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Charity founder accused in creditor's report -

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LISA MILLAR: The former owner of a now defunct major league basketball team has been accused of
slam dunking a charity he helped set up.

A creditor's report alleges Jeff Blandon failed to pay back a $1.5 million loan he'd secured
through the Great Mates charity, causing the Newcastle-based organisation to collapse.

Speaking from the US, Jeff Blandon has told the ABC some of the funds went to the basketball team -
the Hunter Pirates, but he was entitled to most of the money for services his administration
company provided the charity.

Giselle Wakatama reports from Newcastle.

GISELLE WAKATAM: Jeffery Blandon was considered a local hero when he bought the NBL licence from
the cash-strapped Canberra Cannons in 2003, and formed the Hunter Pirates.

He was also a founder of the Great Mates youth charity. A report into the charity's collapse
prepared by Ferrier Hodgson alleges Jeff Blandon looked to Great Mates in March 2005 for funding,
for a $1.5 million loan.

The report alleges the loan agreement wasn't on it causing the charity to fail.

EXCERPT OF THE REPORT: In our opinion the reasons for Great Mates failure are as follows: the
provision of a substantial loan to a related company controlled by CEO Jeff Blandon which did not
have, and is unlikely to have ever had, the capacity to repay the loan.

GISELLE WAKATAM: Proclaiming his intention to give something back to Newcastle, Jeffery Blandon
founded the Great Mates charity in 1998, with its mission was provide mentoring and care to
disadvantaged children.

Mr Blandon has told the ABC the loan with the charity wasn't a traditional agreement and it was set
up as a way for him to recoup money owed to him for services provided by his company - like
training, hiring staff and negotiating contracts.

Mr Blandon denies he ever received a lump sum payment and says he never quote "did a runner with
$1.5 million".

He blames the charity's collapse on the slow payments made by the state government agencies Great
Mates had contracts with.

When asked where the loan money went Jeffery Blandon says most became his own personal money, which
he was entitled to and some went to the struggling Pirates - but he denies using the charities
money to prop up the team.

The creditor's report in no way suggests Mr Blandon funnelled money from the charity into the
Pirates, but the timing of the loan in March 2005 can't be ignored.

The ABC has been given an insight into the troubles at the club under Jeff Blandon.

One person who was associated with the club had this to say.

EXCERPT OF CLUB ASSOCIATE'S STATEMENT: It was a very unprofessional operation. Payments were often
late and made in the form of personal cheques made out to cash. There was a general feeling that
there were cash flow problems. And a sense that Jeff Blandon was waiting for cash to come from
elsewhere.

GISELLE WAKATAM: Another person adds...

EXCERPT OF 2ND PERSON'S STATEMENT: The cheques sometimes bounced causing a great deal of
embarrassment - and players were always worried about their superannuation payments.

GISELLE WAKATAM: A third says...

EXCERPT OF 3RD PERSON'S STATEMENT: Injured players were always threatened with the sack and at one
stage there were threats that the whole team would be fired. Players weren't given copies of their
contracts until the NBL intervened.

GISELLE WAKATAM: Interim NBL CEO Chuck Harmison says he was aware of the Pirates' financial
troubles but says that players and staff eventually got payed.

CHUCK HARMISON: We've been contacted by a number of players from different stages just warrying
about their payment but they were always eventually made, and made within a time frame in which the
players were comfortable.

GISELLE WAKATAM: Australian corporate regulator ASIC says it won't be pursuing a case against Mr
Blandon due to a lack of evidence.

Jeffery Blandon says he'll return to Australia once he's completed his business dealings in the
United States.

LISA MILLAR: Giselle Wakatama reporting from Newcastle.