Dyldam was once a towering force. Its apartments still line the streets and light up the skyline of western Sydney.

But for more than a decade, the Dyldam group has left a trail of misery behind it that includes bankrupt businesses, unpaid taxes, tradies denied payment for work they’ve done, suppliers ripped off, and anguished apartment buyers stuck with defective buildings — one built so badly it posed a hazard to human life.

Time and again, a litany of potential law-breaking has been identified by those brought in to clean up the mess left by busted Dyldam companies.

Yet, for years the corporate regulator, the Australian Securities and Investments Commission (ASIC), took no action.

Only now are events finally catching up with a key figure in this property development empire.

Courts in Brisbane and Sydney are hearing charges levelled against the director of Dyldam Developments, Sam Fayad, for criminal breaches of company law.

The question is, why did it take so long?

University of Sydney law school professor Jason Harris, an expert on insolvency, said it was symptomatic of a wider problem: ASIC’s unwillingness, or inability, to pursue more than a tiny fraction of the many thousands of reports of misconduct it receives each year.

“The sad fact about this is that the bad guys know full well that this is how the system works. So, if you’re a director and you want to break the law … you’re highly unlikely to be prosecuted,” he said.

“ASIC has to be far more effective in being seen to enforce the law because, at the moment, they’re really the watchdog without teeth.”

Even now, the Dyldam empire lives on – allowed to trade, and develop shoddy buildings under a new name.

The property empire

Dyldam didn’t always operate this way.

The brand is associated with two families, the Khattars and the Fayads.

Founder Naim Khattar and his sons Joe and George were later joined in the business by their brother-in-law Sam Fayad and his sons, Fayad Fayad and Remon Fayad.

For decades, from the early 1970s, the company built apartments. When things first started going wrong is not clear.

Financially, Dyldam appeared to be successful for many years – once Australia’s second-largest residential builder. But by 2012, cracks were emerging.

The Entrada apartment complex at Parramatta is one of the Dyldam group’s signature buildings. The company established to build it, Plaza West, went into administration that year owing $28 million to creditors including the Australian Taxation Office (ATO).

Stephen Hathway was brought in to administer Plaza West.

When he started investigating the wider Dyldam group, he discovered there were about 180 companies related to it. There was also a complex web of intercompany loans.

“You’re moving assets and you’re moving liabilities across a broad range of companies with multiple different directors,” Mr Hathway said.

He recalls Plaza West had “massive tax debts and a fairly interesting balance sheet”.

“Some of the so-called assets weren’t really assets at all,” he said.

Plaza West also displayed a Dyldam hallmark – a kind of directors’ musical chairs.

Sam Fayad’s wife, Maria, was listed as the sole director.

Months before the builder went under, Joe Khattar, Chahida Khattar and Sam Fayad all resigned as company officers.

Mr Hathway believes Maria Fayad was a director in name only.

“She had no idea of the detail of any of the transactions or of any of the machinery of which this company had operated,” he said.

As the ATO dug into the finances, it discovered misinformation.

The accounts falsely stated that another Dyldam group company — that Maria’s husband, Sam Fayad, was director of — had made a $6.5 million loan to Plaza West.

That effectively pushed it up the creditors’ queue to be paid back, above the ATO and subcontractors left out of pocket.

“The words from the Australian Tax Office were this was misleading and potentially a fraud,” Mr Hathway said.

There was a push to pursue Maria Fayad and former directors for possible insolvent trading – continuing to operate the business when it wasn’t able to pay its debts.

When a company is found to have traded while insolvent, directors can be held personally liable for debts accrued.

Faced with that threat, the Fayads stumped up $3.5 million under an arrangement that saw creditors get about 80 cents in the dollar of the money they were owed.

A good outcome for creditors, but “upsetting” and frustrating for Mr Hathway, who wanted to see the directors pursued.

“Liquidators can only do so much … ASIC just have to get on and do their job,” he said.

Mr Hathway sent the corporate watchdog a report detailing multiple potential breaches of the law, but it chose not to take action. It wouldn’t be the last time.

The collapse before Christmas

In late 2016, there was another collapse.

The Dyldam-backed construction company Bower Projects was 80 per cent owned by the Khattar and Fayad families.

Three days before Christmas, insolvency practitioner Trevor Pogroske was brought in to Bower Projects by the shareholders as a voluntary administrator.

It had debts of nearly $25 million including $1 million owed to the ATO.

Bower was unsalvageable.

“It was unable to pay its creditors, it was unable to pay its subcontractors,” Mr Pogroske said. “These are hardworking Australian families that are out there trying to make a living – an honest living.”

The subcontractors didn’t get a cent of what they were owed.

The Khattars and Fayads asked Mr Pogroske to investigate possible fraud by Bower’s director, a man named Adrian Banks.

He didn’t find any evidence to back that…