtrade advised that the meeting was invalid due to technicalities in the preparation of the shareholders meeting notification and the fact that a resolution was invalid because it did not identify which director, Franchina or Romaro was to have voting rights removed.
This option was put into the resolution for the benefit of the fishtrade directors to decide who would be their prefered person to have equal % voting to Laughton on SAMPI decision making, but resulted in both Fishtrade directors retaining full voting rights, possibly illegally.
It was informally agreed that Fishtrade would be the sole selling agent for Western Australia with Sampi having the option in other areas.
Fishtrade commandeered all Sampi sales, and did not convey information of selling prices to other shareholders, invoicing the end user to Fishtrade and paying Sampi an unknown % of sales, while at the same time denying shareholders anything other than an unmeaningful financial summary of the year's transactions.
Initally invoices were produced on Sampi letterheads, but this was later changed without discussion to [FISHTRADE AND SAMPI].
It is understood that all expenses were charged to Sampi such as freight to the end purchaser, but there was no breakdown of freight costs. It is possible that freight charges for unrelated Fishtrade transport to Port Lincoln were also charged to Sampi as part of the same truck run and transport invoice.
Breakdown of freight costs and requests for bank details were refused or never provided by Fishtrade even after contact from A.I.S.C. advising Fishtrade of company law obligation to provide full transparent details.
When Peter Laughton requested more detail than the financial statement he received he was told that it had been approved by qualified certified accountants and was therefore correct and in compliance with company law.
Peter directly contacted the accountant and was refused information, he contacted the bank asking for transaction details but this was also refused.
Sampi secretary (Franchina) advised Peter that the bookkeeping being used was a very complicated MYOB system that he could not personally understand, but that he would arrange for Laughton to get a copy to allow inspection by a competent accountant.
This copy was never provided and many reasons were offered over a long period of time for not supplying Peter with a copy of MYOB details, which still to this day (8 May 2012) have not been provided.
As Peter Laughton has limited accounting familiarisation and the Sampi office is located in Freemantle W.A., and as Franchina had advised Laughton that non company personnel would not be permitted to examine the company records, legal action was taken to allow a Freemantle local [Peter Lombardo], who has extensive experience in business operation and management to act as Laughtons proxy director to examine company records and to try to find an amicable outcome to the situation. The owner of the remaining 10% of sampi was in full agreement with appointing Lombardo to this task.
Lombardo was initially allowed access to some records, but when he discovered discrepancies like money paid to Laughton listed as a dividend and not the travel expenses it was for, and that there was no evidence of initial funding, he was no longer allowed access to the records.
Fishtrade provided the funding, but put it on the books as a loan to be paid back, and charged interest on it.
The original company set up agreement was that Fishtrade would provide $160,000 to match Laughtons contribution of knowhow, plant and equipment, and working without payment supervising setting up the Sampi operation until the company became profitable, at which time profit would be equally divided between shareholders.
Although Lombardo's purpose was quite clear and open, and he had the support of the majority of the shareholders, he was advised in no uncertain terms that he was not welcome to examine the company operation Books ?? or allowed access to the Port Lincoln site, which made it very difficult to complete a full report or offer full recommendations.
Peter Laughton employed another independent Port Lincoln accountant to check the books, but they were also denied access.
Prior to Fishtrade purchasing new premises in Port Lincoln, they knew Peter Laughton had limited ability to put extra money into Sampi, partly due to him giving up his existing business to start Sampi, partly due to him having worked without pay setting up and running the original processing plant over 5 years, and partly due to Fishtrade reneging on an agreement to pay a dividend on profits earned in the previous financial year.Fishtrade knew Peter Laughton had limited ability to put extra money into Sampi, so they went on a spending spree, deliberately spending a lot more than needed to be spent, and deliberately putting Sampi into a lot of debt, which was loaned to Sampi by Fishtrade at an unknown rate of interest.
Fishtrade spent a lot of money duplicating equipment supplied by Peter, which had already proven adequate to process over 1000 tons of fish waste up to that date, being the majority of all waste fish material available in the Port Lincoln district each season. Fishtrade also purchased a property, in the name of "Pine Freezers Road" and against other shareholders wishes probably used Sampi time (workers wages) and money to connect power and do very major earthworks. They then started to move Sampi plant and stock onto their own property, and probably charged Sampi rentals based on improvements made with Sampi money.
