“The facts of this case are so fantastic as to strain credulity but they are true.”
That’s Justice Pembroke’s opening sentence in Adam Shepard in his capacity as Registered Trustee of the bankrupt estate of Dr Neil Gordon Stuart Wallman v Paul Mladenis & Ors  NSWSC 1431.
In October 2007 Dr Wallman was a recently divorced, middle-aged obstetrician and gynaecologist with adult children. He approached an introduction agency on the Gold Coast known as Hearts United (the third defendant) seeking love and companionship. On 4 November 2007 he signed an agreement with Hearts United the terms of which seem somewhat one-sided. For a consideration of $200,000 Hearts United promised to provide Dr Wallman, during a three year period, with a personal relationship consultant who would provide him with introductions. The only other services promised were “photo-viewing services” and an “escape package” to the Gold Coast.
2. The agreement referred to terms and conditions that appear to have been non-existent. It also stipulated that refunds were not offered. It may seem surprising that Dr Wallman agreed to sign such a document. It is even more surprising that, before signing the document, Dr Wallman paid a number of lump sums to Hearts United totalling $180,000. He was persuaded to do so by a person known as “Rita”, a sister of Mr Mladenis (the first defendant). Rita did not give evidence but it is obvious that during her lengthy telephone conversations with Dr Wallman to discuss his personal details, in which she canvassed his hopes and aspirations for love and companionship, she was understanding and sympathetic. She was also persuasive. At the conclusion of each telephone conversation she asked Dr Wallman for a large sum of money. Dr Wallman duly obliged, commencing with a payment of $40,000 followed by a series of further lump sums totalling $180,000. When Dr Wallman signed the agreement on 4 November 2007, it recited and gave him credit for the $180,000 he had already paid. Shortly afterwards, Dr Wallman paid the balance due under the agreement.
3. Understandably, the plaintiff, who is the trustee of Dr Wallman’s bankrupt estate, does not seek to recover the $200,000 paid by Dr Wallman pursuant to the 4 November 2007 agreement. But the payment of $200,000 was only the tip of the iceberg.
In early November 2007, Dr Wallman was introduced to “Lily Bolivique.” He fell for her. Mr Mladenis proposed that he pay Hearts United a further $100,000 for a “VIP” package which would cover Dr W’s wedding and honeymoon if he married Lily. A few days later Lily asked Dr Wallman for a loan of $200,000. Mr Mladenis told Dr Wallman that Lily was good for the money and that it would be easier if he paid the money to Hearts United for payment to Lily. Further payments followed – by January 2008 Dr Wallman had paid over a million dollars to Hearts United.
It’s not clear from the judgment how much Dr Wallman saw of Lily (I mean how often he saw her, that is) though she was still around in February 2008 when Dr Wallman saw her in Sydney. Some time after that she disappeared from the scene.
By mid-2009 Mr Mladenis was asking Dr Wallman for money to help him get the money back from “Lily.” Mr Mladenis said he had lent her money too and that she’d “done a runner back to Croatia.” By then Dr Wallman had paid Hearts United over $2 million. Now it became a story of rolling another cheese down the hill.
Back to Justice Pembroke:
…Over the next two years Dr Wallman made many further payments to Hearts United. He was encouraged to do so by express and implied statements by Mr Mladenis to the effect that lawyers were retained in Croatia; that lawyers were retained in Brisbane; that the proceedings against Lily were successful; that Lily had appealed; that the appeal had been dismissed and that the monies were coming. The further payments were needed, he said, to fund the process of recovering the several million dollars that Dr Wallman had already paid.
14. It was, I am afraid to say, all lies. No monies had been paid to Lily and there were no monies to recover. To reassure Dr Wallman, Mr Mladenis provided him with a letter dated 18 March 2009 from a Serbian law firm called Radovic and Ratkovic. The letter was a forgery. The firm did not act on behalf of “Lily Bolovique” and had nothing to do with any fictitious legal process relating to her. Nor were there any Brisbane lawyers acting in connection with the matter. When Mr Mladenis was subsequently confronted by Dr Wallman’s son, who is a solicitor, he asserted that the Brisbane firm of Hopgood Gamin was acting on behalf of Dr Wallman and Mr Mladenis. But Mr Mladenis was curiously unwilling to provide the name of the member of the firm, or the employed solicitor, who was handling the file. He gave a spurious reason for not doing so. The reason for his reluctance was clear. The firm had no instructions. Its supposed involvement was a fiction.
