3 months ago
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Dominic Galati is a businessman with his fingers in many pies.
From entertainment companies to property deals and offshore shelf companies, he has been cosy with the colourful late stockbroker Rene Rivkin, crossed swords with billionaire Frank Lowy and even laid an unsuccessful claim to the Sydney Fish Market site.
But Galati’s fingers can no longer be seen in his latest pie: the infant formula company he founded was on the cusp of a cash bonanza and ready to float on the Australian stock exchange.
Care A2+ infant formula has disappeared from supermarkets, its US distributor has sued for misleading and deceptive conduct, and after raising at least $20 million from investors, Galati has stopped answering emails. Former opposition leader Kerry Chikarovski, a director of the parent company Care Corporation since 2022, resigned from the board after being contacted by the Herald.
When the court-appointed liquidators recently visited the Care A2+ warehouse, they discovered batches of expired baby formula, which will likely be sold at a pittance to go into pet food.
A Herald investigation has followed the money invested in Care A2 Australia, and found an outlaw bikie associate facing serious charges, the brother of an accused drug kingpin and an unlicensed broker who named his personal company “Corporate Hustle”.
The common link is the shadowy financial services company Wilson Street Capital, directed and fronted by former advertising salesman Brad Monks, who holds a degree in sports education, and one of its three shareholders is his brother, Aaron Monks, who has directed a string of struggling companies that have been, or now are, under administration.
The second director of the company, now known as Wilson Street Investment Holdings, is linked to an outlaw motorcycle group, has served jail time for drug offences and is now awaiting trial for conspiracy to traffic a commercial quantity of drugs and deal with the proceeds of crime. He cannot be named for legal reasons.
Neither Brad Monks nor the second director hold a licence to raise capital from investors. Another firm that gave them authority to use its financial services licence has since ended the arrangement because Wilson Street Capital stopped paying its bills.
Former detective Rob Critchlow said Care A2 Australia appeared to have been caught up in a complex web of companies and financial transactions, where capital was raised from legitimate investors, but the subsequent transfers of those funds raised many questions.
“What Wilson Street Capital were doing was raising capital from investors whilst apparently being unlicensed for those purposes and those monies were then diverted to other places,” Critchlow said.
It has drawn attention from the Australian Securities and Investments Commission, the Tax Office and the police.
When Care A2 Australia became embroiled with Wilson Street Capital in mid-2022, the infant formula company had been telling investors for two years that it was soon to list on the ASX, but its plans were variously derailed by a trademark dispute and the global pandemic.
It claimed to have already raised $12 million from more than 200 investors, but it needed to raise millions more ahead of listing, and Wilson Street Capital was ready to help.
“Wilson St Capital are excited to present to you another fantastic Pre-IPO opportunity,” the firm emailed its network in July 2022. “This time it’s an ASX listing at an unbelievable pre-IPO discount …”
But one investor who tipped $600,000 into the business on the back of the offer became suspicious last year when he asked for confirmation that his shares had been registered, only to be told there was no record of his investment.
Businessman Dominic Galati was the founder of Care A2+ infant formula, which has disappeared from supermarket shelves.Credit: Jessica Hromas
He later learnt that shortly after he paid his final instalment, Wilson Street Capital transferred a similar amount to a Queensland mining company then known as NQ Minerals.
The investor was not to know that one of NQ Minerals’ directors was Brad Monks – the same individual who had convinced him to invest in Care A2 Australia in the first place – and that one of NQ Minerals’ biggest investors was the brother of a recently arrested accused drug kingpin.
As Care A2 Australia’s directors scrambled to determine what had happened to their investor’s funds, it was also beginning to dawn on the mining company’s executives that some of their directors were not the usual corporate variety.
The Australian Taxation Office had been asking questions that prompted the executives to conduct their own investigations into their associates. They would later allege in court documents that Brad Monks had breached his director’s duties by charging $105,669 to his corporate credit card on non-business expenses, including strip clubs and casinos, and diverting millions of dollars meant for the mining group to Wilson Street Capital and his personal company, Corporate Hustle. (Monks denied misusing his credit card and said the payments to his companies were owed to them.)
