Media release: VIC (Chapman) - Bankrupt solicitor prosecuted for not disclosing sale of legal business to his trustee

Wednesday, February 17, 2016

Mr Chapman's Statement of Affairs document, dated 18 June 2010, falsely stated that he was not owed any money. Also, Mr Chapman failed to disclose the sale of his legal practice and the proceeds to his bankruptcy trustee. 

It was revealed that at the time of his bankruptcy, Mr Chapman was owed about $67,000 by Mr Misko Vujnovic for the sale of his legal practice, Kelly & Chapman. 

Mr Chapman became bankrupt by his own petition on 21 June 2010. On 15 March 2010 the Deputy Commissioner of Taxation issued a Creditor’s Petition which was adjourned to 22 June 2010 for a debt of $99,920.33.

In April 2010, Mr Chapman opened two accounts with the National Australia Bank in the names of his father and sister as trustees for the Chapman Family Trust. These accounts were not disclosed in his Statement of Affairs or to his trustee in bankruptcy.

The business Kelly & Chapman was sold by Mr Chapman for $180,000 to Mr Vujnovic in an agreement made in 2006. The purchase price was paid by Mr Vujnovic by monthly instalments averaging $1,500. In December 2010, Mr Chapman asked Mr Vujnovic to start depositing the payments to one of the National Australia Bank accounts opened earlier that year. 

In February 2012, Mr Vujnovic became aware of Mr Chapman's bankruptcy and redirected the monthly payments for the business to Mr Chapman's bankruptcy trustee. The trustee wrote to Mr Chapman that same month to inform him that he needed to return $28,500 (19 months of payments) to the trustee as the money vested in his bankrupt estate. Mr Chapman failed to comply with this request.

The court found that Mr Chapman concealed the debt due to him for the sale of his legal practice. He pleaded guilty and was convicted of two offences under the Bankruptcy Act, and was fined $1,200, plus costs of $457.30. 

Mr Chapman was discharged from bankruptcy in June 2013.

The matter was prosecuted by the Office of the Commonwealth Director of Public Prosecutions.