Life as Jack Flader’s poodle must have been exhausting.
If one believes the official version of how the Trio Capital fraud was run, Shawn Richard lived that life for more than five years.
Running even a legitimate business the size of Trio could have been no trivial task.
Especially for this young Canadian with no business education, who found himself holding the reins after someone left his friend and mentor, Matthew Littauer, dead from 11 stab wounds on a seedy street in Tokyo’s notorious red light district of Roppongi just before Christmas 2004.
There were whistlestop roadshows to lure new clients. Endless conference calls and meetings.
Every day, dozens of decisions had to be made. Documents had to be signed, calls made, meetings held, plans hatched, deals haggled.
There were clients to smooch, staff to manage, regulators to keep happy.
Even for a legitimate business, the daily To Do list would have been daunting.
Trio, though, was a scam and that part of it was a whole other “shadow” business on its own, involving its own documents, companies, deals and management.
Worse, the two operations had to be juggled with care.
The two operations, legitimate and illegitimate, were connected like conjoined twins because a fleecing operation like this depends on the legitimate business being kept alive.
Steal too much too quickly and everyone’s out of business, including the crooks.
That added several layers of complexity, not the least of which was the need for Richard to spend half his life on the phone to Jack Flader, keeping him in the loop and dealing with Jack’s weird modus operandi.
Oh, life as Jack Flader’s poodle must have been more than exhausting.
It must have been hell.
The official account is contained in a 32-page Statement of Facts, which constitutes Richard’s confession as agreed with the Australian Securities and Investments Commission, which investigated the fraud.
According to that statement, Richard was ‘‘at all times’’ under Flader’s ‘‘ultimate control and instruction’’.
Not just for the fraud but for the legitimate business too.
Flader ran the lot. That’s what the statement says.
But if every decision, every instruction, came from Flader, Flader and Richard must have been in constant contact with each other.
After all, they were plotting the systematic theft of $176 million from a host of businesses in Australia, utilising a murky maze of shady businesses and bank accounts scattered through a variety of jurisdictions spanning the globe.
Not just plotting it, but actually doing it!
For Jack Flader to run this operation by remote control from Hong Kong, he had to have a local lieutenant to look after the Australian end of the fraud, someone on the ground in Sydney to ‘‘push the buttons’’ for him.
With the size of the business and the complex scam they were running, there is no other way it could have worked.
According to Richard’s story -- the story that ASIC believed -- Richard was that man.
But how much sense does that really make?
For every decision that had to be made, for every rort that had to be concocted, Flader must have needed Richard to fill him in with the relevant information.
That information would have to be communicated, digested, discussed, queried.
Options would have been batted around, decisions made, detailed instructions issued.
Once Flader made his decision and told Richard what to do, it was then up to Richard to issue the necessary instructions to staff.
Because if the official account is true, it could not have worked any other way: Richard had no useful degree of autonomy to make decisions himself, and no one has ever produced any evidence of Flader issuing instructions directly.
Not only did Richard issue the instructions to his own staff on Flader’s behalf, he even issued them to Flader’s staff over in Hong Kong.
Helpfully, the statement includes examples of Richard doing just that.
In one email contained in the statement, a Flader staffer in Hong Kong, Jacqueline Cheung, even argues back at Richard, pointing out that the instructions ‘‘may cause issue when do the audit’’ (sic).
Although the official statement doesn’t fill in the details of this daily drudgery, it’s not difficult to imagine how it must have gone.
Jack Flader’s phone rings. It’s Shawn Richard. Again.
‘‘Jack, ACAST wants to cash out their investment. They’re threatening legal action if we don’t pay up but there’s a problem.’’
He explains that ACAST thinks the asset is valued at much more than he can afford to pay.
Flader: ‘‘OK, so what value would work? How much money can we afford to give them?’’
Richard: ‘‘Not sure. Maybe $1.6 million?’’
Flader: ‘‘Fine. Look, email Jacqueline and tell her to adjust the balance of their account to reflect that value. Easy!’’
Richard: ‘‘But isn’t she right there in the office with you? Can’t you just tell her yourself? I’m a little bit busy here.’’
Flader: ‘‘Shawn, we’ve been through this before. That’s not how it works, OK?’’
Richard: ‘‘But won’t it look like I’m giving the instructions, not you?’’
Flader: ‘‘Yes, that’s the point.’’
Richard: ‘‘Sure, Jack. Whatever you say.’’
Richard emails Cheung, but Cheung responds, in a nutshell, that simply fudging the account balance is, to put it politely, stupid.
Richard calls Flader.
‘‘Problem. Jacqueline says fiddling the balance won’t work. It’ll drop us right in it with the auditors.’’
Flader: ‘‘OK, so here’s what to do. Email her back and tell her…’’
If the Statement of Facts is to be believed, that (or something very close to it) is exactly how each and every decision, legal and illegal, must have worked.
That this huge, complicated operation could have worked this way is laughable.
But that is what Richard wanted ASIC to believe.
And that is what ASIC did believe and now expect the Australian public to believe, too.
