23 December 2025
The story below that Mr Leroy has been found is now added to by the Inspector-General in Bankruptcy announcing that he has brought proceedings in the Federal Court against registered trustee Gavin King and others. Inspector-General in Bankruptcy takes action against trustee Gavin King linked to Paul Leroy matter | Australian Financial Security Authority
Orders are sought that Mr King “be removed as a trustee, including from the estates formerly managed by Paul Leroy” and a declaration that Mr King has breached his duties as a trustee.
These proceedings are said to follow AFSA’s earlier action filed in the Federal Court on 11 November 2025 against Mr Leroy, who is alleged to have misappropriated more than $4 million across at least 5 bankrupt estates between 2021 and 2023.
Mr Leroy was deregistered as a registered trustee in 2024.
AFSA says that further investigations have revealed that Mr King, who was employed by Mackay Goodwin at the same time as Mr Leroy, managed the administration of Mr Leroy’s bankrupt estates, including those from which Mr Leroy allegedly misappropriated funds.
AFSA’s application alleges Mr King breached his statutory obligations and fiduciary duties under the Bankruptcy Act including:
- transferring estates from Mr Leroy to himself without following the proper process
- providing misleading information to the Inspector-General in Bankruptcy, the Federal Court, National Australia Bank and creditors
- failing to keep proper records and to notify creditors of conflicts
- making or signing documents that were false or misleading
- failing to ensure communications were accurate and complete
- breaching duties by profiting from estates
- failing to act honestly and impartially.
AFSA is seeking the “suspension of Mr King’s registration as a trustee, or independent supervision”.
What is happening with Mr Leroy we, or at least I, don’t know.
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8 December 2025
The story concerning the former bankruptcy trustee Paul Leroy necessarily continues with media reports today saying that he has been found in Belgium.[1] That may or should result in him being returned to Australia in order to face criminal charges in respect of which, on a civil basis, the Federal Court has found he stole money.
Judgment of Justice O’Callaghan
Having earlier made orders against Mr Leroy in relation to those moneys, on 12 November 2025, Justice O’Callaghan gave his reasons for decision recounting the background to the circumstance which, he said, “beggars belief”.
“Mr Leroy misappropriated at least $886,000 from the bank account that he maintained as trustee of the second bankrupt estate (of Kathy Jackson) and fled overseas. His current whereabouts are unknown. He also withdrew remuneration totalling $155,918, which is a staggering sum in circumstances where the monies from Mr Rofe’s deceased estate (of whom Jackson was a beneficiary) constituted the only asset of the second bankrupt estate, and the (Health Services Union) was the substantial creditor”.
Between June 2022 and May 2023, Mr Leroy withdrew the $886,000 from the trust account he maintained as trustee of Jackson’s estate in 7 amounts ranging from $90,000 to $234,000.
Leroy then used those funds to make payments to himself, his lawyers, at least one other individual, his superannuation fund and other accounts. “Mr Leroy obviously had no entitlement to any of that money”.
Some many months later, on 2 February 2024, the Inspector-General in Bankruptcy cancelled Mr Leroy’s registration as a bankruptcy trustee.
“… preposterous communications to the solicitors for the union… (e)ven worse … made during the period of time in which he stole the proceeds…”.
He then sent “what can only be described as preposterous communications to the solicitors for the union”, falsely telling the union’s solicitors that he had not yet received those funds.
“Even worse, such communications were made during the period of time in which he stole the proceeds…”.
In one case, Leroy had received the second tranche of funds more than 9 months earlier.
Remedies
In circumstances where a trustee in bankruptcy misappropriates trust property, the Bankruptcy Act provides a number of alternative remedies – s 19 sets out the duties of trustees; s 60-20 IPSB bars a trustee from deriving profit or advantage from an estate; section 65-25 of the IPSB prohibits a trustee from paying out any money other than for proper purposes; section 42-10 IPRB provides that a trustee must act honestly and impartially.
There are various sources of power for courts to enforce those duties, including s 30 (as to the general powers of courts in bankruptcy) and s 90-15(1) of the IPSB (which empowers the court to “make such orders as it thinks fit” etc).
All these duties and powers operated ex post in this case, and belatedly.
The breaches were highly serious, concerning a significant amount of funds, over a long period, with an intention to deceive, a complete failure of integrity, and all for personal gain
Justice O’Callaghan said that the breaches were of a highly serious nature concerning a significant amount of funds; the relevant duties are fundamental; the breaches were perpetuated over a significant period of time; Mr Leroy showed an intention to deceive creditors and a complete failure of integrity; and he deliberately disregarded his duties to safeguard the assets with the intention of misappropriating trust property for personal gain.
