There was much hype surrounding the auction of Russell Drysdale's painting Grandma's Sunday Walk.

Painted by the Australian artist in 1972 just before his eyesight started to fail, the depiction of outback life was touted as a "10 out of 10" painting — a "masterpiece" that was sure to fetch a big price.

"We're very confident this work will set a new Australian auction record for the artist", Mossgreen CEO and director Paul Sumner said at the time.

"[It's] the most important painting Mossgreen has ever handled."

Very important indeed. It is alleged the auction house's future was riding on it.

When it went under the hammer on June 25, 2017 three bidders sent the price rocketing.

By the time the gavel fell it had reached $2.97 million — the fifth-highest price ever paid for an Australian work at auction.

The administrator of Mossgreen believes criminal charges should be laid over what happened next.

Grandma's Sunday Walk was painted in 1972, just before Russell Drysdale lost his eyesight. ( Supplied: Mossgreen Auctions )

It's hard to get a grip on who Paul Sumner is.

Arriving in Australia from Britain 30 years ago, he forged a career as a valuer and auctioneer, first working as a manager at Christies and then the managing director of Sotheby's.

In 2004 he founded Mossgreen, which grew to become one of the biggest auction houses in Australia before it went bust in December last year.

The business owes $13.8 million to staff, former investors and vendors who sold goods with Mossgreen but never received the money.

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A look through Mr Sumner's Instagram account gives some insight into his lifestyle: an assortment of celebrities, fancy cars, country estates and prized artworks.

In November, he was hobnobbing with Fleetwood Mac drummer Mick Fleetwood, after Mossgreen paid the musician to attend a series of dinners at its auction houses in Sydney and Melbourne.

The limited ticket event, which promised an "intimate and exclusive experience," attracted the likes of Foreign Minister Julie Bishop and her partner David Panton.

In August he dined at exclusive Sydney restaurant Icebergs. In September he stayed at a luxury lodge north of Auckland. He travelled everywhere in various Jaguar cars — part of a sponsorship deal with the company.

Mossgreen director accused of 'running a Ponzi scheme'

Mr Sumner also posted about his philanthropic work.

He was the auctioneer at events for charities like the YWCA, the Cure Brain Cancer Foundation, and the Adam Goodes Foundation, among others.

He said he raised $30 million for charity during his 14 years at Mossgreen.

Some describe him as a generous man who cared about his clients and spent his spare time fundraising. To others, he was a skilled auctioneer who used his gift of the gab to advance his own position.

The administrator of Mossgreen, BDO Australia, has alleged far worse.

In a scathing report delivered to creditors last week, the administrator accused Mr Sumner of running a "Ponzi scheme" and participating in what it compared to "insider trading".

It said from June last year, Mr Sumner was using the proceeds of one vendor auction to pay the vendors owed from the previous auction, until the money ran out and the company collapsed in December.

The report was blunt about Mr Sumner's alleged role in that collapse.

"In layman's terms the director could no longer 'rob Peter to pay Paul'," it said.

BDO Australia alleged Mr Sumner and former Mossgreen directors Jack Gringlas and Charles Leski breached several sections of the Corporations Act.

But it is only Mr Sumner who they will recommend be pursued by the Australian Securities and Investment Commission (ASIC) for potential criminal charges.

Vendors 'being paid with proceeds of new sales'

One of the dealings BDO wants examined centres around that June auction of the Drysdale painting.

Prominent Adelaide businessman Alan Hickinbotham, who amassed a fortune founding a building company, bought the painting in 1990 for $231,000.

He died in 2010, and the painting was to be auctioned along with some of his and his wife's other belongings, in June last year.

Paul Sumner worked for Christies and Sotheby's before launching Mossgreen. ( ABC News: Michael Barnett )

As the auction approached, Mossgreen whipped up a marketing frenzy around the sale of the painting.

BDO alleged Mr Sumner told the Hickinbotham family there was one party who was very interested, but that the potential buyer could only afford to pay in instalments.

The Hickinbothams agreed to the terms.

When the auction rolled round, attendance was high and the $2.97 million price tag exceeded all expectations.

Mr Sumner informed the Hickinbothams the bidder he had told them about had won, and would pay in instalments over 10 months.

But that was a lie, according to BDO.

The administrator said the winning bidder paid the almost $3 million the next day, and alleged Mr Sumner used the money to enable Mossgreen to continue to trade whilst insolvent.

"It is arguable that from the date of the Hickinbotham transaction, the director was running Mossgreen as a ponzi scheme," the BDO report said.

"Old vendors could only be paid from the proceeds from sales of new vendor goods.

"The ponzi scheme effectively came to an end on 21st December 2017 as the director realised that with no auction scheduled until early February 2018, there was insufficient 'new' vendor funds to meet fixed overheads and pay out old vendors.

"Given the nature of the conduct (including intentional dishonesty), we have recommended to ASIC that criminal charges be considered once the company is in liquidation."

Accusations 'false and defamatory': Sumner

Mr Sumner completely rejects the allegations.

In an email to creditors this week, he said the BDO report was "factually incorrect and biased".

"BDO's suggestion that, insofar as the unpaid vendors are concerned, the company was conducting a 'ponzi' type scheme is a deplorable and malicious misstatement of the factual and contractual arrangements with those unpaid vendors, clearly designed further to blacken my name and reputation," he wrote.

"The image that BDO would have you believe that I was a self-centred money-grabbing individual that was overpaid and doing bad things, which is both false and defamatory.

"Anyone that really knows me would see what a personal toll the demise of Mossgreen has taken on my wife and I, and how deeply this has affected us both."

The Hickinbothams are one of Mossgreen's largest creditors, owed $1 million from the sale of the painting.

