Organised crime investigation into $17 million fraud leads to charges against 12 people

A joint-agency investigation with the ASIC, Australian Federal Police (AFP) and the Australian Taxation Office (ATO) into a $17 million fraud has led to charges against 12 co-conspirators across the east coast of Australia.

AFP investigators executed search warrants at 10 locations in Sydney, 9 in south-east Queensland and 2 in the ACT on Tuesday in a coordinated attack against a transnational organised criminal syndicate.This investigation started in December 2018. The AFP has partnered with the Serious Financial Crime Taskforce to aim this conspiracy to siphon off money that should have been payed to the ATO.

The fraud amounts to over $17 million since July 2018. The money found its way into bank accounts controlled by syndicate members and their associates.

The organised criminal syndicate had control of labour hire companies undertaking legitimate work in the building and construction industry. The processing of their payroll services were then outsourced to separate companies which usually a legal practice. However, the syndicate also operated and controlled these payroll companies for not paying mandatory Pay As You Go Withholding (PAYGW) tax to the ATO.

The employees of the labour hire companies were paid correctly but the money which had to be pau dot ATO were diverted and allegedly laundered through a variety of other entities. When a substantial tax debt was accumulated by the payroll companies, the syndicate would abandon them and create new ones to continue the fraud and conceal their illegal activities.

The funds were then moved through other entities to disguise the origin and finally would end up in into bank accounts controlled by syndicate members and their associates.

The alleged director of this organised crime syndicate, a 49-year-old man, was arrested on Tuesday. His immediate co-conspirators included financial industry experts and former bankers, demonstrating the level of expertise required to operate and facilitate such a complex fraud.

Seven men were arrested in total in Queensland, they are expected to be extradited to NSW to face court in the near future. Another two men and two women were arrested in Sydney and a man in the ACT was served with a court attendance notice.

The AFP has obtained restraining orders for assets that allegedly belong to this criminal syndicate. They include 12 real properties, 17 motor vehicles, 65 bank accounts, a caravan and a boat with a total value of $21 million. The Singapore Police Force assisted the AFP in identifying and restraining approximately $1.3 million held in Singapore bank accounts.

The ATO will take action to target the outstanding tax obligations incurred by this syndicate and the ASIC will target corporate compliance and regulatory issues.

AFP Commander Investigations, Eastern Command, Kirsty Schofield commented:

Transnational and serious organised crime groups are evolving. No longer do they target any specific crime type or commodity, they adapt to their environments by recruiting professional enablers to provide experience in the financial, legal or any other field they feel can earn them money. This investigation is just one example of how the AFP stays ahead of these groups, formulating innovative techniques to combat the complex and rapidly changing environment of Organised Crime in Australia.

Kirsty Schofield added:

The AFP is always looking to out-smart these organised crime groups – we make sure we have investigators with specialist skills and look to work with partner agencies and private industry to counter a broader range of criminal offending. We will continue to target organised crime at their most vulnerable, namely when they try and legitimise their illegally-obtain proceeds of crime.

ATO Assistant Commissioner Aislinn Walwyn, who leads the agency’s operational activity under the SFCT said:

Aislinn Walwyn, ATO

Aislinn Walwyn
Source: LinkedIn

A common theme of serious financial crime is a business that may appear legitimate on the surface, but once you peel back the layers, you discover a web of well-organised syndicated activity, like phoenixing, which causes real harm to people’s livelihoods and lines the pockets of people who abuse the system.

Walwyn continued:

The SFCT is focused on pursuing people who deliberately try to rip off the country by evading their taxes. Not complying with tax obligations is not a victimless crime – the whole community is impacted by this behaviour. Revenue loss is a significant injury suffered by all Australians.

Walwyn added:

Together, we have pieced together a very complex set of arrangements involving members of a syndicate allegedly engaged in fraud, phoenix activity and tax evasion. The debt recovery actions we have taken ensure we can claw back as much of the money illegally obtained by these groups and direct it back to the community where it belongs.

Four of the arrested men from Queensland and Earlwood were each charged with one count of conspire with the intention of dishonestly causing a loss to the Commonwealth. The charge carries a maximun penalty of 10 years in prison. They were also charged one count of conspire to deal with proceeds of crime with maximum penalty of 25 years in prison.

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