Franco Puleo, owner of the Melbourne-based Gotham City brothel, is locked in a Victorian Supreme Court legal battle with Bendigo Bank (ASX: BEN) after the financial institution closed six of his business accounts. Puleo alleges unlawful discrimination under Victoria’s Equal Opportunity Act, claiming the closure has cost him $900,000, while the bank cites anti-money laundering and counter-terrorism compliance obligations.
Here is the math. For commercial enterprises operating within tightly regulated or high-risk sectors, maintaining access to institutional liquidity is not merely a convenience—it is an existential requirement. When financial institutions sever ties under risk-appetite frameworks, the operational friction can choke cash flow almost overnight. But the balance sheet tells a different story regarding how traditional lenders weigh compliance overhead against reputational and regulatory exposure.
The Legal Battle Ground in the Victorian Supreme Court
According to court documents, Puleo initiated proceedings against Bendigo Bank (ASX: BEN) after the lender shuttered six accounts tied to the venue, which he has operated since 1999. Puleo’s legal representation argues that a primary driver behind the account closures was the applicant’s trade or occupation within the sex industry, violating state anti-discrimination statutes. Beyond lost operating revenue, Puleo claims the action caused significant personal distress and financial drainage, totaling $900,000 in litigation and related costs.
The trial proceeded before Justice Patricia Matthews in the Victorian Supreme Court. Access to banking services has become a central flashpoint for legal scrutiny, as business owners test the boundaries of corporate de-risking policies. Puleo publicly characterized the bank’s actions as corporate bullying, emphasizing that institutional banking access remains essential for legal businesses.
Regulatory Compliance Versus Anti-Discrimination Statutes
In its defence submitted to the court, Bendigo Bank (ASX: BEN) countered that the account terminations were necessary to protect its legitimate commercial interests and satisfy strict regulatory mandates. The bank pointed to guidelines from AUSTRAC, Australia’s federal financial intelligence agency, which designates brothels and commercial sex work agencies as high-risk entities for money laundering and counter-terrorism financing.
Following due diligence conducted in January 2025, the bank concluded it could not adequately mitigate the compliance risks associated with managing Gotham City’s accounts. Financial institutions face severe penalties for failing to police illicit capital flows, creating an adversarial dynamic where compliance departments routinely offload high-risk sectors regardless of a business’s legal compliance history.
The Bottom Line
- Regulatory Exposure: Lenders are increasingly cutting ties with high-risk industries to avoid AUSTRAC scrutiny and heavy regulatory penalties.
- Legal Precedent: The Victorian Supreme Court case tests whether anti-discrimination laws supersede a bank’s contractual right to manage customer risk profiles.
- Operational Toll: The venue’s owner reports incurring $900,000 in legal expenses amidst ongoing disputes and broader security challenges.
| Case Parameter | Details |
|---|---|
| Plaintiff | Franco Puleo (Gotham City Brothel owner) |
| Defendant | Bendigo Bank (ASX: BEN) |
| Judicial Body | Victorian Supreme Court (Justice Patricia Matthews) |
| Core Legal Claim | Breach of Victoria’s Equal Opportunity Act |
| Bank Defense | AUSTRAC anti-money laundering and risk management obligations |
Broader Pressures on Cash-Intensive Businesses
The dispute underscores a widening chasm between statutory legality and institutional risk tolerance. While the Victorian government legalizes and regulates the sex work industry, private financial institutions retain independent legal autonomy over their client rosters. This creates a regulatory vacuum where businesses operating entirely by the book can find themselves financially isolated.
Parallel to the banking litigation, Gotham City has faced external security threats. The venue was struck by bullets during a drive-by shooting, adding physical risk to the ongoing commercial hurdles. As the Victorian Supreme Court weighs the statutory obligations of lenders against the rights of licensed operators, the final verdict will establish a critical benchmark for how financial institutions manage high-risk sector accounts across Australia.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
