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Skeletons in the closet: Everledger CEO’s bad faith practices under the microscope

Former Queensland Chief Entrepreneur, Leanne Kemp, whose diamond-tracing company recently collapsed with nearly $AU10 million in debt, was once found to have acted in ‘bad faith’ by a Federal Government agency.
Leanne Kemp, founder Everledger, lectures about transparency in the jewellery industry - "There
Leanne Kemp, founder Everledger, lectures about transparency in the jewellery industry - "There's a lust for trust".

Queensland Premier Annastacia Palaszczuk appointed Kemp to the position in 2018 describing her business as a “global power player”.

Government documents obtained by Jeweller show that despite being aware that Kemp had previously faced personal bankruptcy, Palaszczuk also approved an extension to her tenure.

During her time as Chief Entrepreneur (2018-2020), Everledger racked up $AU5 million in losses.

By 24 April this year, that figure had increased to $AU9.5 million and the company was placed in voluntary administration.

Jeweller recently reported that Kemp dealt with a personal bankruptcy case - leading to her being listed on National Personal Insolvency Index. 

Furthermore, in the past week, it was established that Everledger has been misusing the intellectual property of third-party organisations in a possible breach of Australian Consumer Law.

Several company logos appear on the Everledger website under the heading “TRUSTED BY” - as an apparent endorsement of the company - even though some of the organisations were unaware of the matter. 

Two of the IP owners claim that Everledger is using these logos to promote its business without approval.

Further controversy

The plot has now thickened further, as Jeweller has discovered another IP controversy involving Kemp.

She was involved in a long-running legal dispute over a jewellery industry trade mark, where it was determined that the Applicant - Phenix Jewellery - had acted in ‘bad faith’.

The company’s website states: “Established in 2002, Phenix is a privately owned Australian company specifically established to service the needs of the insurance industry and its customers”.

Kemp served as Phenix’s director of international strategy, marketing, and operation for nine years (2007-2016) and, intriguingly, her otherwise comprehensive Linkedin profile shows no record of Phenix Jewellery.

The legal dispute began in 2007 and involved multiple parties on one side (The Applicant) being Phenix Jewellery and Absoft Group - another company connected to Kemp - and Greg Beaumont (The Opponent) who had founded Phenix Jewellery five years prior.

In July 2007 Beaumont left Phenix Jewellery to start a new business to be known as Jewelscan.

Beaumont discovered that a domain name (jewelscan.com.au) had been registered and also learned that a trade mark application had been made for Jewelscan - in the full knowledge that he would be starting a new business.

He lodged an application to oppose the trade mark registration with IP Australia – a Federal Government agency that administers intellectual property rights and legislation for trade marks, patents, and design rights.

The matter concluded in 2012 and the report was damning.

Official decision: Full ‘bad faith’ report by Australian Trade Marks Office

Not only do documents reveal that the directors of Phenix and Absoft appeared to blame, or at least, point the finger at each other during the legal dispute, Nicole Worth, Hearing Officer concluded: “I find that that the [trade mark] application was made in bad faith, which the Applicant has not rebutted.”

Section 62A of the Trade Marks Act 1995 allows someone to oppose an application on the grounds that it was made in ‘bad faith’.

The Australian Trade Marks Office decision details correspondence from a solicitor acting for Phenix: "We are instructed that Ms Kemp is not a director of Phenix Jewellery Pty Ltd but her company, Absoft, is a service provider to the company.

“We are instructed that Ms Kemp has an interest in Phenix Jewellery Pty Ltd as a shareholder. We are instructed that if this action has been taken by Ms Kemp, that it was undertaken by her without any consultation or support from Phenix Jewellery Pty Ltd.”

“I do not consider that the reasonable man or persons adopting proper standards would have believed they could apply for the trade mark in good faith.”
Nicole Worth, Trade Marks Office

The hearing document details confusion between Phenix’s own staff and directors about who was responsible for the trade mark application!

Worth’s decision notes correspondence from the Chairman of Phenix Jewellery, Les Riley, which stated, “I can assure you that, as the Chairman of Phenix, that Phenix is not associated with the website or the trade mark.

“I believe, as Ben [Riley] has advised, that you should direct any further correspondence to Leanne [Kemp] at Absoft as it seems obvious that she is the instigator”.

Bad faith

The Trade Marks Office’s decision also offers a legal explanation of ‘bad faith’.

“The words ‘bad faith' suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant.”

The report goes on to address persons ‘adopting proper standards’ and/or whether ‘acceptable commercial conduct’ is adhered to when making an application.

Worth wrote: “The question before me therefore is whether persons adopting proper standards would regard the decision by the Applicant [Phenix/Kemp] to apply for registration of the trade mark, in respect of goods and services relating to the validation of jewellery insurance claims, as being in bad faith or that reasonable and experienced persons would view the decision as falling short of acceptable commercial conduct.”

“I can assure you that, as the Chairman of Phenix, that Phenix is not associated with the website or the trade mark … you should direct any further correspondence to Leanne as it seems obvious that she is the instigator”. - Les Riley, chairman Phenix Jewellery
“I can assure you that, as the Chairman of Phenix, that Phenix is not associated with the website or the trade mark … you should direct any further correspondence to Leanne as it seems obvious that she is the instigator”. - Les Riley, chairman Phenix Jewellery

Of particular interest in the case was a claim by Beaumont that the copy and text appearing on the website (jewelscan.com.au) had been taken without permission from another international and unrelated business.

“In respect of the Applicant’s website Mr. Beaumont submits that it [the wesbite] is merely a ‘front’ and that text displayed upon it has been ‘lifted’ from the American website www.jewelryappraisalservices.com,” the report details.

