Vivacious ASX director and entrepreneur extraordinaire Giuseppe Porcelli was found guilty of “Fraudulent Bankruptcy” in Italy, yet thrives under the noses of Australian regulators. Michael West reports.
“Le bugie hanno le gambe corte” translates literally to “Lies have short legs”. It is an old Italian saying, no doubt used by many an Italian parent in an effort to teach their children right from wrong when they are caught with their hand in the cookie jar. Those who try to conceal information may gain a short-term advantage, but in the long run, the truth will catch up to the lie.
Back in October last year, Giuseppe Porcelli, the Manly-based immigrant entrepreneur from Italy, posted this on Hot Copper with regard to WhiteHawk Ltd (using his nom de plume “myinvest”):
“In response to some comment about my integrity in terms of “misleading shareholders”, I wanted to clarify that adverse media do not make a person guilty; it is a court that determines guilt, and I have never been found guilty of anything in my 50 years of life.”
Anything?
An Italian with conviction
He seems to have “forgotten” to tell anyone about the long-running criminal prosecution and his relatively recent criminal conviction in Italy for “fraudulent bankruptcy”. A conviction that came with a 3-year prison sentence, so this is no small misdemeanour. This is big league criminal stuff.
The missing piece of Porcelli’s “immigrant done well” back story is, it now appears, that he was, in fact, running from a criminal court case against him in Naples, Italy, his hometown, for a “fraudulent bankruptcy”. What we might call an illegal phoenix scheme. A criminal act punishable by prison time if convicted.
Details are sketchy as things often are in foreign lands, but it seems that Porcelli closed a business that owed a lot of money to creditors, including, one might safely assume, the Italian government for taxes and duties. He then set up a new company and attempted to carry on the same business free of all those pesky debts.
Once the government worked it out and started its prosecution, it must have seemed sensible to Porcelli to get the heck out of Dodge in case he was convicted, as who would want to spend time in a Neapolitan prison with all those Mafiosi types? One can only assume that the pizza in prison there is not as good as that available outside of prison.
So down to Australia Porcelli came as fast as his “short legs” could carry him. Here he had no track record, no background, no convictions.
A clean slate.
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A chance to start again and prove he was a genuine entrepreneur, and so Lakeba was born just as the case against him in Naples was warming up. Courts take their time in Italy, so it took around a decade before judgement was finally passed.
Guilty, with a 3-year prison sentence attached for good measure.
Well, that would certainly make visits home to Italy in the European Summer a little dangerous.
In that decade or so since the case against him started, Porcelli has built several businesses under the Lakeba umbrella using his offshore development team in India, applied for and been granted Australian citizenship, bought a multi-million dollar home with his wife, Antonella de Rosa, near the beach in Manly and acquired various boys’ toys like boats and fast cars.
The Lucky Country
Life was indeed good for Porcelli and his family. Australia really was the lucky country.
Lucky it was a long way away from the Italian courts.
How did this previously undeclared but very significant information come to light? Did our hapless student of Berlusconi’s Business Practices have a crisis of conscience? A late-night LinkedIn confession? A rogue social media post?
Of course not. That’s not how convicted criminals operate. In one of the great ironies of life, a snippet of good news reported in some obscure Italian press also revealed a swathe of bad news for Porcelli.
The Good News? After he was convicted, Porcelli appointed Dario Di Napoli, a Neapolitan criminal lawyer, to plead his case and help him clear his name. Somewhat miraculously, Porcelli and two other convicts were granted a pardon by the President of Italy, Sergio Mattarella.
Well, not a full pardon in Porcelli’s case, but a waiver of his 3-year prison sentence for “fraudulent bankruptcy”.
Pardoned. Source: Italian press, ANSA
Porcelli’s criminal conviction still stands, but at least he can now wander around as a free man back in his home country.
The bad news? Porcelli had managed to hide his criminal past from all and sundry in Australia until this news report came out. Oh dear! Suddenly, all those rumours start to feel a bit too close to the bone. The truth is catching up with the short-legged lie.
L’uomo Nuovo
One might reasonably ask what was the reason for this very valuable act of clemency by the Italian President Serio Mattarella?
The decision was reported to be based on the fact that Porcelli had shown a commitment to rehabilitation by building a successful business in Australia while on the run from the Italian courts, and he had repaid all of the debts he owed when he liquidated his company in a misguided attempt to avoid paying them.
It would seem that the President of Italy was too busy to Google “Porcelli; Australia” and so was apparently not made aware of the various legal actions commenced against Porcelli in Australia claiming he has used false and misleading accounts to attract investors, engaged in shareholder oppression and operated his various Lakeba ventures with a general lack of corporate governance and a high degree of self-interest.
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One must also wonder where Porcelli got the money from to repay all those outstanding debts that were significant enough to warrant a prosecution spanning many years.
There has never been a dividend paid to shareholders of Lakeba since it was launched in Australia back in 2013. There has never been a significant sale of any of Lakeba’s ventures. Could it be that Porcelli has been moonlighting in the gig economy at night to squirrel away enough to buy out his prison sentence?