The Mladenises bought cars and real estate with some of the money. None of the money, his Honour found, was paid to “Lily” (though surely she was paid something?). She was not, as she had been held out to be, another client of Hearts United. The only evidence that there was even one other client of Hearts United (a man in WA) was doubtful.
In the meantime, American Express got a judgment against Dr Wallman (presumably for an unpaid credit card bill) and served him with a bankruptcy notice which in July 2010 he failed to comply with. He was made bankrupt in August 2010.
This did not stop Mr Mladenis and, surprisingly, it did not stop Dr Wallman, despite his obligations to his Trustee. Perhaps that factor is why Mr Mladenis said that payments were now to be made to his wife rather than through Hearts United, though there could be other reasons.
In evidence were various sms messages from Mr Mladenis seeking money from Dr Wallman for what he said were his efforts to recover the money from “Lily” and in particular when he apparently went to Croatia via Dubai in Dec-January 2010-11 and to the Philippines in August 2011. It all came to an end on 27 August 2011, as the last few messages show:
Mate on the phone overseas can u transfer 4-400 now – 09-May-11
Hey mate confirmed funds and transactions for wed got confirmation with bank today yeahy can u lend me 6500 till then so i can pay lawyers pls thanks mate – 04-Jul-11
Neil can u transfer 4700 to me now in a meeting pls just do it it will be bk in your acc by 9am tomm explain later – 26-Jul-11
Can u send me 9 k pls with lawyers now – 02-Aug-11
Mate I’m chasing down that bitch in mamilla with some heavy s trying to get her to sigh our money – 26-Aug-11
I know I was just about to ask u transfer me money there’s no one there that can get to the bank till Monday I need to accommodation for the guys and find this bitch we have the add to her condo Fucken bitch the paper work was faxed if not I can get the hard copy for from Rita I need 4750 – 27-Aug-11
So what u can’t transfer anything from your account that’s bullshit – 27-Aug-11
Do the transfer so I can come bk or don’t ask me to help u after u get paper work because that means u don’t want to sort it out together I will get my money my self – 27-Aug-11
If I didn’t give a fuck I wouldn’t have comme here to fuck lily up with to bikers so do it and I will get Rita to give it bk to u with the papers on Monday – 27-Aug-11
What happened? Did the Trustee get on Dr Wallman’s trail? Did Dr Wallman confide in his solicitor son? Judging from the proceedings number, proceedings were promptly commenced or if already on foot, expedited. Justice is rarely so swift.
Of course, Mr Mladenis said there was another story or various other stories to account for the payments. In my experience there often is – something which the gullibile party is meant to feel a bit guilty about which is meant to stop them breaking out of the spiral or seeking help. The whole saga was a far cry from his public professional persona as a man who “enjoys time with the family, surfing and football.” Sometimes embarrassment about gullibility is sufficient.
To quote the judge, again:
44. The plaintiff in this case pleaded many causes of action. He was spoilt for choice. Deceit, misrepresentation, misleading conduct and breach of trust were the central elements. I am satisfied that the plaintiff’s case has been amply proved. In reaching that conclusion I have taken into account the seriousness of the allegations made, the inherent likelihood or unlikelihood of the events in question having occurred and the gravity of the consequences to the defendants that will inevitably follow if I make the findings of fact for which the plaintiff contends. Ultimately the proved facts were overwhelmingly against Mr Mladenis’ implausible explanations. The submissions on his behalf were entirely factual, concerned with the proper characterisation of the events that occurred. Their primary contention was that “the question of how Mr Mladenis has seduced Dr Wallman to part with over $3 million has not been answered”. To the contrary, I think it has. In my view, Mr Mladenis was dishonest. He caused Hearts United to obtain monies from Dr Wallman by dishonest means.
The exact remedies are yet to be sorted out and it must be said that some of his Honour’s expressed reasoning about Mrs Mladenis’s involvement in the fraud and deceptive conduct seems rather broad-brush – particularly so far as it is based on her duty to know or do certain things as a director of Hearts United. In the meantime, a freezing order has been continued over the defendants’ assets.
It turns out that Justice Pembroke was wrong and the commenter “Hearts Anon” below was right about Hearts United having clients other than Dr Wallman. See the SMH’s follow up report (now based on more than the judgment, Dr Wallman’s picture from the internet and Dr Wallman’s bankruptcy, also ascertainable from the net) here and also this 2010 press release.