To avoid loosing a director at a legally demanded Sampi shareholders meeting to evict a Fishtrade Director, Fishtrade offered to sell all shareholders extra shares, still without providing detailed financial records, so that they would of owned the majority of the shares and had full control of any shareholders meeting. Other investors were excluded, and the existing shareholders did not want to put more money in while Terry Romaro and Charles Franchina were directors.
This was stopped by the federal court, so Fishtrade went on a spending spree, then demanded their loan money back within 30 days, and before the court room appointment, still without providing shareholders with financial records.
Fishtrade then put Sampi into voluntary administration, who offered to sell the business to the highest buyer.
The administrator offered a deal to Peter Laughton to stop pending legal action.
Peter Laughton's lawyers told him that he had no choice but to accept the offer, to take it to court would of cost a minimum of $200,000, and more likely to cost $400,000 with no certainty that it would not go much higher. In short Fishtrade would have been able to drag it out till Peter ran out of money, and even if he won, the maximum return would have been limited to Sampi assets, possibly Sampi assets that were not covered by the loan guarantee.
Peter Laughton was denied access to the property and was unable to show potential buyers what assets Sampi had, nor were they allowed to view the assets by themselves.
Because the books showed a very poor return on investment, Fishtrade were the only ones to make an offer, and so Fishtrade will get 100% shareholding, while the original shareholders get nothing .
Main Actors
Peter Laughton
Peter is a highly qualified boilermaker and was involved in pioneering work with submerged arc welding where the welding is done submerged under granular flux.Established, owned and ran a successful amateur fishing bait and tackle wholesaler company, sold out to McLaughlin.
Established, owned and ran a fresh fish shop and wholesaler, sold out to Coolpool who are still running it.
Established owned and was running a supply store for commercial fishermen. Was involved in introducing squid fishing and Orange roughy fishing into Australia, invented and marketed an easy to use with gloves on long line clip, and bait launching system.
Developed a method of processing fish waste that does not let the waste go rancid or off, developed and marketed health products based on the Omega 3 and 6 oils and squaline separated from the fish waste. As part of this process Peter was in regular contact with world leading scientists in this field, and initiated a different classification system for the squaline.
This business was drasticly effected when Pan Pharmaceuticals was closed down.
Owned 45% of Sampi, and was a Sampi director, albeit powerless.
Charles Franchina
Owns 33% of Fishtrade, and is a Fishtrade Managing Director.Owns 50% of “Pine Freezers” and is a “Pine Freezers” managing Director.
Former Managing director of Sampi.
Fishtrade owned 45% of Sampi.
Terry Romaro
Former Director of Sampi.Owns 33% of Fishtrade and is a Fishtrade Director.
Owns 50% of “Pine Freezers” and is a “Pine Freezers” Director.
Fishtrade owned 45% of Sampi.
Terry owns 2 building company's, 8 Deep and True North Homes and also owned a third building company 20*20 which entered the North West housing market in 2009 and collapsed in 2010, owing approx $600,000 to people who had put deposits on houses and $5.3 million to other creditors.
May also own or be involved with building company "Green P".
http://www.optuszoo.com.au/news/top/perth-now/dodgy-builder-could-snare-forrest/263000
http://www.perthnow.com.au/business/builders-pain-trail/story-e6frg2s3-1225975446077
http://au.news.yahoo.com/thewest/a/-/wa/8542776/firms-collapse-hits-rottnest-plan/
http://au.news.yahoo.com/thewest/a/-/newshome/8554798/bidder-bitter-over-rottnest-tender/
Terry has also been awarded the Order of Australia Medal for his service to the commercial fishing industry, and is quoted in 2009 as saying he "owns a tuna factory in Port Lincoln, which he said turns tuna offal into Omega3 Oils and environmentally friendly fertilisers." Fishtrade wrote off Sampi's $40,000 separator and disposed of it in early Feb 2009, and stoped producing oil before 23 Jan 2009. (Email to customer date 2 Feb 2009, 1:26 pm) This separator was essential for oil production.
http://melville.inmycommunity.com.au/news-and-views/local-heroes/Lifelong-love-of-dance/7528046/
http://www.itsanhonour.gov.au/honours/honour_roll/search.cfm?aus_award_id=1141281&search_type=advanced&showInd=true
http://www.itsanhonour.gov.au/honours/honour_roll/search.cfm?breif=false&page=5&search_view=qb09_person&view=all&search_type=advanced
Fishtrade
Buys and sells fish and marine products internationally and ship those products to buyers.Terry Romaro and Charles Franchina each own 33% and are Fishtrade Directors.
