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Australia's Biggest Tax Fraud Syndicate Brought Down by a Routine Government Inquiry

Posted  May 30, 2017

By the C|C Whistleblower Lawyer Team

The largest tax fraud case in Australian history—which has already resulted in the raid of 28 properties, ten arrests, numerous firings, and the discovery of a crime syndicate stretching from top Australian tax officials to struggling drug addicts—was first identified through routine monitoring by the Australian Tax Office (ATO). The discovery came after the syndicate had skimmed approximately $130 million meant to be paid in tax, in part through a series of “phoenix” companies that deliberately liquidated to avoid paying debts.

The ATO identified Plutus Payroll Company as being at the center of the fraud. Plutus was a genuine payroll processor that contracted with government departments and other legitimate clients; however, in mid-2016 the fraud syndicate created numerous subcontracted companies related to Plutus that recruited unwitting drug addicts and welfare recipients to act as “straw directors,” skimmed small amounts of money off of each payroll transaction processed, and scammed the straw directors out of the bulk of their promised weekly pay. More than 200 companies, related through complex transactional and business relationships, have been identified as taking part in the scheme.

Individuals charged with conspiracy to defraud include the son and daughter of Australia’s deputy tax commissioner Michael Cranston. The deputy commissioner himself was not suspected of taking part in the scam; he has, however, been summoned to court for allegedly abusing his position as a public officer by attempting to access restricted information about an audit involving his son. Additionally, three unnamed senior executive service officers are currently under investigation for their suspected role in the fraud.

Although the ATO did a fantastic job bringing this scandal to light, as the Australian Federal Police recognized in a submission to a joint parliamentary committee considering greater protections and rewards for whistleblowers, most white collar crime would not be detected at all without the help of insiders willing to blow the whistle. Constantine Cannon’s own submission to the committee—in which we highlight the success of the US whistleblower regime and urge Australia to adopt a similar system—is available on the official parliamentary inquiry site.

Tagged in: Tax Fraud,