The mining executives also initially alleged in their claim documents – but abandoned these allegations when applying for a default judgment – that Brad Monks and his fellow director Rodger Stuart Johnston had raised $654,000 from 18 investors for shares that were never issued, and solicited nearly $1 million from investors that never made it to the company. The money was allegedly paid into a trust account held by Green & Associates solicitors.
Care A2 Plus was one of a small number of overseas infant formula producers allowed to import into the United States.Credit:
The court documents say that when the mining company asked Green & Associates for a copy of the trust account statement, the solicitors demurred that they had never acted for the mining company or operated a trust account for it.
“Rather, we acted for Wilson St Capital Pty Ltd and Mr [Brad] Monks personally.”
Green & Associates said the firm had engaged with third parties in good faith and maintained “the utmost integrity” in complying with its professional obligations.
“Our firm assisted transparently at all times required with investigations conducted by ASIC, the ATO, the liquidator appointed to WSC, and NSW Police, and not only was neither the director [Brad Monks] nor prior director subject to any further scrutiny, but neither was our firm,” the firm said.
Monks and Johnston also denied any wrongdoing.
By the time the mining company’s executives realised who they were dealing with, it was too late to disentangle themselves from the company without being held personally liable, so they decided to bail out the company with personal funds and turn it around.
But their initial fix, to kick Brad Monks off the board and replace him with their biggest investor, turned to horror when they realised their new director was the brother of an accused drug trafficker, who had been sensationally arrested the previous year after skipping bail and spending two weeks on the run.
In effect, half the company was owned by the brother and family companies of a man who is now awaiting trial for importing a commercial quantity of a border controlled drug and dealing with the proceeds of crime.
There was no suggestion that their new director was party to any alleged crimes, but the executives sought external advice to manage the perceived risk, and fell upon Rob Critchlow, who had led the manhunt for the director’s brother before retiring from NSW Police and setting up a risk advisory consultancy.
It was Critchlow they called when they identified a mysterious $500,065 payment entering the company account without explanation. “Get it out,” Critchlow advised.
In January, a Federal Court judge entered a default judgment and ordered Brad Monks and Johnston to pay $2.9 million in damages to the mining company. Monks was ordered to pay an additional $2.4 million in a separate damages award.
Johnston said all money raised for the mining company made its way into working capital, and he was suing his lawyers for negligence.
“The Federal Court did not find that Brad Monks and I had breached our directors duties and the claims that we did anything not in the company’s interests were never tested,” Johnston said.
“The judgment was made because the court decided that we had taken too long to put on our defence. We have a valid defence and a large counter-claim.”
But extricating the pair from the mining company has not been without incident.
Wilson Street Investment Holdings and Brad Monks’ personal company, Corporate Hustle, were wound up last year. During bankruptcy proceedings against Brad Monks, one executive was sufficiently concerned for his safety to take out an apprehended violence order. (The bankruptcy proceedings are still on foot.)
Brad Monks, an unlicensed broker who used to run Wilson Street Capital.Credit: Facebook
Brad Monks has set up a new business, Sirius Fund, which is touting for business. He declined to comment on how he planned to operate without a financial services licence.
“What I can say at this point is that I have co-operated with investigations by ASIC and liquidators, and have never been the subject of any bans, reprimands, charges or civil remedies in connection with them,” he said.
“There is no evidence ... to suggest I have partaken in wrongdoings of the multiple nature suggested and to publicly slander me in this light is highly damaging and irresponsible.”
Having cleaned up its corporate ranks, the mining company continues to trade in Tasmania.
But Care A2 Plus, the Care A2 Australia subsidiary, went into liquidation in December. The product is no longer being sold, and investor updates have ceased.
Liquidator Antony Resnick said the company had no funds in its bank account, no assets and there was limited co-operation by the directors as he continued his investigations. Creditors were owed about $7.5 million.
The liquidators only belatedly learnt that cans of expired baby formula were still sitting in a Melbourne warehouse.
“Even if it had been in pristine condition there was not enough to have covered even a proportion of the company’s liabilities,” Resnick said.
“A lot of people have lost a lot of money.”
Galati said about $2 million raised by Wilson Street Capital for Care A2 Australia was originally unaccounted for, but the company reimbursed this amount after he met with them in the foyer of his lawyer’s offices in Chifley Square.