Pine Freezers
Created to buy 21 Pine Freezers road, and to lease it to Sampi.Owned 50/50 by Terry Romaro and Charles Franchina and they are both Directors.
History
Before Sampi existed there was a company called Feedlink, which took the fish waste, minced it, and dried it in a gas fired rotary kiln. This was then sold as animal feed. Feedlink probably received government grants to keep operating.Peter Laughton and Charles Franchina knew each other through their dealing in the Commercial fishing industry.
Approx August 2003 An agreement was made that;
Fishtrade and Laughton agreed to form a joint venture company for the purpose of producing fertiliser and fish-bait from fish by-products.
Laughton would contribute his knowledge and skills in respect of the production of trap bait, tuna oils and tuna liquor, together with approximately $100,000 worth of equipment. Fishtrade agreed to contribute $160,000 in four lots of $40,000 as the funds are required. Each party or their nominee would hold 50% of the shares in the joint venture company.
Peter Laughton's knowledge and skills was not just advice, but full time work until Sampi started returning a profit.
He gave up his business in Melbourne and moved to Port Lincoln to do this, and made numerous trips to and from Melbourne transporting equipment.
29 January 2004 According to court papers or 1 March 2004 According to administrator, SAMPI was registered as the joint venture company and issued 100 ordinary shares, being 50 to Quotila (on behalf of Laughton) and 50 to Fishtrade.
Sampi originally rented an abandoned meat abattoir for the purpose of testing Peters techniques on Tuna, and to see if there was a market for what could be produced. It was intended to be a low volume set up before investing in something more efficient and permanent. Because Feedlink was no longer the only place processing tuna waste, their government grants dried up and Feedlink folded.
Because the only alternative to Feedlink and Sampi was either dumping the waste in landfill, at $ to the processor, or trucking the waste 600 km to Adelaide, also expensive, Sampi was obliged to suddenly ramp up production, even if it meant dumping the finished product due to lack of storage space. Finished Sampi emulation is a lot better for the environment than rotting tuna waste, and could be spread on farms with the land owner very much in front. There was a mad scramble at the start of Sampi's life to buy up bulk storage tanks to hold this product.
Need date Sampi started returning a profit.
Need financial report details for this period.
Need dates Peter was working full time, with no pay.
7 July 2008: Draft financial report (Email dated 7 July 2008 @ 9:05 am)
22 June 2009 21 Pine Freezers road valued at $610,000from email dated 1 Oct 2009.
23 July 2009: 2008 / 2009 Financial report and 2008 / 2009 Tax return Sampi made a profit this year. (Email dated 23 July 2009 @ 9:41 am)
Mid to late 2009, "21 Pine Freezers road" company is created, and buys 21 Pine Freezers road for $???. 50% owned by Charles Franchina, 50% owned by Terry Romaro.
Sampi money is probobly used to do major earthworks and to connect power to site, as well as wages for working on the site.
11 Sept 2009: Email impling that Fishtrade offered Laughton $150,000 for his shares close to this date, valuing Sampi at $ 333,333.
4 Nov 2009, Laughton became concerned that Terry Romaro and Franchina in their capacity as directors of SAMPI were causing SAMPI to make decisions and/or take actions without consultation with Laughton. He notified Franchina of his concerns and offered to sell Quotila’s interest in SAMPI for the sum of $546,000, valuing Sampi at $1,213,333 which was rejected by Franchina.
9 Nov 2009: Email from Fishtrade offering Laughton $200,000 for his shares, valuing Sampi at $ 444,444.
8 Dec 2009: Fishtrade call a directors meeting for 2 Feb 2010
12 Jan 2010: Laughton formally requests financial information to be avaliable at least 28 days before directors meeting is held.
2 Febuary 2010, Directors Meeting. Fishtrade decides to relocate Sampi to 21 Pine Freezers road, Port Lincoln, dispite objections from Peter Laughton that the site is unsuitable for a number of reasons.
No minutes from this meeting.
