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HotCopper users have reacted to overnight reports Dubber Corporation (ASX:DUB) has seen $26M disappear from its coffers due to organised crime links.
Let’s run through the background, here. Dubber is a company that provides telecom companies voice recording solutions, in a sentence.
Overnight, a report from The Age revealed its had found $26 million of funds that belonged to investors in Dubber have effectively gone missing from the company’s coffers.
The ultimate scandal, here, is some of those funds seemingly went to pay off members of Australia’s criminal underworld after those funds were stranded in the account of a more-than-Rakish lawyer.
$10M raise a sore point
Those payments were seemingly made after the company also launched a $10M raise, purportedly all cards in order, but which now appears to have been a funding exercise to make those payments.
A colourful list of names were named by The Age, whose allegations were backed up by a KPMG report into the company that was somehow leaked to journalists.
Among those colourful names are Melbourne crime figure Mick Gatto, counterpart John Khoury, a man described as “gangland lawyer” Mark Madafferi; his client Mohammed Abou-Eid, and, former Dubber CEO Steve McGovern.
Dubber’s McGovern and Madafferi allegedly had the type of relationship where the former felt safe depositing Dubber’s funds into the trust account of Madafferi’s law practice.
Apparently this rather unorthodox approach was attractive in the contemporaneous interest rate environment – though, this was in early 2020, before the RBA began hiking.
Panic, paranoia and gang politics
Long story short – those funds never came back out of the account.
Reports allege Madafferi was under pressure from crime figures to pay “the boys,” according to reported text messages.
Those boys were probably Mick Gatto and Khoury and possibly others, as far as The Age’s investigation could figure out. Six and seven-digit sums were paid.
(This finance journalist apologises in advance to any notorious underbelly types who may have been wrongly accused in reports elsewhere.)
According to what materials are public, it’s alleged Madafferi put the pressure on McGovern to help him out once his gangland contacts, presumably, turned on the gangland lawyer for one reason or another.
Madafferi, it seems, was afraid of waking up in a soundproof sea container. Probably a good reminder of why one shouldn’t get involved with such mischief in the first place.
HotCopper users not happy
From the get go in the relevant thread discussing The Age’s investigation, users were clearly miffed with the tech stock’s management.
“The share register is probably littered with underworld money – would (sic) trust the price movements at all after reading that article,” user Snookered76 wrote.
“Well, there you have it. That stinky little $10M cash raise that was supposedly intended to top up the balance sheet for a major customer signing now proved to be a lie,” user Tradie130 added.
“How is a public company allowed to operate like this? Unbelievable.”
In typical HotCopper fashion, user Shadowcat had an amusing summary of affairs.
“We like to throw the word “crooks” around because they pissed away so much money on hookers, blow, and lining their own pockets. But these guys are literally crooks,” Shadowcat wrote.
Perhaps most interesting about all of this is that the company’s shares haven’t moved – that said, they’re worth two tenths of a cent ($0.002).
Piecing together the puzzle
Dubber’s shares are down -83% over CY2024 YTD and down -13% over the last week (but up +17% MoM).
The company has all the hallmarks of a stock that’s fundraised itself into a very diluted hole. It has 2.095B shares on issue; thin trading volumes and an overall lacklustre chart.
Shares were worth 17cps back in February of this year; but on February 27, Dubber issued a trading halt based on “accounting issues” picked up in an audit. This finance journalist can’t help but wonder if this is where the KPMG document comes from.
Two days later it entered voluntary suspension.
Then on March 1, the ASX itself suspended Dubber shares after it failed to submit key documents on time. The company issued a statement that same day:
“As part of the audit review process for its 31 December 2023 half-year accounts, the Company has become aware of inconsistencies in respect of funds that have been held on behalf of the Company by a third-party trustee.”
(Remember the gangland lawyer’s law firm trust account?)
Then, just over a month later, the company booted Steve McGovern from the Managing Director role given funds “may have been misused.”
By the time it recommenced trading in mid-April, shares had fallen from 17cps to 4.8cps.
At least one HotCopper user on Friday said he’d hold onto DUB until it went back to 4cps. Given the nature of what’s come to light, this finance journalist would probably just cop the loss.
All in all: an important reminder that all is not what it seems, and a very, very healthy dose of skepticism is not an impediment to good investment decisions.
DUB last traded at 0.2cps.
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