Controversial lender of last resort, Ian Lazar, has swapped a prison cell for an upmarket private hospital in Mosman after his lawyers successfully argued his mental health was deteriorating and that Corrective Services could not provide the appropriate treatment.
Mr Lazar, 45, was bail refused in August after threatening to kill a business associate.
"I will burn your house and your family" and "Your wife will be a widow when I slice your throat in front of her," Mr Lazar allegedly texted to Penrith car dealer Henry James.
At the time Mr Lazar was already on bail for a string of offences, including several counts of fraud, stealing cattle, receiving stolen goods and using a gold bar, allegedly stolen from a crime figure, as payment for the intimidation of a police officer.
While on bail for those offences, Mr Lazar is alleged to have to have threatened Mr James who was trying to recover $20,000 he had loaned Mr Lazar.
Mr Lazar, who changed his name from Ian Rogut when he was bankrupted in the late 1990s, is also alleged to have ripped off the wife of a senior mafia figure.
Mr Lazar allegedly claimed there was a "hit" out on her husband, who was in jail at the time. Mr Lazar claimed he could provide protection if she paid him. The woman sold her Mercedes Benz and gave the $35,000 proceeds to Mr Lazar.
Supreme Court judge Ian Harrison expressed concern that "these offences were allegedly committed whilst the accused was on bail … and would appear to demonstrate a flagrant disregard for bail conditions imposed by the courts.
"Likewise, Mr Lazar's criminal associations and his attempts to pervert the course of justice are especially concerning," noted the judge.
However, last week Justice Harrison found that Mr Lazar was "suffering a debilitating mental illness that has not improved in jail".
Mr Lazar's alleged criminal conduct "may at least partially be attributed to his illness, and he should have the opportunity to address it," said the judge.
Mr Lazar, who the court heard had been diagnosed with "Bipolar II Disorder-hypomanic phase," was ordered to reside at the Mosman Private Hospital Mood Disorders Unit until his treating doctors considered he was well enough to be discharged.
Mr Lazar is not allowed to use a mobile phone or to contact, harass or intimidate other witnesses. A date is yet to be set for his trial.
Mr Lazar came to national attention in 2011 when four of his seven lapdogs were kidnapped. The dog snatchers demanded $300,000 for the safe return of the dogs.
Later that year, he was accused in Federal parliament of ripping people off and taking "'people's life savings and leaving them homeless and in dire financial straits".
In a tabled response, Mr Lazar said, "I am engaged in the business of acquiring and dealing in defaulting mortgage securities; a lawful occupation."