4 Febuary 2010, Peter Laughton, via solicitors seeks access to Sampi financial records.
11 Febuary 2010, Fishtrade refuses access to Sampi financial records.
1 March 2010, Lease of "Pine Freezers" property commences.
19 March 2010, Laughton appointed Peter Lombardo to review Sampi Books and act as a director at Peter Laughton's own expense.
29 March 2010, Directors Meeting. Fishtrade/Sampi resolves to provide Fishtrade with security for loan to Sampi to a limit of $850,000, with a shareholding vote of 45%.Meeting minutes received 23 April 2010
11 May 2010, Fishtrade ask if Laughton would be interested in selling for $250,000, not offering just asking if he was interested. This would value Sampi at $555,555.
11 / 12 March 2010, Peter Lombardo offers to meet with Fishtrade to try to sort things out, it is flatly rejected.
Between April 2010 and July 2010, Lombardo reviewed and considered various financial records in respect of SAMPI and SAMPI’s business operations. He subsequently prepared a report for Laughton, which recommended that Laughton on behalf of Quotila call a shareholders’ meeting to resolve the perceived deadlock between Laughton and Franchina.
Peter Lombardo was denied access to Sampi premises to conduct this report.
Peter Lombardo's report on Sampi
1 July 2010 Finance records, with items in random Credit and Debit columns. Not sure when this was received.
27 July 2010, Quotila by its solicitors requested Franchina in his capacity as secretary convene a shareholders’ meeting of SAMPI.
29 July 2010, Franchina acknowledged the request.
3 August 2010, Fishtrade security is registered with the Australian Security's Investments Commission (ASIC), without going to a directors meeting and without costings or explaination of borrowings amounts quantified or defined.
10 August 2010, Quotila by its solicitors advised Franchina that Quotila intended to move additional resolutions at the proposed shareholders’ meeting, including a resolution to remove either Romaro or Franchina as a director and a resolution to appoint a new director nominated by Discovery III.
11 August 2010, Franchina advised Quotila that “arrangements will be made in due course for the shareholders meeting” and that “other directors” wanted to move additional resolutions including to remove Laughton as a director.
23 August 2010, Franchina issued a notice of a shareholders meeting and directors’ meeting of SAMPI to be held on 27 August 2010 at 10:00am. The notice did not state whether any resolutions were to be proposed at the directors’ meeting or what the terms of such a resolution might be.
27 August 2010, Peter Laughton, at his own expense, hired a neutral chairperson and a meeting room for this meeting, but Fishtrade refused to allow a neutral chairperson to chair any meeting.
The forced shareholders meeting of SAMPI was cancelled by Fishtrade because the date of requesting additional resolutions at the meeting required by Peter Laughton was slightly later than the required period of notice.
The original resolutions, with the required notice were ignored.
27 August 2010, a directors’ meeting of SAMPI was held.
Franchina, Romaro and Laughton attended the meeting, which went for a total of 10 minutes
At the meeting, the directors of Fishtrade passed the following resolution:
[SAMPI] undertake a pro-rata rights issue, pursuant to clauses 4 and 5 of [SAMPI’s] Constitution, by the issue of 100 fully paid ordinary shares at $5,555 per share to raise a total sum of $555,000, the purpose of which would be to:
Retire debt of $358,062 owed to Fishtrade International Pty Ltd;
Provide additional working capital of $197,438 to fund on-going business activities; and
The Company Secretary be authorised to issue a letter to shareholders, notifying the shareholders that they are entitled to apply for their pro rate share entitlement by 5pm on 16 September 2010.
Fishtrade knew that Peter Laughton had very limited funds, and had received no money from Sampi, and was unable to buy these shares. This was the whole point, once Fishtrade had the majority of the shareholders voting rights, they could hold a shareholders meeting and not get removed as Directors. The other 10% shareholder did not want to put money into a company while Fishtrade were Directors.
Franchina and Romaro voted in favour of the Resolution, and Laughton voted against it.
Prior to the Resolution, Franchina and/or Romaro did not obtain any advice for and on behalf of SAMPI in respect of the proposed Rights Issue from an accountant, financial planner or business advisor; or alternatively, any such advice that suggested that there was an urgent need for the proposed Rights Issue.
As at the time of the Resolution, SAMPI did not have any urgent need for funds in that its principal creditor was Fishtrade, whose debt was secured by way of registered charge.
