Police phone taps allegedly overheard former ATO deputy commissioner warning his son about tax fraud

A sports car seized by police. Image: AFP

Australian Taxation Office deputy commissioner Michael Cranston allegedly told his son how to avoid being prosecuted for tax fraud, saying he could “mount a good case” for his eldest child that may throw investigators off.

Mr Cranston, 57, is captured in phone intercepts allegedly suggesting that Adam Cranston should tell a judge that he is not “the real director” of the fraudulent scheme’s parent company and canvassing the possibility his son may be pursued for “unexplained wealth”.

“They won’t get you criminal, it’s civil,” he said, according to intercepts contained in police documents tendered in court.

The explosive phone taps have left Mr Cranston’s reputation in tatters, ending a 35-year career with the ATO chasing wealthy individuals for tax fraud.

He resigned on June 13, the day he first appeared in court charged with using information and exercising his influence as a public officer to dishonestly benefit his son.

Adam and sister Lauren, 24, are among nine people charged with running the scheme that allegedly skimmed PAYG payments worth $144 million (revised from $130 million on Wednesday).

Adam allegedly used his company Synep to buy legitimate payroll administration company Plutus. The syndicate then set up several sub-contracted companies referred to as “bots” or “bottom companies”, run by “straw” directors who were mostly drug addicts or welfare dependants.

The ATO’s suspicions grew as more PAYG was withheld by the “bots” and syndicate members began blaming each other for taking too much. In one transaction, Plutus’ manager Simon Anquetil allegedly withheld 98 per cent of PAYG.

On January 24, the ATO issued garnishee notices on five “bots” for debts of $26.5 million. Penalty notices were issued on “straw” directors for $5.85 million.

Growing increasingly nervous, Adam Cranston allegedly pressed his father for inside knowledge on how ATO investigations work.

hadn’t told his father the full story, instead saying he’d unwittingly bought a company that was being “smashed” with garnishee orders.

His father looked through the orders and asked Adam Cranston if the company had any links to organised crime or phoenixing. Adam Cranston said there was a previous episode with a former business partner Peter Larcombe in which PAYG was skimmed.

“He goes, ‘look mate … essentially it stops with me. It hasn’t come across my desk’,” Adam told his co-conspirators. “He said, ‘we’ve got a lot of phoenix operations going on at the moment, there’s a lot of garnishees going out.’ He said, ‘mate I can … make some inquiries and find out exactly what our interests are with Mr Anquetil … but it just seems like to me … an initial letter for what they call a covert phoenix investigation.'”

Adam Cranston asked his father about “all the scenarios” for the investigation. However, he said he didn’t let his father know the extent of the scheme as it would be “f—ing Ben-Hur”.

“It would be the biggest tax fraud in Australia’s history. There is no question,” co-conspirator Dev Menon replied, according to the police documents.

Michael Cranston is charged with trying to look up restricted information and directing two assistant commissioners to do the same between February 1 and 9.

Then, between April 28 and May 2 when the ATO began investigating Plutus, he allegedly tried to cut a deal for his son.

On April 26, the ATO issued a letter to Plutus estimating debts of $46.6 million. The letter was issued under the direction of the deputy commissioner, Mr Cranston.

Plutus objected to the ATO’s assessment, blaming the debt on “bot” companies.

On May 2, two weeks before members of the alleged syndicate were arrested, Mr Cranston advised his son to be “really careful mate, at the moment”.

“Synep owns Plutus, you own Synep. They’ll see that you’re connected with Peter Larcombe who was f—ing around with the employer companies before, and he used dummy directors. It’s all connected.”

He said he could “mount a good case” to obfuscate his son’s involvement.

“I could mount a good case that you own Synep, which owns Plutus, who’s responsible for 1200 people through subcontractors and not paying PAYGW [withholding].”

Adam Cranston said he could tell investigators that his friends, Mr Anquetil and Jason Onley, told him to buy Plutus as it makes good money but he had no contact with the company. He said he’d argue Synep was merely a shareholder.

“So, I turn around and go, I don’t even know the inner workings of Plutus, legitimately. I’ve never even set foot into their office … I could literally put my hand on my heart in front of a judge and say ‘Your Honour, I was told it’s a great investment, we’re a private equity firm’.”

Michael Cranston said if investigators mount a case and put it in front of “a f—ing judge”, he should say he’s not the real director.

“You mean civil or criminal [case]?” Adam Cranston said.

“Civil. They won’t get you criminal,” Michael Cranston said. “And they’ll have a crack … but you might not get on there and then what we do is go with unexplained wealth. F— ’em.”

Adam Cranston maintained he couldn’t be pinned for unexplained wealth as everything he owns has been paid for with after-tax dollars.

“You’ve got a lot of f—ing cars, mate,” his father replied.

This article first appeared on Business Day. See the original article here.

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