Gary Kilpatrick lit up a last Benson & Hedges, then slowly stripped off his valuables: the fancy mobile phone with the inbuilt camera, the fraternity ring embossed with a sapphire, the gold chain and the leather thong with a crystal pendant, the wallet from his back pocket.
He handed them to his sister, Abha, who was standing beside him on the balcony of the courthouse that muggy grey December morning last year. Then he hugged his 74-year-old mother, Ruth, who was no longer able to hold back the tears. “It looks like the Big House,” he said, in the quaint, swaggering gangster-speak he picked up from some best-forgotten B-movie.
A few minutes later the magistrate pronounced sentence, the uniformed court attendant hustled him through a side door, and the five-year fairytale was over – the million-dollar mansion, the BMW, the champagne and the glamorous girlfriends exchanged for a prison cell.
All Gary Thomas Kilpatrick, prisoner number 364256, had left to remind him of his previous life as Gary Spellman, the big-spending celebrity showman, were a faded stage backdrop, some costumes he no longer fitted into and a pile of bills. Nearly $3 million worth of bills, in fact – the money he used to finance his Walter Mitty fantasy.
The story of how a near-illiterate former bankrupt from the boondocks of Wollongong managed to cheat the country’s largest banks out of a small fortune is as much a story of the reckless incompetence of our financial institutions as it is of the greed of an unsuccessful small businessman. If Kilpatrick could get away with it, anyone can.
He borrowed hundreds of thousands of dollars on the strength of false invoices for equipment that simply didn’t exist. He financed a non-existent car twice with different finance companies, a sting he called “the double Porsche”. He mortgaged a house for $200,000 more than it was worth by using a bodgy valuation. He used other people’s credit cards to pay his bills.
And the victims were not dodgy third-tier lenders, but blue-chip corporates: the National Australia Bank’s Visa and MasterCard operations, the Commonwealth Bank and CBFC, its finance company subsidiary, Suncorp Metway, Sanwa, Esanda, AGC, BMW Financial Services, GE Commercial, Capital Finance, National Rental Corporation. So how did he get away with it?
I first met Kilpatrick – alias Spellman, his stage name – leaning against the bar of John Cornell’s iconic Beach Hotel in Byron Bay, a schooner of beer in his hand, the blue Pacific beating in the background. He was talking about his penis-pumping machine, one of his many eccentric habits, as I was later to discover.
It was the winter of 2002, and Kilpatrick had arrived in town with a bang not long before. It takes a lot to impress the blase inhabitants of the Bay – they are used to film stars and rock musicians dropping by – but the amiable, free-spending Kilpatrick was hard to ignore.
Tooling around in his BMW sports car, he would spend $300 shouting the bar at the Beach Hotel, or hand $50 to a didgeridoo-player begging in the street. He became a regular at Boomerang, one of Byron Bay’s swankiest restaurants, where he would pick up the tab for dinner for his rapidly growing circle of friends. One night he demanded the most expensive wine on the list, a Grange Hermitage worth more than $1000. Kilpatrick sipped it, pronounced it a bit sour, and topped it up with Coca-Cola.
He bought a $1.15 million mansion surrounded by palm trees on almost a hectare of land at Ewingsdale, with a pool and views to the lighthouse. He dubbed the house “The Great Gatsby” and proceeded to set impressive new standards for partying – the booze, the drugs, and the women never seemed to stop.
But people were starting to ask who was this guy? Byron Bay prides itself on not prying into people’s pasts – many move there to start a new life. But such conspicuous consumption was bound to attract attention.
Kilpatrick grew up in Berkeley, a down-market suburb of Wollongong in the 1960s (he’s 44 now), a shy, insecure boy with a doting mother, Ruth, and an abusive father.
“He lived in fear that people would find out he could not read or write,” says Keuzeman. Kilpatrick developed strategies to conceal his illiteracy. He would wear a bandage around his right hand and pop pain-killers, pretending that he was injured.
