Gregory Chambers was in trouble.
As the sole shareholder of Dunedin law firm Kelly Chambers Ltd (KCL) he was responsible for a tax bill of more than $180,000 and the Inland Revenue Department was breathing down his neck.
There was one saving grace for Gregory Chambers, however.
He did not exist.
He was the creation of Raelene Kelly, an Australian lawyer of 28 years’ experience who moved to Dunedin in 2007, working for what was the then Wilkinson Adams.
She described herself as a "proud member" of the legal community who had "a hard-won reputation for straight dealing".
By the end of 2010, she ventured out on her own and set up KCL.
Admitting she was ignorant to New Zealand’s tax system, Kelly used financial consultants Deloitte to assist.
It filed monthly PAYE returns with the IRD, all Kelly had to do was pay the bill.
GST was a similar story — KCL’s office manager obtained the forms but it was up to the boss to stump up the cash.
As far as tax fraud goes, it was about as rudimentary as it gets.
For two and a-half years, Kelly simply ignored the mounting debt.
Lies
In November 2012, the situation was becoming increasingly fraught but Kelly assured the IRD she was working closely with accountants.
It was a lie; one of many.
Deloitte advised Kelly to invest in small-business accounting software, offered to assist with filing paperwork.
It was all ignored.
Within months, the Companies Office was threatening to strike off KCL, and IRD compliance officers were circling.
On September 15, 2013, Kelly took decisive action.
She transferred her shareholding in the business to Gregory Chambers, a resident of 4 Goodlet St, Surry Hills, New South Wales.
When investigators tried to track him down, they found the listed address contained more than 20 units.
A PO Box number in Mr Chambers’ name yielded more conclusive results.
There was a street address and phone number — both belonged to Kelly.
"The inescapable inference is that Mr Chambers does not exist," Judge Paul Kellar said in a subsequent written ruling.
The ensuing 12 months saw the inevitable unravelling of Kelly’s inaction and deception.
She disregarded letters from the IRD warning of criminal penalties, KCL was put into liquidation and in September 2014 tax-evasion charges were finally laid.
Flight
Kelly first appeared in the Dunedin District Court in November 2013 and as an officer of the court with no previous convictions she was bailed without opposition.
With the trial edging ever closer, she sought permission from the court to fly back to Australia.
She planned to accompany her daughter who was studying at the University of Melbourne, she wrote in an affidavit.
"I am resolute in my determination to defend the charges, and hold the honest belief that I will be exonerated.
"To fail to appear would amount, in my opinion, to a concession that I was guilty as charged, and I most certainly do not make that concession," Kelly stressed.
"A failure to appear would mean spending the rest of my life: (a) in hiding and on the run from authorities; and (b) unable to practise, despite being at the peak of my professional career."
The court changed her bail and allowed her to travel overseas.
When her judge-alone trial began on September 14, 2015, the prosecutor, judge and witnesses were there.
Kelly was not.
A few days earlier she had emailed the court saying she had a "moderate to severe anxiety disorder" and was unable to attend the trial.
She had supposedly not had the opportunity to obtain medical records to verify her claims.
"That simply defies belief," Judge Kellar said.
The trial, he ruled, would take place in her absence.
Guilty
As Kelly uncannily foresaw in her affidavit, her non-attendance did nothing to help her cause.
A procession of former employees, accountants and IRD staff gave unchallenged evidence about the woman’s financial negligence.
Predictably, Judge Kellar found her guilty of 46 charges — 31 of aiding and abetting KCL to knowingly apply tax deductions for a purpose other than payment to the IRD, and 15 relating to GST.
Despite her tax woes, it was not as though the business had been struggling.
The court heard there had been funds available to pay the required tax at the time — Kelly just had not bothered.
"The money was not spent on business expenses or the necessities of life. Often in cases such as these, funds are spent propping up a failed business," the judge said.
"Instead, you spent it on luxuries and travel. You lived a moderately high life ... funded in part by tax money."
The trial heard how Kelly would transfer money from the KCL business account to her own account so she could splash out on mortgage payments, air travel, alcohol, private-school fees, a trip to Europe and a $2855 monthly payment for a Jaguar vehicle.
Sentencing was scheduled for October 14, 2015.
The defendant, again, was a no-show.
A warrant was issued for her arrest and the hunt for the elusive Raelene Kelly began.
Hiding
When Kelly was supposedly too unwell to travel back to New Zealand, she went to Perth to be with her friend "Collette" — a longer flight than to Auckland.
