THE MAD, BAD, INCREDIBLE AND TOTALLY WEIRD STORY OF WINLEY AND THE GREAT DEATH CHALLENGE

By Terry McMullan

WINLEY INSURANCE, THE PERTH-BASED authorised representative company whose investors emptied its broker trust fund and skipped town with the proceeds, is dead. But like smoke after a bushfire, the smell lingers.

For those who came in late, let’s recap the Winley story to date. You will find this tale weaving all over the place, from Perth to Los Angeles. Its central figures are a reclusive American couple who invested in building a company and then stole millions of dollars from it.

But it’s the denouement of this saga, which you’ll find in part two of this article, that you’re going to have a tough time believing. It involves what was either an altruistic scheme for a worthy cause that went wrong or a shameless global scam intended to raise billions of dollars.

Winley was the name of an authorised representative (AR) group that operated in Perth from about 2010.

It’s one of many such companies operating in Australia. AR groups operate under a single financial services licence. They centralise and deal with the regulatory and business complexities for a number of intermediaries (its authorised representatives) who bring in the money through premiums collected from clients.

The money can be held in a trust fund for 90 days before being passed on to the insurers. The company charges its ARs fees and generally makes things work.

Winley had about 47 intermediaries working for it. Most were in Western Australia and most were quite small operators. The company’s managing director was Jeff Bailey, who operates a broking business north of Perth. He was also a Winley AR.

The company was set up in July 2009 using investment capital provided by Chandanie and Steve Godwin, two US citizens who had made their home in Perth. (Winley took its name from the last syllables of the Godwin and Bailey surnames.)

Chandanie and Steve Godwin are, by any measure, a remarkable couple. In an era when practically every person in the developed world is online in some form or other, they’re impossible to find.

There are a couple of small and unprintable pictures of Ms Godwin in groups at Perth insurance events. But of her husband there is no sign. Online, Steve Godwin does not exist.

Despite his obvious determination to maintain a low profile, Steve Godwin’s unusual appearance and manner in the closely knit Perth insurance community could hardly have failed to attract attention.

His normal garb for business meetings was jeans, a hoodie and a baseball cap. He sometimes sported several mobile phones. People who met him have described him to Insurance News as silent to the point of reticence.

He is portrayed by Perth insurance people and Californians alike as skinny, pale and withdrawn. “Shut off”, one Perth source tells Insurance News. “He walked around most of the time with a hoodie on and talking to no-one,” a Los Angeles source says.

Unless, it seems, Mr Godwin was talking about himself. In that he was positively voluble, according to some Perth-based insurance professionals. He was proud of his achievements, which he said included owning several multi-million dollar companies in the US.

But he preferred to leave the talking to his wife, who is described by sources who met the couple as warm, engaging and friendly. A little more is known about Ms Godwin, who is believed to be of Sri Lankan origin.

She worked at Aon in Perth for some time before setting up a company in 2009 called Insurance Premium Reduction Specialists. She was its only employee.

At the same time she and Steve Godwin were setting up Winley Insurance from a twostorey home in the suburb of Lake Munger, closer to the central business district. Ms Godwin is listed as an AR of Winley.

Insurance News does not know if the capital used to set up Winley was obtained from business loans or from the Godwins’ own finances.

Jeff Bailey was their partner in the enterprise, and Winley’s managing director. He was listed as the company’s sole director. Perhaps surprisingly, neither of the Godwins was listed as a director, although they obviously had access to Winley’s broker trust fund.

Mr Bailey declined or ignored Insurance News’ requests to speak to him. During its short existence Winley’s only distinguishing feature seems to have been that its management fees were far lower than those of its counterparts.

It offered many of its facilities free of charge to its ARs. Its advertising and its website never used names, just phone numbers. It had no discernible management structure and carried no information about its directors.

Yet insurers seemed happy enough with Winley and did considerable business with it.

The first real sign that something was going wrong at Winley would have been obvious only to the regulator, the Australian Securities and Investments Commission (ASIC).

ASIC says Winley failed to lodge financial statements, auditor reports and auditor opinions over consecutive years, “in breach of its legal obligations and licence conditions and despite repeated demands to comply”.

The company continued to operate through the period of the breaches – understood to be the past two years – with insurers and ARs passing millions of dollars through its accounts apparently unaware that anything was wrong.

Then, at some stage in the months before the collapse, Mr Bailey allegedly became aware the Godwins were taking funds from the broker trust account.

A former Winley AR, who provided information to Insurance News on condition his name was not used, says he had a tense discussion with Mr Bailey shortly after the company collapsed. He says Mr Bailey told him he had confronted the Godwins about the withdrawal of funds.

“They had advised that new investors were coming in and monies would be replaced.”

The informant says a shortfall in funds “caused an issue for non-payment of insurers in early 2016”.

However, he alleges Winley continued to pay commission to its ARs at that time, “therefore avoiding suspicion from the majority of us”.

Apparently no insurer dug deeper to see why Winley was unable to pay its bills.