“He was a strange kid, a very needy kid,” she says. “He was a bit of a Walter Mitty, and he had some pretty wacky beliefs. He would psych himself up and stick dressmaking pins into his hands and legs and will himself not to feel pain or to bleed.” An old photo shows him trying to walk on broken glass.
He was also, says his mother – who is convinced that her son was the fall guy rather than the ringleader of the frauds – impressionable and easily led. “I idolither, Tommy, a merchant seaman. His parents discovered when he was seven that Kilpatrick was dyslexic, and at the age of 14 he dropped out of school to become a groundsman.
His oldest friend, Val Keuzeman, a Wollongong businesswoman, got to know Kilpatrick when she was secretary of the Rail Cricket Club (Albion Park), and he was a stylish batsman (he taught himself to play by watching video tapes) and coach of the younger players in the team.sed him. He was a fantastic son,” she says. “But everyone seems to have taken advantage of him – Gary is very naive.”
His first forays into business flopped. He ran an indoor cricket centre which went bust, then a jewellery business which also failed – Spellman was made bankrupt in 1986. He became a “silent partner” in a cut-price fuel distribution company in the Illawarra, Global Oil (Australia), which also ran onto the rocks.
It wasn’t until the early 1990s that he discovered his real calling – stage hypnotist. He saw a performer called Reif Spano (whose specialities are making people bark like dogs and convincing them they are Superman) at the Corrimal Leagues Club, and was so impressed he became the sorcerer’s apprentice, eventually adopting the name Spellman and starting his own show.
“He was so good it was scary,” says Keuzeman, recalling a stunt in which he hypnotised volunteers from the audience, persuaded them that they were Martian politicians campaigning for election – and got them to declaim gobbledegook. He took the act to Melbourne, Darwin and to Sydney’s Star City casino. “He loved the attention,” she says. “Dressed up in his costume on stage he felt he was really somebody, not just some kid from Berkeley who couldn’t read or write.
“But Kilpatrick soon discovered his hypnotic powers didn’t work on his creditors. The show was losing money, and he needed equipment. So he started down the slippery slope of borrowing – first a few thousand for running expenses, then tens of thousands for lighting equipment and smoke machines, then half a million dollars worth of mortgage to buy a penthouse in Wollongong.
With his new-found wealth and celebrity came some questionable friendships, as Kilpatrick started to knock around with a bunch of good-time guys he met one day on the beach and dubbed “the jet skiers”.
He campaigned for George Harrison – a disgraced bankrupt former lord mayor of Wollongong. He was a partner in the oil business with Steve Talenta, a local car dealer who Spellman told the court was known as “The Godfather”, although he has not been charged with anything. He partied with John Galaxidis, another Wollongong car dealer, whom police have described in court as a “plastic gangster” and who is in prison awaiting sentencing after pleading guilty to charges involving fraud, drugs and firearms.
Kilpatrick began to get a taste for the high life. Although he had previously never drunk alcohol or used drugs, he and his new best friends swigged champagne and dropped MDMA (ecstasy) at pricey Wollongong restaurants, night clubs and bars. In one year alone, he ran up a $30,000 tab at the Beach House (speciality: $59.95 for “Chef Ricardo’s Moroccan seafood hot-pot”). He bought a stable of flash cars, and even lashed out $11,500 to buy an Olympic torch at auction.
A virgin until the age of 21, he had always been rather diffident around women – now he was surrounded by them. There were Russian prostitutes, a mail-order bride from Czechoslovakia, a brief marriage to a Singaporean, and a young woman called Heidi who wanted to be an exotic dancer – Kilpatrick used $8500 of the proceeds of his frauds to pay for a breast-enlargement operation for her.
One night, he says, he and his manager went to a brothel called the Tudor Court in Kings Cross where he was so captivated by a woman called Tracy that he lent her a $19,000 diamond ring on condition she have lunch with him at a Double Bay restaurant the next day. Astonishingly, she turned up and gave him back the ring.