The business would resume operations as soon as a trademark dispute with A2 Milk was resolved, he said. He has registered a third corporate entity, Care Corporation, that he still intends to float on a stock exchange, possibly in London.
But Care A2 Australia shareholders are convinced that their money is dusted.
“Some of us who are realistic have resigned ourselves to the fact that we don’t have any chance of getting our money back,” said Martin Bryden, who tipped his life’s savings into the business and fed the formula to his twins.
“But there should be some accountability so this doesn’t happen to other people. If they stopped production and closed down, what was the money spent on?”
When Bryden bought his shares in 2021, the formula was stocked at Chemist Warehouse and Woolworths online, and the company’s strategy to break into international markets appeared sound. Its unique selling proposition was a formula made with A2 milk proteins, where each batch could be traced back to the herd that produced it.
An early company prospectus listed seven executive staff, including two of Galati’s associates from his bid to develop the Sydney Fish Market, and named a casual academic at the University of Technology Sydney [UTS] as the head chemist.
But the academic was so embarrassed when he learnt that he had been described in that way that he socially withdrew from his university colleagues and students, and UTS, which had been discussing commercialisation options with Care A2 Plus, sent it a cease and desist letter.
Brad Monks, an unlicensed broker who used to run Wilson Street Capital.Credit:
UTS’s director of research partnerships Andrew Groth said Care A2 Plus had breached a non-disclosure agreement and the decision to end the relationship was clear-cut.
“The risk was greater than the reward,” Groth said. “It seemed like their business model was very opportunistic. I prefer to work with someone who is committed to the science and committed to the outcome.”
Part of the company’s strategy involved an aggressive marketing campaign as it positioned itself to become a household name, including sponsorships with Nine’s Australian Open, Married at First Sight and Lego Masters and major baby expos. But behind the branding, the company was in tumult.
One of its efforts to increase its exposure was the payment of about $2 million to online streaming business Sports Flicks, to help it secure the rights to the Rugby League World Cup. Instead, the Sports Flicks founder Dylan Azzopardi spent the money on his parents’ mortgage and other expenses, leading to a dispute that Galati initially tried to resolve with the assistance of “mediator” Ray Younan.
“You know we’re not leaving here until you come up with a way to repay the money,” Younan told Azzopardi, according to a witness. “So you might need to call your wife and tell her now you won’t be home until late.”
The money was not recovered, and the matter wound up in litigation. Azzopardi unsuccessfully sued for false imprisonment, and the Care A2 companies successfully countersued for deceit and misleading or deceptive conduct. It was the first of several lawsuits that sucked the company’s cash.
In November 2021, the New Zealand dairy company A2 Milk filed legal proceedings against Care A2 Plus over its trademarks, which Care A2 Plus met with its own claim against A2 Milk. Two weeks later, Care A2 Plus took out a $2.1 million loan with a non-bank lender, which ended in legal action when it defaulted on the repayments.
It was also sued by a US distributor that it agreed to supply with 4.8 million tonnes of formula. Care A2 Plus had pulled off a coup in 2022 when it was given fast-tracked approval by the Food and Drug Administration to export product into the United States, which was then suffering from an infant formula shortage.
But the distributor, Gensco Pharma, threatened to sue in a Florida court over allegations that Galati and two of his colleagues had misrepresented Care A2 Plus’s ability to produce the amount of product it had agreed to supply, and concealed from Gensco the company’s financial position. It also sued Care A2 Plus in the Federal Court of Australia for supplying defective products and not complying with advertising requirements. A preliminary judgment in the Federal Court case revealed the anticipated Florida claim.
Care A2 Plus counter-sued Gensco for failing to use its best efforts in marketing, causing damage to the brand worth $1.2 billion in revenue.
Galati said the company had run through its cash on marketing and legal fees, but the main thing holding up the resumption of trade was the trademark dispute.
“It’s taken longer than 10 months to come to a decision and we are still waiting,” he said.
“Some shareholders think they have lost their funds but this is incorrect. The company still exists and we have added a health and wellness focus.
“I have more to lose than anyone if the company ceases to exist.”
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