At the centre of what has been described as the biggest white collar fraud case in Australian history is a startup called Plutus Payroll.
Australian Federal Police allege it is this company from which $165 million in tax dollars were siphoned, ending up in the pockets of a criminal syndicate.
The case has drawn in a senior tax official and his son and daughter and resulted in a series of arrests and the seizure of a long list of luxury goods, including sports cars and light planes.
Police today described Plutus as a “legitimate payroll company”, but being controlled by members of the alleged crime syndicate.
Here’s how the alleged fraud worked:
Plutus accepted money from legitimate clients to process payroll on their behalf.
This money was transferred to seven sub-contracted companies known as “Tier 2” companies, which then made payroll payments to individual workers of clients.
The directors of these Tier 2 companies are what are known as straw directors, or people recruited to appear to be running the companies, but who in reality know nothing or little about operations. The crime syndicate members were in effective control.
As part of their contractual obligations to the legitimate payroll company’s clients, the Tier 2 companies are required to remit pay as you go (PAYG) withholding tax payments to the ATO (Australian Tax Office) on behalf of the clients.
However, investigators found that only part of these tax obligations were paid.
The remaining money was allegedly siphoned off by the syndicate members and channelled through a complex series of companies and trusts for their own personal gain.
Plutus Payroll, well know among IT contractors, had trouble early this month when the ATO froze its accounts, meaning thousands of people didn’t get paid.
Whirlpool forums at the start of May had technology workers complaining about missing pay managed by Plutus, as well as a lack of response from the company to enquiries.
“I switched contracts and ended up with this mob as suggested by the agents. Not looking good at the moment — a month of pay including super is what I am worried about,” said one post.
The website for Plutus Payroll Australia had all content removed, replaced by a single message remaining that the company is suspending its business “due to a commercial dispute”.
“For our valued contractors whose pay has been affected on 27 or 28 April, 1 or 2 May, please contact us,” the company stated, referring to a contact form and a telephone number.
A week later it emerged that the ATO had frozen the company’s bank accounts. “Acting in a draconian and unfair manner, the ATO froze Plutus’ bank accounts on 27 April without prior warning or any consultation,” the company said.
And later the company said: “Plutus Payroll is very pleased to advise that the ATO has agreed to allow the release of the wages owed to our contractors. For more information please click.”
Today the website only contains a contact form.
Private equity firm SYNEP bought Plutus mid 2016. The company was listed as part of the SYNEP portfolio. However, the page on its website for its portfolio is empty now.
The previous content confirming SYNEP as an investor in Plutus can be seen using webarchive.org.
The SYNEP portfolio page, now deleted, said: “Plutus Payroll offers contractors a zero-fee, fully automated, all-inclusive contractor payroll management service. Employers can take advantage of the fully automated cloud platform to manage payroll.”
Business Insider has contacted SYNEP seeking comment.
Adam Cranston — the son of Michael Cranston, a deputy commissioner at the ATO — who was arrested and charged as part of the tax fraud case, is listed as the co chair and managing director of SYNEP.
Cranston, the younger, is a known motor sport enthusiast. He is fielding a 991 Porsche in the Liqui-Moly Bathurst 12 Hour.
His LinkedIn page says SYNEP invests in Australian and New Zealand companies with enterprise values between $20 million and $200 million.
According to the LinkedIn profile of Tim Munk, a former general manager who worked for two years at Plutus until April, a number of executives left the company when it changed ownership.
“Sadly, following a change in ownership and subsequent restructuring, Tim Munk parted ways with Plutus Payroll along with Tim Fox and Chris Long to start work on their own business venture — more in-line with the ethos of a better customer experience,” Munk says on LinkedIn.
Munk told Business Insider he joined Plutus in April 2015.
“It was fantastic,” he says. “We had a great team, really nice people. The challenge was something we were all very passionate about.”
Under the new owners, he and seven other employees lost their jobs. Their last day at Plutus was at the end of March this year.
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