It is unlikely that we will ever know, but the one thing we all now know is that Porcelli is a convicted criminal in Italy. Let’s see if that appears on his LinkedIn profile, on future ASIC and ASX forms, or even on immigration forms when he visits other countries.
So if he didn’t tell the whole truth and nothing but the truth, how much of his backstory can we still believe?
Toothpaste ventures, Berlusconi accolades
His oft-told backstory was of a kid growing up in the backstreets of Naples before he dragged himself out of the swamp by building and selling a toothpaste company called “Fresh Up” to a “major FMCG company”.
This young “street urchin” even received a prestigious, but undefined, business award from the then Prime Minister of Italy, Silvio Berlusconi, who Porcelli publicly lauded as his business idol. Who knows, Berlusconi may have identified something special in Porcelli that reminded him a little of his own character?
Using the proceeds of the claimed sale of this toothpaste business, Porcelli decided to focus on his new passion, technology.
From fresh breath to software in a single bound.
After developing an app called VoicePro, which he claimed was a global smash hit but which has never featured in Lakeba’s accounts, he focused his attention on an app security platform way before, in his opinion, anyone else had ever thought of app security.
Fast exits
He brought this platform to Australia in 2013 and sold it into his new corporate entity, Lakeba, for a very tidy sum without getting all the right approvals, according to some. That platform was originally called Lakeba Frameworks but was subsequently renamed to the somewhat catchier Quixxi (Quick! See!…get it?).
In addition, he has generally taken credit for almost single-handedly founding, building, promoting and commercialising a range of ventures under his Lakeba umbrella, with several “exits” already under his belt as proudly declared on the Lakeba website.
This impressive background and entrepreneurial spirit were woven into a heartfelt story to help build confidence amongst those who had the capital he desperately needed to build his new software empire in Australia and, apparently, pay off his debts in Italy.
Unfortunately, not many of these alternative facts appear in even the deepest online searches, so either it didn’t happen the way he told it, or little of it ever made it onto the internet for some reason despite Porcelli’s penchant for prodigious self-promotion.
Yes, there was a company called Fresh Up Italia SpA that existed from 2005 to 2009 before it “ceased”, being the regulator’s terminology for a company that has been liquidated.
Awards … almost
It was this business that was liquidated illegally to avoid paying its debts. There is, however, no information readily available relating to the commercial success of this brand or a sale of the brand to a larger FMCG enterprise, as Porcelli has loudly claimed.
Not to say it didn’t happen, just that it wasn’t big enough or important enough to even make the industry press. There is also no information readily available about a “prestigious business award” from Berlusconi to Porcelli, but maybe it was just one of those corny pay-to-play industry awards that aren’t taken seriously by anyone other than the recipient.
Porcelli has applied for a few of those in Australia, but has yet to win one. Maybe his persistence will reward him one day with the Christopher Skase Award for Business Excellence?
As for his claimed “exits” of various Lakeba ventures, this site has dealt with that amply in the past. The only one that can be verified is the sale of a small venture called Deals4Sport that was sold for $50,000 back in 2014.
He has, however, just claimed to have sold Quixxi, his prized security baby, for $2.5m worth of shares in ASX-listed WhiteHawk Limited, having previously valued Quixxi at more than $20m in Lakeba’s most recent published accounts.
It must be a tough market out there for him to take a 90% haircut, unless the claimed value of $20m was more wishful thinking than properly valued. Even a hefty chunk of the $2.5m is subject to performance targets, so let’s see if that even gets approved by shareholders and passes the required independent valuation test.
Auditors schmauditors
It seems Porcelli is in dispute with his current auditors over their valuations, and so he is seeking to appoint a 3rd auditor in as many years.
If you can’t trust a convicted criminal, who can you trust?
One can only hope that Porcelli was completely honest on his Australian citizenship application and fully disclosed the long-running criminal case against him in Italy. After all, it has been quite a while since a criminal record was a requirement to get residence in Australia.
Failure to declare such an important issue of character could, if ever discovered, be the basis for cancelling his citizenship. So best to assume he declared it as Australia needs as many “successful entrepreneurs” as it can get.
Of course, a (self-declared) successful businessman like Porcelli has many company directorships, even some on the board of publicly traded companies.
Very prestigious appointments that would have made his idol Berlusconi proud. Unfortunately, in Australia and most other countries, a criminal conviction is a disqualifying fact.
No directorships for you!
After all, shareholders have a right to expect that the guardians of their investment will be honest, upstanding corporate citizens. One can only imagine, therefore, that it had slipped Porcelli’s mind that there had been a case against him in Italy for many years, and he was eventually found guilty of fraudulent bankruptcy and given a 3-year prison sentence.
Both ASIC and the ASX might want to ask for a bit more detail to ensure they are satisfied Porcelli is of sufficiently good character to remain as a director.
That is, of course, if ASIC ever wakes up and reads the news.
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