“In support of this claim he exhibits pages from both websites which display identical wording. He also exhibits emails from an associate who had attempted to access services at the Applicant’s website, to no avail, and then made an enquiry via the website.

“The response received was to the effect that the Applicant’s services were currently only offered to insurance companies, and were not yet available to the general public.”

These accusations appear particularly damning given the recent misuse by Everledger of the intellectual property of third-party companies.

While the case was complicated, and Worth acknowledged some "deficiencies in the Opponent’s [Beaumont’s] evidence”, she concluded that “it contains sufficient material to raise serious doubts about the Applicant’s bona fides”.

Worth concluded that, “I do not consider that the reasonable man or persons adopting proper standards would have believed they could apply for the trade mark in good faith.

“I believe the Applicant ought to have known it should not have filed the subject application on 21 September 2009 and, on the balance of probabilities, I find that the ground of opposition under section 62A of the Act has been established.”

Phenix Jewellery was ordered to pay costs.

No further comment?

When Kemp was appointed Chief Entrepreneur by the Queensland Premier, government documents recorded that Kemp had previously faced personal bankruptcy proceedings.

The details about Kemp’s listing on the National Personal Insolvency Index (NPII) were redacted, however; Jeweller has now learned that the 2004 proceedings were commenced by Lexington Unit Trust Pty Ltd.

As part of her appointment, government documents detail her resume dating from 1996. In addition to some educational ‘qualifications’ it lists three board positions and six positions of employment including her nine years at Phenix Jewellery.

Jeweller contacted Palaszczuk’s office asking if she was aware of IP Australia’s findings of ‘bad faith’ prior to Kemp’s appointment as Chief Entrepreneur.

In what can only be described as a bizarre response, a spokesperson for the Department of Tourism, Innovation, and Sport said, “we have no further comment”.

When it was emphasised that there had been no previous comment, the spokesperson stood her ground and repeated, “we have no further comment”!

Related story: Inconsistencies and oddities in Everledger CEO’s background

Kemp’s exhaustive resume on Linkedin raises many other questions, including why her nine years as international strategy marketing and operations at Phenix Jewellery is excluded from her Lindedin profile; however, if the details of the ‘bad faith’ decision were known to Palaszczuk at the time of her appointment, one may ask why it was not detailed on her appointment documentation in a similar way to noting the personal bankruptcy proceedings against Kemp. 

Indeed, further embarrassment is inflicted on the status of the Office of the Chief Entrepreneur following the collapse of Everledger and the recent discovery that the company has been misusing the logos of third-party organisations.

And that is without mentioning Kemp’s attempts to build an international reputation on issues of ‘trust’ and ‘transparency’, particularly in the jewellery industry.

With that said, a finding of ‘bad faith’ would not augur well with the esteem of a government position such as Chief Entrepreneur.

Deafening silence

Kemp is reported to have said that “there is a lust for trust” in business and her company’s website page boasts: "Our vision is to be the world’s most trusted transparency platform; to build a connected system where reputable people buy, sell and promote assets with verified provenance, authenticity, and sustainability data."

Kemp has avoided various media questioning and transparency about why Everledger and Foreverhold Limited failed, including important questions about how third-party companies were being promoted as “trusting” Everledger under her management given the claim that their IP had been misappropriated.

“None of Kemp’s many social media accounts including Linkedin and Twitter - nor the official company website - record or mention the collapse of Everledger or the liquidation of the UK parent company, Foreverhold Limited.”

None of Kemp’s many social media accounts including Linkedin and Twitter - nor the official company website - record or mention the collapse of Everledger or the liquidation of the UK parent company, Foreverhold Limited.

Although the company collapsed two months ago, the Everledger Linkedin profile makes no mention of it being under Administration.

Further, since the loss of jobs and at least $AU54 million being ‘burned’, Kemp has continued to author articles and post on social media about the importance of trust and transparency in the jewellery industry.

She has also lectured at industry events, including at JCK Las Vegas in June.

The Administrator of Everledger – Vincents Accountants - notes that since various capital raisings, including support from Tencent - the $US400 billion Chinese tech giant - Everledger appears to have only survived on Australian government grants.

The outcome of the second creditors meeting deciding the future of the business was unknown at the time of publication.

Following the $AU10 million collapse, it is believed that Kemp - who describes herself as a ‘serial entrepreneur’ - is attempting to buy the business for $AU50,000 as part of a Deed Of Company Arrangement.

Other questions have now been raised over Kemp’s resume, including 'missing years' on government documentation and at least two previous companies associated with Kemp that were placed under administration.

Rather ironically, the website of Kemp’s Absoft Group, which had been placed under external administration and eventually ceased business in August 2020, is still live and features Phenix Jewellery as a “partner”.

Interestingly, ASIC records show that Blue Nile, the US online jewellery retailer which has annual revenue in excess of $US400 million, is a shareholder of Phenix Jewellery. Blue Nile was acquired by Signet Jewellers last year for $US360 million. 

 

Background reading
Jewelscan Pty Ltd v Phenix Jewellery Pty Ltd - Australian Trade Marks Office
Inconsistencies and oddities in Everledger CEO’s background

More reading
Inconsistencies and oddities in Everledger CEO’s background
Lust for trust: Everledger in hot water for misuse of third-party logos
Everledger collapse places Queensland Government in firing line, CEO faced bankruptcy in 2004
Everledger collapse: Questions raised around business model, management
Second collapse in Everledger saga; CEO denies ‘cash-burning’
Australian diamond tracing tech company collapses
New blockchain platform can track pearl provenance and ownership
Australian-led start-up launches new blockchain platform

 











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Preview - 30/07/2023