“… he is not entitled to any remuneration”
As to Leroy’s remuneration already approved,
“[g]iven the simple nature of the administration — to say nothing of the disingenuous correspondence he engaged in with the solicitors for the union to put them off long enough to steal monies to which, as Mr Leroy well knew, the union was entitled — in my view he is not entitled to any remuneration”.
Micheletto (Trustee) v Leroy, in the matter of Jackson (Bankrupt) [2025] FCA 1466.
Comment
Mr Leroy “stole” this large amount of money over nearly a year, without detection, up until May 2023. He then seems to have fled the country and only now – December 2025 – is it reported that he has been found.
And only in February 2024 was he deregistered by AFSA, for having inadequate insurance.
While the Judge expressed outrage at the apparent brazen nature of Leroy’s conduct, there was no comment made about the adequacy of the regulatory regime under which the moneys were taken.
Such an outcome seems to give little assurance about the security of the considerable funds held by trustees, and liquidators; nor about the regulatory regime of AFSA and the numerous industry and law and accounting bodies.[2] At the same time, it is difficult to regulate the millions of dollars held by trustees at any given time.
As AFSA acknowledges, in relation to its regulation of trustees by way of file inspection,
“while an inspection of a sample of administrations cannot be expected to identify all compliance issues, it is a valid preventative control to minimise the risk of fraud”.
See Monitoring and inspection of bankruptcy trustees and debt agreement administrators – Inspector-General Practice Statement 11 which explains the processes and monitoring and inspection of bankruptcy trustees and debt agreement administrators.
AFSA says it uses
“a harms-based approach that best reflects the fact that system-wide influence is concentrated with a small number of practitioners. As part of this approach, we have also tiered practitioners to allow us to better determine the level of supervisory attention that needs to be given”.
A focus of its regulation is
“mismanagement of trust funds ranging from unauthorised payment of fees through to reckless, fraudulent or deliberate misappropriation of funds for personal gain. Expand our intelligence capabilities to mature an outcomes-focused, whole-of-system approach to monitoring and supervisory activities”.
AFSA says it uses a pre-emptive and reactive response to misuse by way of anticipating problems through
“horizon scanning … to enable a greater focus on prevention and disruption, in addition to existing reactive responses” and to “develop and implement new technological capabilities, such as predictive analytics, machine learning, and artificial intelligence”.
It says that if misuse does occur, “we will act swiftly and decisively to address it through a firm and fair response”.
As to the “industry bodies” including ARITA, CAANZ and the law societies and bar associations, they have a co-regulatory role, any one of which has legislative authority to notify AFSA of any concern about a trustee, or a liquidator, whether that practitioner be a member of the industry body or not.[3] Presumably those bodies have processes for handling referrals of concern from their members; for example, a barrister in relation to her problematic dealings with a trustee.
See also How were moneys stolen by a liquidator and a trustee? – Murrays Legal
Next action
If Leroy were to be now prosecuted and convicted, he may end up like Mr Amos: Former liquidator – $2.5m – 4/2 years jail – Murrays Legal
As to the next stage, it seems that AFSA is now suing Leroy’s employer for the moneys taken by Leroy, and others: VID 1535/2025.[4] The respondents are the current trustees of Jackson’s estate; Mr Leroy; McKay Goodwin Pty Ltd, Mr Leroy’s past employer; a Mr AW Noble; and the Official Trustee as trustee of the estates of B Carter and JA Carter, and of MA Chalmers and SM O’Rourke.
That matter is next in court on 13 March 2026. This could take a while.
Photo: heat affected coleus.
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[1] The Australian, 8 December 2025.
[2] See Bodies everywhere – the role of professional bodies in regulating insolvency practitioners (2018) INSLB 94, M Murray
[3] Bankruptcy Reg 2021 reg 5. There is the case on a plain reading of, for example, s 40-100 IPSB. Compare Efficiency and Certainty in Decision-Making: An Evaluation of the Insolvency Practitioner Disciplinary Committees, Catherine Robinson, (2025) Sydney Law Review 19975: 1-38, at 8.
[4] Leroy saga takes new turn as employer sued
One Response
By reason of s 109(1)(a) and Regulation 25 of the Bankruptcy Regulations. Costs and fees payable or paid to a third party service provider are treated differently to any remuneration claim by a trustee. They also rank in priority to any claim for remuneration by a trustee. Claims of a third party service provider are of course also dealt with under Div 60 of the IPSB and IPRB