Another informant says he and others were told sometime in early April that the company was going to have to shut up shop and that it had a serious shortfall in funds. It’s not known if the reason was spelled out.

By that time, Chandanie and Steve Godwin had left Perth, apparently bound for the United States.

An email dated April 14 from Mr Bailey to all Winley ARs warns them to stop processing business on Winley systems and to expedite moving their businesses to other AR groups.

“There are no funds to pay insurers and the ones that have paid in the last few days we can not allocate commissions to you as these funds will be returned to the clients.

“I understand that some of you are very pissed off and you have every right to be, I’m not the person responsible for misappropriating the funds I’m simply trying to mop up the best way I can given the situation that has been left behind from the other partners at Winley.

“I to [sic] personally have commission owed to me that I will not see also, so I’m in the same position as you guys are.”

One informant says he was not aware of the reason for the need to find a new AR group until he heard the details “from other parties… on April 4.”

This was the date insuranceNEWS.com.au revealed the Winley collapse – more than a week after we first became aware it was in serious trouble.

Quite a lot happened fairly quickly after that. It became obvious within hours of publishing that most insurers and underwriting agencies owed large amounts by Winley had not been not aware of the collapse.

We know of only one insurer having the information in advance of our publication, and that was only by three days.

Not only were the insurers in the dark, so was the regulator. It eventually investigated, but it had missed all the red flags Winley had been flying for two years.

Mr Bailey informed ASIC on April 18 he had resigned as a director of Winley, and on May 12 the regulator cancelled the company’s licence.

In a statement attributed to ASIC Deputy Chairman Peter Kell but undoubtedly written by someone down the corridor, the regulator managed to sound like someone who’d misread the invitation and turned up at the party a month late.

“Be clear, ASIC will act on failures to lodge financial statements, resulting in the suspension or cancellation of the AFS licence.”

It all too obviously hadn’t acted in time to avert Winley’s collapse. By the time ASIC got around to issuing threats, the company was little more than a shell.

Its ARs, including Mr Bailey, had found other groups to work with, and insurers and underwriting agencies were getting used to the knowledge that their money – estimated to be more than $7 million – was gone.

Chandanie and Steve Godwin, of course, were nowhere to be seen, leaving no trail.

And there the Winley story unhappily ended. Until, that is, Insurance News started receiving some intriguing emails from California.

PART TWO

DEATH DIVE: THE PLOT THICKENS

A FEW WEEKS AFTER INSURANCE NEWS announced the collapse of Winley Insurance and the disappearance of its mysterious investors with the proceeds of the broker trust fund, an email arrived from a person in Los Angeles.

This person had been employed in the US for much of 2015 on a top secret project being organised by a mysterious couple named… you guessed it, Steve and Chandanie Godwin.

Searching the internet for any information on his former employers, he had found nothing at all until Google started pulling up articles from insuranceNEWS.com.au.

Amazed and a bit appalled at his former employers’ activities in faraway Perth, he and (eventually) others opened up with what they knew about the Godwins.

Through seven months of last year they had been working on a project so breathtakingly bold in its scope, originality and sheer audacity you couldn’t at first take it all in.

They had come up with a death-defying stunt that would attract a global online audience and had the potential to raise billions of dollars.

Called Death Dive, the stunt involved an unnamed person jumping out of an aircraft in the stratosphere without oxygen or a parachute and landing in shark-infested waters.

Death Challenge Inc, “a new business venture that practises commercially sustainable philanthropy”, was registered in the US in February last year.

In a media release published globally on December 15, Death Challenge announced March 25, 2016 – Good Friday – as “the official date of the most spectacular and perilous event ever to be broadcast live”.

The event was timed to take place in the same week as World Water Day. The intention was to “stop death by dirty water”.

More than 2 million children die each year from not having access to clean water.

So shortly before Winley ARs in Perth would learn all was not good with their company, their erstwhile investors would be overseeing a stunt involving a super-athlete who would jump out of an aircraft 15.3km high without the aid of a pressure suit, oxygen or parachute.

If he survived – which seemed highly unlikely – he would end his descent in sharkfilled waters.

Known only as “The Challenger”, the anonymous superhero would wear a mask and would not be identified.

The clean water cause is “a cause close to The Challenger’s heart”, according to the publicity blurb. “He suffered from a nearfatal illness after drinking dirty water during his travels.”

Ending the curse of dirty water globally would cost lots of money, of course, but it’s certainly a worthy and appealing cause.

The jump was to be streamed live to a global pay-per-view audience, with all viewers eligible to vote whether or not to “save the Challenger” by offering so-called lifelines.

The online audience and others who would see the dive from the aircraft and ships at the dive site would buy votes before and during the jump, saying yes or no to three possible “lifelines”.

If you haven’t suspended belief so far, it might be a good idea to let it go now. Think Batman or something.

The first “lifeline” would be offered at about 7000 metres, when a circling aircraft was to toss out a parachute, which The Challenger would “try to chase down and put on under near-impossible conditions”.

The second “lifeline” would be offered at about 6000 metres, when a so-called rescue skydiver would pursue The Challenger “through the sky in an attempt to complete the first-ever mid-air hook-up without any safety equipment”.