There are other logical and practical issues with the Statement of Facts.
For one thing, doesn’t it all sound just a little too convenient for Richard to point at someone else and say, ‘‘It wasn’t me, sir! It was him over there!’’?
Here we have a young man accused of fraud on a massive scale, sweating it out in an interview room while Australia’s financial police throw document after document his way, all bearing his signature, his financial fingerprints.
And the best he can come up with is an excuse that ranks right down there with ‘‘the dog ate my homework’’?
Surely, in such circumstances, any investigator -- a cop, a parent -- would be deeply suspicious, especially when all the evidence points unequivocally at the person sitting right in front of you.
But beyond that, the official statement raises another interesting question.
This stems from the fact that while the statement makes it obvious that Richard knows an awful lot about how certain transactions went down, his knowledge is otherwise surprisingly incomplete.
Not incomplete as in ‘‘a bit hazy’’ but, judging by the contents of the statement, full of gaping holes — about 149 million holes, in fact.
The total fraud was at least $176 million, yet Richard only confessed to transactions worth less than $27 million.
For those transactions, he gave investigators a significant amount of detail, as would be fitting for someone running the Australian end of the scam on behalf of an absentee mastermind.
So what about the other $149 million? Why doesn’t Richard spill the beans on that?
Apart from the bland note that everything was run by Flader, the statement is silent about the rest of it.
We can only presume that Richard didn’t have the answers.
If Flader really was running the show by remote control, there are only two plausible explanations for these gaps in Richard’s knowledge.
The first possibility is that Flader had only one gofer in Australia: Richard.
If that was so, Richard must have known every aspect of the fraud in intimate detail and was simply holding out on ASIC.
So in that case, why didn’t ASIC insist that he fess up?
After all, Richard was being treated as a cooperative witness, to the extent that he was even granted a substantial discount on his jail time.
If he knew the full story and wanted to be treated as cooperative, he was under an obligation to tell it all — and ASIC was under an obligation to get it out of him or prosecute him as an obstructive witness, not a cooperative one.
The alternative explanation is that Richard really didn’t know the rest of it.
But in that case, somebody else in the Australian business must have had the dirt.
Every shonky deal, every lying document, required someone here to play ‘‘fetch’’ for Flader because there is no other way that Flader could have run it.
So if Flader had other poodles here, who were they? Why haven’t they been found and punished?
Yes, we do know there were other people involved.
Yet according to the official records, none of them were in it as deeply as Richard.
None of them have their financial fingerprints — their signatures, their email addresses — plastered over as many crucial documents as Richard.
None of them describe themselves to regulators as taking daily orders from Flader.
In fact, some of them never even mention Flader and those that do rarely make more than a passing mention.
For sure, none of them implicated Flader.
And interestingly, neither they, nor Richard, describe the sort of day-to-day working relationship that must have been necessary if they were working with Richard as a team to carry out Flader’s instructions.
If Flader was issuing some instructions through poodle Fido and others through poodle Spot, the inescapable conclusion is that Fido and Spot must have been in deep collusion if only to avoid treading on each other’s feet.
If that were the case -- two or more poodles working together to make their common master happy -- one might have expected that to come out somewhere in the official documents.
But it doesn’t.
At the most basic, nuts-and-bolts level, Richard’s story that Flader ran the whole show from Hong Kong doesn’t stand up to scrutiny. It beggars belief that the day-to-day business of stealing $176 million over five years could have worked the way he described it.
All of the hard evidence that ASIC obtained pointed to Richard as the kingpin, not Flader.
Of all the scoundrels who had a hand in this sorry tale, Richard was the only one who implicated Flader.
He also had a powerful motive to incriminate Flader to make himself look less culpable.
And the official story sags under the weight of another burden too: Following Richard’s revelations, ASIC and the Australian Federal Police chased Flader for three years trying to prove that what Shawn Richard told them was true.
They failed, leaving them with no choice but to call off the hunt and exonerate Flader.
There is an alternative theory.
One that does stand up to scrutiny.
One that does fit the available evidence.
That is consistent with the evidence of others.
And one that, according to an unimpeachable source who has spoken to the Mercury, Richard himself told investigators was the truth long before he changed his tune and fingered Flader.
This is the story where Richard ran the show himself, and Flader was no more than a service provider, a Mr Fix-it who had the means and the ability to get things done overseas as Richard wanted.
But for whatever reason, that is not the story ASIC chose to believe.
Isn’t it about time we were told why?
There is one final twist to this tale.
One of the dishonesties that sent Shawn Richard to jail was that, for five years, he lied to investors and regulators when he told them he was the man who ran Trio.
If his ‘‘Jack’s the man’’ story is the fabrication it now appears to be, this raises the utterly bizarre prospect that, in part, this notorious liar was jailed for actually telling the truth: that Trio really was under his control, not Jack Flader’s.
In other words: that in order to save himself decades in jail, Shawn Richard deliberately painted that particular truth as a lie, and in the process, got away with the biggest con of all.