Harvest Homes directors Steve Taylor and Dean Turner tell the Federal Court how convicted fraudster Oliver Roths took control of their Newcastle construction company

Now the pair have told the Federal Court in Sydney how they unwittingly handed control of the company, that went into liquidation in 2019 owing creditors millions, to a convicted and jailed fraudster.

Some know him as Oliver Banovec, others Oliver Roths, but to Harvest Homes staff he was known as "the boss" or the "head honcho".

On Tuesday, at a public examination into the collapse of the Harvest Homes group, Mr Turner and Mr Taylor said they had no idea who Roths was when they agreed to let him become a "major shareholder" in mid-2017.

The directors learnt just a few months before GLFB Pty Ltd (trading as Harvest Homes NSW) and subsidiary Harvest Homes (Properties) collapsed, with debts of more than $5 million, that Roths was a convicted fraudster.

Roths, also known as Sydney eastern suburbs rich kid Oliver Banovec, was sentenced in 2010 to seven years' jail for fraudulently using $500,000 of an investor's money to support his business.

The Federal Court heard this week that Roths concealed his past by changing his name and offered to buy a 51 per cent stake in Harvest Homes NSW for more than $1 million, via a company called AXL Financial, but the funds were never paid.

Instead, the parties came to an agreement that Harvest Homes would build 61 dwellings on 38 blocks of land at Warnervale, on the Central Coast, and Roths, via AXL Financial, would provide the funding.

"We did our due diligence...," Mr Turner said. "We thought it was all above board until February 2019 when we learnt who he was."

According to the directors, Roths told them that AXL Financial - that is now in liquidation - owned the land at Warnervale. "The property was never actually owned at the time by AXL," Mr Taylor said.

"At the time we didn't know that, they told us they owned the land...we walked on the dirt. We were told originally we would be building on there in a number of months."

Mr Taylor told the court he met Roths in 2016 when he came to Harvest Homes offering to supply cheap "Chinese labour". Around the same time, Mr Turner was introduced to Roths as a broker who could secure finance for construction projects.

About a year later, Roths approached Harvest Homes NSW with a proposal for AXL Financial to take a majority shareholding in the company.

The court heard that within a few months of Roths getting involved in the business, it started experiencing cashflow problems.

Harvest Homes accountant Luke Carter and bookkeeper Wendy Masters told how every invoice had to be approved first by general manager Adam Hinchliffe - who was appointed by Roths - and then Roths or AXL.

The pair detailed how they were forced to write a script to read to dozens of angry creditors calling about their unpaid invoices. Company policy drawn up by Roths dictated that Mr Taylor and Mr Turner, both still directors, where only allowed to approve payments up to $10,000 in "extremely critical" or "urgent circumstances".

Mr Taylor described how the company's cashflow was being "stifled" and Roths was in control of the internal finances and external loans.

The court heard how Harvest Homes was forced to pay a $75,000 late payment fee on one loan and interest rates of up to 15 per cent.

When Mr Turner or Mr Taylor objected, they were simply "overruled".

The companies had loans from lenders including Agility Finance, AXL Financial and Moshav Financial.

"All of the loans were controlled by Oliver Roths," Mr Taylor said. "We were paying exorbitant rates."

Mr Taylor said the cashflow issues started after Roths got involved and then the company was offered a loan to fix the problem.

A situation he described as like having a "gun to our head" and said loans were "forced on us".

"There were other loans that came through Agility that we didn't sign paperwork for," he said. "I believe Mr Roths had some insight into or some hold over Agility."

He said Harvest Homes' problems were further complicated because Roths controlled how much money was injected into the companies from the loans.

Mr Taylor said if the business needed $400,000, it might receive $100,000.

He said Roths approved the loan payments and drawdowns. "We didn't see all the documentation for all the loans that were purported to be ours," he said .

The public examination continues before Registrar Thomas Morgan on Wednesday.

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