At 4500 metres an aircraft flying across the line of the by-now rapidly descending and increasingly worried diver would let out a towrope. That’s right, a towrope.

The Challenger would “try to grab and use [the rope] to sky-surf into the water”. This scenario was written by an international public relations firm based in Ireland, by the way.

If he failed to grab the towrope, The Challenger would then have the waiting sharks to deal with, although how much would be left of a human hitting water at terminal velocity was not mentioned.

The promotional blurb, written in an excited-but-deadpan tone, says The Challenger is “one of the world's most experienced extreme athletes, having completed just under 20,000 skydives, more than 5000 high dives and thousands of hours of cagefree dives with great white sharks over the past 30 years”.

The Challenger – who was tipped to be able to use “multiple extreme disciplines in an attempt to survive a dive more than 260 times higher than the current world record” – is no fool, however. Before he jumped he wanted the financial arrangements lined up.

The publicity says no lifelines would be accepted by The Challenger “unless 1 billion votes are purchased globally”.

All else having failed, our intrepid birdman would still refuse to grab the towrope for an aerial surf to the water “unless 7.125 billion votes are first secured”.

In 2014 Austrian Felix Baumgartner gathered a massive online audience – 8 million on YouTube alone – when he fell 39km to earth from a balloon, albeit in a full spacesuit and with a parachute strapped on.

Take a similarly spectacular event, add some real craziness like near-certain extinction and the attraction of “voting” whether The Challenger gets to live or die, and you might be onto something.

A stunt of such remarkable originality, bravery and silliness could attract an audience of hundreds of millions, perhaps billions.

And as we can assume a vote would have to cost at least a dollar, with people encouraged to spend up big, there’s potentially a lot of money at stake – maybe $7 billion or more.

Presumably all that money would have to be delivered upfront and online before the stunt began. And The Challenger’s identity is never revealed. Hey, wait a minute…

It all sounds so fanciful, except for the fact the Godwins sank serious money into preparing for the event.

As many as 70 people on a daily pay rate of $US250-$US300 were employed for seven months on the project.

Working – and in some cases living – in two mansions in California (one is a ninebedroom, seven bathroom monster with an equally huge guesthouse) owned by the Godwins, the staff contracted to build the pre-publicity system say they were concerned about the motives behind the work they were doing.

“We thought it might be a money-laundering operation,” one source said. “Maybe the stuff about being altruistic was just an alibi.”

Or perhaps not. People in Perth who met the Godwins remarked on their desire to make the world a better place. “They said they wanted to dedicate profits from their businesses to finance worthy causes,” one source said.

Back in California, a source told Insurance News: “Chandanie and Steve were very, very secretive. Taking pictures of them was absolutely banned.

“She was really no-nonsense. She did all the talking. It was a real command and control situation.

“Steve would walk around wearing a hoodie. He never talked to anyone. We began to wonder if he was The Challenger.”

The source says the Godwins would disappear for long periods during the seven months of his employment. “They’d be back for two months and then they’d be gone again. They lived in one of the houses when they were around.”

Models were employed to work on videos promoting the event, and 500 interviews with celebrities were compiled on video. These were to be used to intensify interest. One of those celebrities was Hollywood star Billy Bob Thornton, but “most of them were B-listers”.

“The whole thing was crazy. Money was being thrown around like it didn’t matter. We even had personal chefs at each house.

“But no one really knew what they were doing. The people at the top were clueless.

“This was the most disorganised thing I’ve seen in my life. It was indulgent and senseless.”

Part of the California team’s work was to raise interest in the Death Challenge project and attract support money, but our sources say that avenue failed to fire.

Star backing: Penny Marshall and Billy Bob Thornton were the most recognisable celebrities to back the scheme. Images from www.eyepoppingvideos.com

On December 23 – shortly after the publicity machine cranked into life – the Godwins called a halt and disbanded most of the operation. The website disappeared on January 10. It’s still on the net, listed as “under construction”.

Of course, there are a lot of questions surrounding the Godwins’ activities in Perth and California. Like, where are they now?

Insurance News has told several insurance companies we know the Godwins’ address in California. So far only one company has asked us for it. Most seem to think recovering their lost money would just be another loss-maker.

Ignoring obvious questions like the existence of the anonymous Challenger, how many millions or billions of dollars could be skimmed off and how gullible people are, there are also questions related to the Godwins’ Perth activities that are more relevant to an insurance industry audience.

For example, how a company in a tightly regulated industry like general insurance could fail to submit its annual accounts for two years running without being pinged by the regulator.

Or why the Godwins weren’t reported to the authorities when they were allegedly detected helping themselves to the trust fund.

And how Insurance News, based in the eastern states, could know Perth-based Winley was in deep trouble more than a week before the insurers who lost millions of dollars.

The Godwins are long gone. They may never be held to account over the lost millions. And The Challenger, the impossibly brave publicity-shy superman with the bad water experience and amazingly physical lifestyle? We’ll probably never know.

Insurance New magazine - June/July 2016