By now, Kilpatrick was borrowing to pay the interest on his borrowings. Keuzeman, who was doing the books for Spellman Corporation, could see the finances spinning out of control. Fraudulent invoices were being generated to raise money, including a “phantom” Porsche Carrera, with which he swindled $195,000 each from two finance companies.
“I told him he couldn’t do it,” says Keuzeman, “and Gary just said: ‘It’ll be all right on the night.’ He said it was the way everyone did business. I told him I wouldn’t be part of any fraud, and I was keeping a ‘protect your back’ file.”
The frauds were so blatant it is impossible to understand how they fooled financiers for five minutes, let alone the four years it eventually took to detect them. False invoices would be generated by a shadowy dummy company, credit applications were concocted using crudely forged bank statements and tax returns, the bank would pay up – and no one bothered to check whether the cars, or the stage equipment, even existed.
Undeterred, Kilpatrick plunged deeper into debt. By the time his creditors woke up and called in Star Dean-Willcocks, the insolvency specialists, in 2001 more than $1 million had simply disappeared. “On numerous occasions,” said their report, “Spellman Corporation obtained finance from various finance companies in respect to the purchase of assets that it simply did not purchase … [The money] was used in funding the ongoing trading losses of the company, or the drawings of the director [Kilpatrick] and payment of ongoing lease obligations.”
But the liquidation of his company did not stop his crime spree. Hooked, by now, on the high life, police allege that he and Galaxidis obtained details of people’s credit cards from a bank employee.
This led to one of the most extensive cases of identity theft so far detected in Australia. Altogether, the names and gold credit card numbers of 44 people with high limits – many of them professionals such as doctors – were taken and used to obtain more than $50,000 in goods from businesses in the Wollongong area.
According to phone conversations intercepted by police, Kilpatrick would say to Galaxidis, “Is our little friend going shopping today?” A name would be selected from the list, an order would be placed by phone, and one of their leg men would go to the shop to pick up the property. Simple as that. The victim wouldn’t know until the bill arrived.
In October last year, for instance, a certain Peter Wilson would have choked on his muesli when he opened his NAB MasterCard statement to find that he had been billed for $21,000 in a single month for goods and services he knew nothing about.
The goods the gang obtained were a bizarre and random collection: a pizza, a motorcycle, three coffee machines, five tickets for a pop concert, water skis, a $1000 traffic fine, six global positioning satellite devices, a vacuum cleaner, roses, a telephone consultation with Ask-a-Psychic, two laptop computers, a nail gun, a tandem skydiving jump, two Sydney Roosters jumpers, a barbecue, an ink cartridge, a fish tank…
Kilpatrick says that he received none of the goods, and only had some bills paid for the Great Gatsby property where he was now living. But he had been caught on the telephone intercepts, calling himself “the wizard” and the gang “the dream team” and boasting, “I am the dream builder. I make things happen.”
As well, the police had come banging on Keuzeman’s door and she had produced files and computer records she believed would implicate other people in the frauds. Unfortunately, they also implicated Kilpatrick, who eventually pleaded guilty to 65 charges of fraud involving $2.6 million, most of which would never be recovered.
Galaxides and three others were also eventually charged. What brought them unstuck was a suspicion – well-founded, it turns out – that Galaxidis was a drug-dealer, distributing drugs in Wollongong night clubs and via SMS messages. In September 2002, strike force Westmeath – a combined operation involving Wollongong and Lake Illawarra detectives and the NSW Crime Commission – began to monitor his phones. They obtained the evidence about drugs they were looking for – and an unexpected bonus in conversations between Galaxidis and Kilpatrick about the credit card fraud.
Five days before Christmas they raided the Great Gatsby mansion in the hills behind Byron Bay and found another bonus – as well as the handwritten list of 44 names and credit card details torn up in a wastepaper basket, there was a small quantity of marijuana, 515 ketamine tablets (“special K”, a veterinary drug used on racehorses which has a similar effect on humans to the “party drug” GHB), and, in the garage, a BMW which had been stolen from a jockey while he was riding at a Gold Coast race meeting.
