Sterling Electronics has been partially cleaned out in a quiet move Thursday night. Many Crown Heights residence witnessed as moving trucks pulled up to the store and workers began removing the merchandise from the shelves. This comes following the revelation of the stores involvement in the recent Credit Card “swipe for points” scandal that left many with tens of thousands, and some with hundreds of thousands of dollars in debt.
CrownHeights.info has received multiple alerts from community members as moving trucks and multiple workers were seen emptying shelves and merchandise from the iconic Sterling Electronics store on Kingston Ave. Stories of harassment from the workers have surfaced, as they attempted to prevent people from taking photos during the Thursday night clean out.
The store can be seen in photos with some shelves bare, and the floor littered with boxes to be packed.
This follows the recent revelation of the “Swipe for Points” scandal that was broken here on CrownHeights.info, shining a light on the corruption behind the scandal in hopes of educating the public.
The scandal was based in the Sterling Electronics storefront on Kingston ave, and spilled over to an alleged buyout of the famous electronics store “The Buzz.” The buy turned out to never have been completed, leaving many wondering where the money went.
The premise of the scheme was rooted in the sometimes lucrative market of credit card points and rewards programs. From signup bonuses to spending goals that double rewards, many had allowed themselves to be lured into this risky practice in which they allow individuals and companies to use their lines of credits, with a promise of repayment, so that they can “manufacture spend.”
The “foolproof” scheme fell apart as the store, already in financial trouble following some alleged “bad business decisions,” became unable to pay its bills. In a last ditch effort to stay afloat, an additional charge was made on the credit cards. This time though, the store was unable to return the money from the charges made, leaving all the credit card owners with the debt.
The store has not reopened since the revelation of the nearly 4 Million dollar credit card scheme. Rumors that additional monies taken as personal loans were also involved in the scheme, could not be verified by CrownHeights.info.
The owner of Sterling Electronics, Gershey Nueman, was unable to be contacted, his
Australia’s corporate watchdog is investigating what happened to $18 million in loans that saw money flow from publicly listed companies controlled by mining magnate Joseph Gutnick to a private company that he was also closely involved with.
The Australian Securities and Investments Commission has confirmed to The Age and Sydney Morning Herald that it is investigating loans involving the Gutnick-chaired Merlin Diamonds, whose shares have been suspended from trading since October, and a private company called AXIS Consultants.
The centrepoint for the loans drama is Mr Gutnick’s level-one office at 42 Moray Street in Melbourne’s Southbank precinct. It is home to both Merlin Diamonds and AXIS.
Since 2001, AXIS has been integral to Mr Gutnick’s financial dealings. Several of his listed mining companies have contracted AXIS to provide administrative, management and geological services.
Filings with the Australian Securities Exchange show listed companies such as Merlin Diamonds, Top End Minerals (now called Myanmar Metals) have over several years advanced unsecured loans of at least $18 million to AXIS.
Another Gutnick-controlled public company, United States-based Legend International, has loaned AXIS at least $5.6 million.
Unfortunately for the shareholders of the Australian companies, AXIS has proved unwilling or incapable of repaying the bulk of the loans. Most of them have been written off as impairments and are, most likely, unrecoverable.
The terms of these AXIS loans have been extremely kind. “No fixed terms for repayment of loans between the parties, no security has been provided and no interest charged,” is how Merlin Diamonds explained the arrangement in its 2015 annual report.
ASIC investigators are trying to determine if there is any justification for publicly listed companies closely associated with Mr Gutnick making such generous loans to AXIS, a private entity also linked to the businessman.
The next question is why AXIS has not repaid the loans?
Mr Gutnick was a long-standing director of AXIS until he declared himself bankrupt in July 2016. But it’s still closely tied to him.
His eldest son, Mordechai Gutnick, and long-time business associate Peter Lee are present AXIS directors. Another loyal ally, David Tyrwhitt, who has worked with Mr Gutnick for more than 20 years, was an AXIS director until October 2017.