At all material times, Franchina knew that Quotila and/or Laughton were not able to raise funds, whether in the time stipulated in the Resolution or at all, in order to take up the proposed Rights Issue.
Romaro and Franchina in exercising their power to make the resolution did not exercise their powers as directors of SAMPI and discharge their duties to SAMPI in good faith; and acted for an improper purpose, namely to dilute Quotila’s shareholding in SAMPI in order to defeat Quotila’s attempt to call a shareholders’ meeting and to preserve Franchina’s control of SAMPI and thereby contravened s. 181 of the Act and/or acted in breach of their fiduciary duty as directors of SAMPI.
The resolution was oppressive to, unfairly prejudicial to, or unfairly discriminatory against, Quotila within the meaning of s. 232 of the Act.
The meeting minutes showing Peter as having no objection to Fishtrade replacing the hired neutral chairperson, signed by Terry Romaro, are simply wrong, as are a number of other items in various meeting minutes, which is why this meeting was recorded in the first place.
Meeting as MP3 (3.3 MiB) Meeting as Ogg (2.4 MiB) Meeting as Wav (18.4 MiB)
Need link to copy of minutes.
Short version, Peter Laughton took Fishtrade to court for a large number of issues, including failing to hold shareholders meetings and not acting the in shareholders interests, but Fishtrade put Sampi into the hands of administrators before the court hearing date.
15 September 2010, Peter Laughton / Quotila trading made an application to the Federal Court of Australia seeking orders for access to the company records and an injunction preventing the rights issue to proceed.
16 September 2010, Deadline for share rights issue. Fishtrade offers funds of $249,975 to buy Sampi shares, no other shareholders have access to Sampi company records, and none else offers funds.
27 October 2010, The Federal court of Australia orders an injunction preventing the share rights issue to proceed.
05 November 2010 Peter Laughton calls a general meeting for 17 November 2010.
17 November 2010 Directors and Shareholders meeting. Fishtrade declare the proxy shareholders vote to be invalid, and vote against Peter Laughton, and their 45% shareholding outweighs Peters 45% shareholding. Meeting minutes
I might of mixed up the meeting summery with 27 August.
2 February 2011, Fishtrade issues a formal demand upon Sampi for the repayment of $850,000 by no later than 3 May 2011.
Early 2011 Fishtrade buy unknown Sampi assets, paying $18,381.
14 Febuary 2011 Administrators are affective from this date.
Sampi debt on 27 August 2010 was $358,062, Sampi debt on 14 February 2011 was $1,879,625, and Sampi assets totalled $1,820,314, a difference of $59,311 between total assets and total debt.
They managed to spend $1,521,563 in less than 6 months, when their own predictions of requirements was less than $197,438, and the new site still needs work done. This blowout of well over 770% was not accidental.
21 February 2011, Fishtrade decides that shareholders are not prepared to support the repayment of the Fishtrade loan and declare that Sampi is or may become insolvent and resolve to appoint voluntary administrators. Directors meeting minutes
4 May 2011, Administrators produce a creditors report.
This report notes that Fishtrade is Sampi's only customer, and that the financial records are unsigned.
Administrators are fully aware of the situation, prevented Peter Laughton from contacting the accountant that did not sign the financial records, prevented Peter Laughton or other possible buyers from inspecting Sampi assets, authorised copyright infringement, did not require the Sampi web site to advertise for possible buyers, failed to ensure that statuary requirements have been met, not only in the business dealings but also in making sure the shareholders had proper records, even after they had asked for them. Prevented Peter Laughton from talking to possible buyers to inform them of the Hollywood accounting.
Sampi creditors report
11 May 2011, Administrators notify at least one creditor of a creditors meeting AFTER the deadline to notify them to be able to attend the meeting.
17 June 2011 Complained to ASIC. Complaint 82411980
22 June 2011 I have evidence that Fishtrade continued spending money
???????? Fishtrade regain formal control of Sampi.
Unknown date Ownership of Sampi transfered from Fishtrade to "21 Pine Freezer Road". The reason for this is simple, Terry Romaro and Charles Franchina each own 1/2 of "21 Pine Freezer Road", but they only own 1/3 each of Fishtrade. This is a simple way to avoid paying other shareholders of Fishtrade any dividends.
When did Peter appoint independent accountants to review Sampi's books.
When were they denied access ?
Details of lack of financial report to shareholders at any time in Sampi's life.