THE FINGERS OF FINCORP

How Eric and the boys gorged on a fat financial pie.

Opinion by Neil Jenman.

Craig John Stubbs began 2007 as the chief executive of a soon-to-be bust financial company called Fincorp.

Since it was founded in 2002, Fincorp had borrowed several hundred million dollars from several thousand investors, mostly mums-and-dads. The Fincorp strategy for raising these millions was simple - massive amounts of false and misleading advertising. Huge newspaper and magazine ads and slick radio ads. Telling lies is always a powerful sales method.

Investors were told their money was safe and they could rest easy knowing they were getting a certain return. Yesterday, in the Supreme Court, Craig Stubbs admitted that Fincorp was high-risk but promoted as low-risk. It almost defies belief. 

Fincorp, which was started by a character called Eric Krecichwost, was not a safe company. It was a giant financial pie into which Krechichwost and his pals stuck their greedy fingers and gorged themselves in a financial feeding frenzy that lasted almost five years.

Apparently, the strain of running a dodgy company was too much for Craig Stubbs. On January 7 this year he resigned, citing poor health caused by stress. Even though he had only joined Fincorp in 2005, poor Craig couldn't take the anxiety any more. He was 43-years-old.

Yesterday, as he gave evidence in the NSW Supreme Court, Stubbs looked anything but stressed. According to one observer, he appeared "cocky and arrogant" and seemed "very pleased with himself".

Stubbs inferred to the Court that he had got a bad deal from Fincorp.

Bad deal? How so?

Well, apparently, when Stubbs joined Fincorp, he was promised that he could stick several of his fingers in the fat financial pie - and plenty of times too.

Eric Krecichwost promised Stubbs a "sign-on fee" of $350,000.

That's right, just for showing up, Stubbs was promised a finger-lickin three-hundred-and-fifty Gs. But, alas, Craig's fee came more slowly than he anticipated. He only got $150,000 for starters. It took another 18 months for him to get the balance.

Another finger-lickin' deal that was promised to Craig Stubbs was this - a builder was supposed to show up at his home and erect a pergola (fair enough, it gets hot in the West Pennant Hills valley in summer) and charge all the costs back to Fincorp.

In other words - and let's spell this out - the mum-and-dad investors, most of whom were battlers living in modest homes, were supposed to pay for improvements to Craig Stubbs' mansion.

And now Craig feels he got a bad deal because, instead of getting all those home improvements, he only got around four weeks worth of builders' labour.

The barrister for the liquidator, Steven

Golledge, asked Craig Stubbs about money that was paid from Fincorp to Craig's wife.

Craig was ready with an answer.

Sometimes, when he worked at home (under the pergola perhaps?) Mrs Stubbs would help with secretarial work. Also, as a stressed exec, Mrs Stubbs provided "comfort" to her hubby when he needed it. What a gal. Definitely worth $120,000 a year of the investors' savings.

But, hey, when you look at how many fingers the Fincorp founder, Eric Krecichwost, stuck in the Fincorp pie, it's easy to see why Craig Stubbs feels somewhat short-changed.

On Monday, barrister Steven Golledge grilled former Fincorp chief financial officer, Neil Livingstone.

Livingstone had prepared a flow-chart showing how Eric Krecichwost and his family and friends (John Krecichwost, Clinton Krecichwost, Jacob Quigley and Col McIlveen) had stuck their fingers into the Fincorp pie and pulled out close to $20 million for themselves.

The money was described as [spotters'] fees for properties bought by Fincorp. Yes, those same properties that produced no income and led to the collapse of the company.

You know the trend these days - make winners out of losers by paying them fat bonuses. Only this time, the money came direct from the savings accounts of mums-and-dads into the grubby mitts of Eric and his mates.

And Eric got by far the biggest lick. He reportedly stuck $13 million in his kick.

But all these revelations that are coming out in this week's Court hearings tell a fraction of the story.

There is no mention this week of how Eric's wife, Tiffany, paid $3 (yes, three dollars) in 2005 for a company that owned a commercial property in downtown Camden. The property had been purchased by Fincorp in 2003 for a million dollars. That must have been the property deal of the decade - pay three dollars for a property that last traded for a million dollars.

And then, of course, there's the palatial Krecichwost mansion (or should it be called 'compound'?) set on plumb acres at Cobbity (near Camden). A magnificent home with stunning landscaping.

Millions upon millions of dollars to Eric Krecichwost and his mates. Thanks to 8,000 small investors who believed the deceitful advertising.

On Sunday December 9, Eric Krecichwost celebrated his 41st birthday.

Bet he had a big cake.

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FOOTNOTE: The Australian Securities and Investments Commission (ASIC) has obtained court orders freezing the assets of Eric Krecichwost and several former Fincorp directors.