Mr Gutnick, his son, Mr Lee and Mr Tyrwhitt, the AXIS directors, have also all appeared as either directors or senior executives at publicly listed companies, including Merlin Diamonds, that have loaned AXIS money over the past six years.
So when the ASX began asking questions of Merlin Diamonds about its AXIS loans in October last year, it was reasonable to presume answers would be forthcoming given the crossover in directors and shared office.
But, remarkably, Merlin Diamonds told the ASX it “does not have access to the financial information of AXIS”.
Unlike the Merlin Diamonds board, or the stock exchange regulator, The Age and SMH have been able to access some of AXIS’s confidential financial information.
It shows that AXIS has operated as a conduit for the transfer of huge sums of money from public companies controlled by Mr Gutnick to other businesses strongly linked to his family.
One AXIS balance sheet from 2014 shows that the publicly owned Merlin Diamonds, Top End Minerals and Legend International between them had loaned more than $12 million to AXIS.
Two more private companies associated with Mr Gutnick had also loaned AXIS $2.3 million
Money in, money out
While the loaned money was flowing from the publicly listed companies into AXIS, even more money was going out of the private company.
As of 2014, several other Gutnick-linked companies borrowed more than $15 million from AXIS. The AXIS balance sheet records a net loss in 2014 of $1.79 million and a $2.5 million gap between its current assets and liabilities.
While it is clear there is plenty of financial detective work for ASIC to do, some investors, while grateful for the regulator’s interest, are perplexed as to why it has taken so long for anyone to act.
“This has been hidden in plain sight for years. The loans, the conflicts of interest and the lack of repayment are all there in the ASX filings,” said one former Gutnick associate who asked not to be named for fear of receiving a writ from a businessman who has in the past sued his own family members.
Hard times for the chosen one
It is difficult to fathom that the man with two mortgages over his St Kilda East house was just five years ago wealthy enough to be included at the tail end of the BRW richest 200 list with an estimated fortune of $255 million.
Folklore has it that the starting point for Mr Gutnick’s amassing of riches was a prophecy made in the late 1980s by the New York-based spiritual leader of the ultra-orthodox Lubavitch Hasidic movement.
The late Rebbe Menachem Mendel Schneerson foresaw great wealth for Mr Gutnick in the discovery of gold and diamonds in the Australian outback.
The Rebbe’s endorsement of Mr Gutnick’s Australian mining ventures carried enormous weight among ultra-orthodox investors who ploughed money into Gutnick-led ventures. Some won and some lost. Such is the mining game.
By the end of the 1990s, Mr Gutnick was at the peak of his powers. The saviour of his beloved Melbourne Demons, Mr Gutnick and his family travelled by private jet and Rolls-Royce and Bentley cars. They had bodyguards and friends in high places in Australia, the United States and Israel.
No more so than Israeli Prime Minister Benjamin “Bibi” Netanyahu. When Mr Gutnick helped bankroll Mr Netanyahu’s 1996 election campaign, he made an influential friend for life.
Gutnick with Israeli Prime Minister Benjamin Netanyahu in 2001.CREDIT:JOE ARMAO
After experiencing great highs and depressing lows over the next 20 years, everything finally fell apart for Mr Gutnick in 2016 when a $103 million deal between his Legend International company and the Indian Farmers Fertiliser Cooperative came unstuck, resulting in expensive litigation and the businessman’s decision to declare bankruptcy.
A special meeting was scheduled to take place on Tuesday in the office of Chief Rabbi of Israel Rabbi Dovid Lau, with the European Union’s Ambassador to Israel, Emanuele Giaufret, and the European Union Special Envoy for Religious Freedom, Jan Figel. Read more on Yeshiva World News >
A security guard at a Los Angeles Chabad school shot a person on a public sidewalk who was taking video of the school. The guard shot from behind the school gate hitting his victim in the leg and declared it a “warning shot.”. From Patch.com The Chabad Ohel Chana High School was placed on lockdown. […]