A senior tax official and his son and daughter have been swept up in what police allege is an unprecedented tax fraud involving $165 million.
A crime syndicate allegedly used a payroll processing company as a front to siphon off tax payments made by companies which should have gone into federal government revenue.
Michael Cranston, a deputy commissioner and long servicing senior executive at the ATO, was issued a court attendance notice for alleged abuse of his position as a public official. He must appear in court on June 13.
His son, Adam Cranston, 30, was arrested in Bondi yesterday and has been charged with conspiracy to defraud. His 24-year-old daughter, Lauren, was also arrested.
The Australian Federal Police arrested and charged nine people for their association with a syndicate allegedly responsible for the tax fraud, described as one of the biggest white collar fraud investigations in Australian history.
The eight-month investigation, codenamed Operation Elbrus, culminated with 28 search warrants in Sydney, Wollongong and the Southern Highlands yesterday. A further six search warrants were being executed today.
The ATO says “a very small number of other employees” are being investigated under code of conduct issues.
“We will be forensic in our examination of what has occurred,” says Andrew Mills, acting commissioner of taxation. “The people being investigated have been suspended without pay.”
Police say assets belonging to the syndicate members are being restrained so Police can pursue forfeiture through proceeds of crime legislation. The assets include houses, jewellery, luxury cars, motorbikes, firearms and two aircraft.
The fraud allegedly involved a company, Plutus Payroll, to provide payroll services to legitimate clients. Plutus wasn’t able to pay out wages to thousands of tech contractors earlier this month after the ATO froze its accounts.
The money received from these companies was transferred to subcontracted companies, allegedly controlled by syndicate members, to process payroll.
While processing these payments, funds paid by legitimate clients to service tax obligations were allegedly diverted by the syndicate for their own personal gain.
Here is police video of the arrests, following an investigation which went for eight months and involved more than 290 police who were assisted by the ATO.
“The scale of this alleged fraud is unprecedented,” says federal police deputy commissioner Leanne Close.
“Investigations such as this are inherently complex and we still have a lot more work to undertake as we analyse the material that has been seized.
“The threat posed by this syndicate to the revenue stream is demonstrated by the fact that $165 million was removed from the tax system, ultimately removing it from possible use by the community.”
Andrew Mills, the acting commissioner of taxation, says the investigation has so far not revealed any evidence of intervention or influence on audit cases, or of money being refunded, or of a tax liability being changed.
“The information I have to date shows no compromise of the operations of our administration,” he says.
“Our systems, controls and procedures worked effectively and we have been able to successfully isolate and protect the investigation, working well with the AFP (Australian Federal Police) over many months to build a picture of what has been happening.”
A total of six people were charged with one count of conspiracy to defraud: a 30-year-old Bondi Beach man, 28-year-old Waterloo man, a 33-year-old Wahroonga man, a 24-year-old Picton woman, a 24-year-old Balgownie woman, a 47-year-old Vaucluse man.
Two were were charged with one count of dealing with property reasonably suspected of being proceeds of crime: a 33-year-old Cronulla man, a 46-year-old Sutherland man.
Three were charged with one count of demand with menaces intend obtaining a gain or causing a loss (blackmail): a 47-year-old Woollahra man, a 46-year-old Sutherland man, a 28-year-old Waterloo man.
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