Paul Sumner examines a large painting, which will be returned to the vendor. ( ABC News: Michael Barnett )

When the ABC spoke to Mr Sumner, he was busy in Mossgreen's former Armadale premises, in Melbourne inner-east, handing unsold goods back to their owners.

"It's very emotional. I mean I've got quite emotional with a couple … because part of me feels responsible because I was the CEO of the company," he said earnestly as he matched item numbers from a computer with the goods on the shelves.

Mossgreen 'did everything by the book': director

Hundreds of items have been held in limbo since the collapse of the auction house.

Their owners — collectors from across the country — had been locked in a separate battle with the administrator, BDO, which wanted to charge them hundreds of dollars for the return of each unsold item.

Last month, the Federal Court ruled BDO had no right to charge the fee.

"I'm very critical of the process that's happened [with BDO]," Mr Sumner said.

"These items are personal possessions of people and as such they have emotional attachments … they're often family things so even though they're letting them go, they're still attached to them."

Hungry for positive PR, he was happy to talk about his current work, but was taken aback when asked on camera about his role in the demise of Mossgreen.

"We, and I say on behalf of all three directors of the board at the time, we never knowingly traded insolvent," he said.

"I'm not someone who's not prepared to say sorry. I think when you've done something … you know in a company — where a company has fallen over — you have a right to say to those creditors, you have a duty, to say sorry.

"However, there's nothing that we did, that I did as a director of Mossgreen that was not by the book and that will be proven in time.

"There were circumstances beyond my control that led to the ultimate demise of the company. But I'm here now to try and prove … actions speak louder than words very often in life, and I'm here to help those vendors and creditors in whatever way I can."

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When asked bout his apparent high-flying lifestyle, he said it was not how it looked.

"[Mick Fleetwood's visit] was a business venture, I actually spent a lot of money to pay for Mick Fleetwood to come to Australia to do a dinner and book launch thing, so I paid money on it, nearly lost money on it," he said.

"So I don't hang out with rock stars. I'm not that kind of person."

Ex-directors deny breaching Corporations Act

BDO also alleged Mr Sumner and his partner, Amanda Swanson, were regularly buying items at Mossgreen auctions via absentee bids, but not disclosing that they were the buyers.

It said that was tantamount to "insider trading", as Mr Sumner could manipulate the value of the goods before an auction through the marketing process and had additional knowledge of the provenance of the goods.

Mr Sumner did not deny that he was buying goods, but said it was common practice and he behaved ethically.

"I think it is important to note that staff selling and buying at auction houses is allowed in every auction house that I have ever known and in principal it is not wrong, provided that rules apply to not allow any outcomes that would favour the staff member over a client be they a vendor or a buyer," he said in his email to creditors.

Mossgreen was based in the inner Melbourne suburb of Armadale. ( ABC News: Michael Barnett )

Mr Gringlas and Mr Leski, who sold their share of the company to Mr Sumner in June 2017, were also in the firing line of BDO's report to creditors.

It alleged as far back as July 2015, if not earlier, Mossgreen was reliant on the proceeds from future auctions to meet the unpaid vendors from prior auctions.

There is no law in Victoria and NSW about auction houses keeping vendor funds in a separate trust account, but BDO said: "the director and former directors failed to act with care and diligence and did not act in good faith. As a result, vendors have suffered substantial financial loss".

Mr Leski and Mr Gringlas denied their actions breached the Corporations Act.

BDO's report was riddled with inaccuracies, according to Mr Leski, who said he had nothing to hide.

"I found the whole document rather self serving. Trying to make their behaviour look good and to divert attention from what they've done or failed to do," he said.

Mr Gringlas, who was tipping in his own personal money to keep Mossgreen afloat, acknowledged the business was running at a loss, but disputed that constituted insolvent trading.

"To say I knew the company was insolvent is false. Trading at a loss is different, and as long as I was underwriting losses, you can't say it was insolvent," he said.

He is Mossgreen's largest creditor, owed $6 million.

While no love is lost between Mr Gringlas and Mr Sumner, the former said he found BDO's allegations against Mr Sumner hard to believe.

"I don't think he's a good businessman, but I don't think he's a criminal," he said.

Administrators have been 'absolutely ruthless'

At a creditors meeting on Friday, people who had lost money to Mossgreen agreed to put the company into liquidation but refused to pay BDO for their work.

It is estimated Mossgreen had about $2.4 million left when it went bust.

The administrator has spend more than $1.6 million in four months, leaving less than $800,000 for creditors.

BDO will now likely seek a court order to ensure they are paid from the Mossgreen coffers.

"It's all just been horrible," one of those creditors, Ruth Rosalion, said.

Mrs Rosalion, and her husband lost $50,000 from goods that were sold in two auctions at the end of last year.

The mix of items — including precious silver and war memorabilia — were mostly from her deceased mother's estate.

"That makes it doubly difficult, having to realise these things now lost were willed to me and it's all been thrown to the wind," she said.

It is likely creditors will not get a cent of what is owed. If they are lucky, they may get 20 cents in the dollar.

The ABC has spoken to a dozen vendor creditors stung by the collapse, from antique dealers who lost a couple of thousand dollars to note collectors who lost $150,000.

Many said the conduct of all the players was disappointing.

"BDO have been shockers. They've been absolutely ruthless," Ms Rosalion said.

"I think Paul Sumner's a delightful gentleman, but I think he needs to be held accountable for the way he was administering Mossgreen, and I think the other directors have something to answer for as well."

Now the company is in liquidation, it will be up to corporate watchdog ASIC to investigate just how culpable Mossgreen's former CEO is.