The next time I met Kilpatrick he was in a rather subdued mood. We went for lunch in Federal, a village near Byron, with a friend, Nick Casey, who was working on Kilpatrick’s defence team. By now Kilpatrick had traded down to a Honda Integra, though he still had no driving licence.
Over pasta at Pogel’s Wood restaurant, Kilpatrick confessed that the bank was getting nasty about the Ewingsdale mansion – he had no money to pay the mortgage and it looked as though he would be evicted.
The house, incidentally, had been overvalued and mortgaged on the basis of fake financial records. Fortunately for the financier, Suncorp Metway, the then booming Byron Bay real estate market saved its bacon: the house was sold for $1.35 million earlier this year.
As his day of judgement drew closer, Kilpatrick had resigned himself to a term of imprisonment, and had somehow programmed his mobile phone so that when the police rang for a chat – as they often did – they were announced with the chorus from Dido’s White Flag: “Well, I will go down with this ship/And I won’t put my hands up and surrender/There will be no white flag above my door.”
Although he was putting on a brave face, Kilpatrick became depressed, and twice tried to kill himself with an overdose of prescription drugs. He was scared that he might finish up in a tough high-security jail, and wanted to know what the alternatives were.
So, accompanied by Casey, who knew one of the inmates, we took a drive one Sunday to the Numinbah prison farm, just over the Queensland border. It is in a valley surrounded by some of the most beautiful rainforest in southern Queensland, and – as we shared a takeaway roast chicken and salad – Casey’s friend, serving a rather long stretch for a major drug importation, talked about the relaxed regime, the sports facilities and the food. Even though there was only a fence to mark the boundary, few tried to escape.
Kilpatrick liked the place. But just how he thought he could arrange to be incarcerated in Numinbah, like so much of this story, was a figment of his imagination. He was apparently hoping that one of his women friends, the mother of his two-year-old son, would move to the area so that he could apply for a transfer on compassionate grounds.
At his magistrates’ court hearing in Lismore – where the charges involving the drugs and the stolen car were dealt with – Kilpatrick’s barrister, John Weller, managed to convince the magistrate, Chris Bone, that his client was not the mastermind. With tears in his eyes and his voice croaking, Kilpatrick blamed Galaxidis and Talenta for leading him astray.
“He certainly was not the ringleader. He clearly allowed himself to be used,” said Bone. But he could not ignore the seriousness of the drugs offence – even if possession rather than distribution was the charge – and sentenced Kilpatrick to 12 months in prison, with a non-parole period of four months.
However, when he came up for sentencing on the fraud charges in Wollongong District Court almost a year later, Judge Joseph Phelan was less sympathetic. He sentenced Kilpatrick to seven years’ jail – he will not be eligible for parole until October 2008.
When I last saw Kilpatrick, dressed in the one-piece canvas boilersuit prisoners in NSW have to wear when they have visitors, he was trying to put a brave face on things, in spite of being banged up in the medieval dungeons of Parramatta Jail, where icy rain blows in through the glassless slits in the sandstone walls that pass for windows.
He had graduated from sewing mailbags to gardening, and was studying to try to improve his literacy. And, always the Walter Mitty, he told me that the guards had been warned not to look him in the eyes for fear that he would hypnotise them into handing over their keys.
“Poor old Gary,” says Keuzeman. “His reality cheque finally bounced.”
Pub: Sydney Morning Herald
Pub date: Wednesday 27 October 2004
Section: The Sydney Magazine
Word count: 2923
Photography: Penelope Clay and Ben Hills
1. Kilpatrick on stage … he was particularly good at sending the banks to sleep.
2. Enjoying the high life … Kilpatrick set impressive new standards for partying.
3. Kilpatrick, arms around two friends, was never short of mates when the money flowed.
4. Prison bars instead of a Porsche … Kilpatrick awaits sentencing on fraud charges.