She obtained a pre-paid cellphone registered in her friend’s name and though she changed device several times in the following years, she maintained that account.
The Australian courts later highlighted it as one of the first in a string of deliberately obfuscatory acts by Kelly to throw authorities off her trail.
In 2016 — the same year she was struck off as a lawyer in New Zealand — she moved to Queensland, where family members lived.
It was there that she was found, albeit briefly.
In October 2018, Kelly was served with legal documents relating to the tax-evasion proceedings.
Within weeks she moved to Victoria where she settled with her brother Donald Kelly, a physiologist and biochemist.
When the pair found a rental in the Geelong suburb of Leopold it was only her brother’s name that appeared in the application.
"I’m a 52-year-old divorcee with one adult son who lives in Qld ... I live quietly and work from home on a consultancy basis, and don’t have clients coming to the house," Mr Kelly wrote.
He referred to his sister as his "accountant".
During later extradition hearings, Australian Federal Court Justice Debra Mortimer said it was a clear attempt to keep Kelly out of the spotlight.
"On this occasion, it would appear she embroiled her brother in that deception," the judge said.
While living with her brother, Kelly also changed her name.
In court documents she appears as Raelene Mary Kelly, Raelene Marie Kelly and Rae Coates-Kelly.
She claimed, variously, that it related to her family history and an event in 2018; that it was a "whimsical and incidental" decision; and that she discarded the name because her mother was suffering dementia.
Justice Mortimer dismissed those explanations as "implausible".
Collared
On June 20, 2021, Kelly was arrested in Victoria.
Seven years after being charged, six years on the run, a life of secrecy and deceit — all for white-collar crimes which regularly result in home detention.
There has never been an explanation and Kelly refused to speak to the Otago Daily Times when she was approached at the stately Dunedin residence at which she has spent recent weeks.
"Whether the appellant simply could not bring herself to face the situation she had created, and this unwillingness grew more acute as time passed, it is not possible to say. But I find her conduct was quite deliberate," Justice Mortimer said.
Kelly called her actions a "lapse in professional conduct".
"The fact that [she] would describe it like that illustrates her unwillingness to accept the seriousness of her own conduct," the judge said.
Kelly spent nearly 16 months in the Dame Phyllis Frost Centre — a maximum-security women’s prison — where Covid restrictions meant inmates were often locked down 24 hours a day.
But she was not idle.
Once her extradition to New Zealand had been signed off, she fought against her return.
In February last year Kelly applied for bail until her appeal matters had been resolved but Justice Mortimer ruled she simply could not be trusted.
"There is a real, and not fanciful, risk she would attempt to conceal herself again if she were released on bail. It might be doubted she would succeed for long, but in my opinion there is a real risk she would try."
In October 2022 — nearly eight years since she left — Kelly was flown back to New Zealand.
Enigma
So who is Raelene Kelly?
Like the criminal fraternity, the legal community generally has a no-narking policy and most of those contacted for comment suggested others who would be more appropriate.
One former colleague described Kelly as "charismatic but enigmatic"; a Mr Nott who served her with legal papers in Queensland offered: "It was a very successful serve. The lady was very polite to me as well."
She refused an interview with the ODT, as did her sister Lyndell, a respected oncologist with whom she had been living in Dunedin.
Her brother Donald in Australia did not return emails.
Kelly was unmoved when she sat in the dock at the Dunedin District Court this week, eyes cast down, a mask obscuring most of her face.
Her counsel Len Andersen KC said the events of recent years had been a "significant burden for her".
She did not plan to stay in New Zealand, he confirmed.
Prosecutor David Tasker told the court the IRD would not be pursuing recovery of the debt, which had blown out to $344,000 with penalties and interest.
An IRD spokeswoman said reparation was only sought when there was a decent prospect of repayment.
"Considerable time was spent by IRD staff and authorities in Australia to successfully prosecute her and return her to New Zealand for sentence," the spokeswoman said.
Judge Kellar said Kelly’s fraud was "driven not by need but by greed" and he questioned her remorse.
"You seem to have been unrepentant, to continue to deny liability when your liability was plain to see," he said.
"As a result of this in large part, if not entirely, your legal career has come to a complete end."
Had Kelly been sentenced as scheduled in October 2015, the judge said a prison term of 22 months would likely have been imposed (a term that could have been converted to a community-based sentence).
But the long-running saga had an anti-climactic conclusion.
Because of the time Kelly had spent behind bars in Australia, no further penalty was imposed.
Judge Kellar convicted and discharged her.
Kelly immediately walked out of the courtroom, got into a car, and was gone.
