Unprecedented! $165 million dollar tax fraud ring

This has to be the most bizarre case I’ve seen in my 30 years covering finance, government, and business  in this country. What has taking place today I’ve got to say has completely blown me apart to see that something such as this has occurred and it obviously has to roll it through the courts.

Introduction – Unprecedented 165 million dollar tax fraud ring

I’m talking about the raids that have been launched by the Australian Federal Police and the tax office today that implicate the family of Australia’s most senior tax fraud investigator, the deputy commissioner of the Australian Tax Office, Michael Cranston. Now, the reason why it becomes a bizarre story is because of the number of people who have been brought into this envelope.

I’ll try and explain all of these. What it is that Michael Cranston’s son, Adam and his daughter, Lauren have both been charged in regards to what is alleged to be one of the largest frauds ever perpetrated in Australia, $165 million. We’ll try to explain how it also works as well. Then what it goes on to is there are even more people. There are nine others who have been arrested and in many cases charged, in some cases have been held without any form of bail overnight.

Then as we go further on others are implicated as well. Say for example, the lawyer who had been acting for EDO bid was somehow involved. Also somebody who I have known for a long time and that is the journalist and producer, Steve Barrett, who is in Central Court today in Sydney allegedly sought to blackmail two members of the syndicate during a meeting at the offices of Clemens Lawyers on February 1st according to reports in the City Morning Herald this afternoon.

It’s a very bizarre story. Let’s just pick up just a little bit of this with the Australian Federal Police Deputy Commissioner Leanne Close today talking about this investigation and about the structure of what took place.

Interview with Leanne Close, Australian Federal Police

Leanne Close: This was certainly a complex structure that was established by the syndicate. However, as I outlined earlier the Australian Taxation Office system certainly did flag this and they started to undertake assessments and look at what was happening. When the FP became aware of the tax office work that’s when we joined up our investigations.

Ross: I wanted to say that it’s not as complex as what you might imagine. It’s actually very simple. It starts with a payroll company and that payroll company is called, Plutus. Now very shortly we’re going to speak to a man who is a competitor of Plutus Payroll. Now, that man smelled a rat very early on because what he also did to be honest is he got some people who are contractors, that’s where Plutus’ business was in contractors trying to look after their subcontractors where they pay their superannuation or that type of thing, their taxes.

He basically signed up a few accounts. He knew right from the get go that something wasn’t quite right. Anyway, then you move on to the next phase of this, under that company Plutus Payroll there were other companies, strong companies, strong directors put in place. What happened was eventually the money was supposed to being paid the wage and so forth into the contractors and to their employees. The money at one stage stopped, but it actually restarted again.

What happened was the money was supposed to also go to the tax office, but only a fraction of the amount that was owed from the wages and all the other bits and pieces that were being paid on the way through that was supposed to go to the tax office, only a fraction of what went there. The tax office is going to catch up with this eventually.

Well let’s now again go back to what Leanne Close from the Federal Police who was doing this investigation. Here is just a little of what took place when Michael Cranston was involved. Let’s go to some of that.

Leanne Close: The piece that his son has asked him to access an information potentially. We don’t believe that at this point that he had any knowledge of the actual conspiracy and the defrauding.

Ross: That is Leanne Close again saying we don’t believe he had knowledge of the defrauding, but there were other things. Then let’s have a look at what was actually taken today when they took it all in. We’re talking about significant numbers of cars, we’re talking about properties. We’ll get Eddy Meyer, my colleague for 9News been right across here today to explain this all to you.

We’re talking about so much stuff including firearms that was actually detained, loads of dollar bills that you cannot imagine. This is all being picked up today. Let’s now go to Christie Schofield. Christie’s Schofield is with the tax office. This is what she had to say in that media conference today.

Interview with Christie Schofield

Christie Schofield: Mike was in shock when we spoke to him yesterday as you would imagine knowing what’s happened to his son. He’ll appear on the 13th of June at Dawning Center.

Ross: That was Detective Superintendent, Christie’s Schofield explaining that about Michael Cranston when they did that. All right. Let’s go to Michael Cranston himself because Michael has appeared on this program talking about tax fraud. And a little later one of the people who we pursued most vigorously, well his lawyer will be on the program. That person is Paul Hogan and John Cornell.

It was Cranston who led operation Wickenby. It was Cranston who laid all of the tax office investigations into the Panama Papers, in all of the Phoenix Companies in Australia. He did all this stuff. It’s not just him who is implicated, there’s two other top ten tax officials in this country who are also implicated in trying to help out. If they are proven to have done what is alleged in some of the warrants out there, two years jail. That is what Michael Cranston told me in 2011.

Response from Michael Cranson

Michael: The reason why we put a court release out like this, Ross is actually for two reasons, one is actually to send a message to those who attempted to get involved in tax fraud or those that have and basically saying that you may be caught and there’s some pretty serious sanctions. The second point is, and it is a very important point that we do let the broader community know because most probably do the right things.

The fact is they want us to do something about the people with that and that sends a message to them that we do take it seriously and we do treat and deal with people that do the wrong thing.

Ross: The one question I think a lot of people would ask of Michael Cranston is having been such a good tax investigator over the years, why is it that your family accumulated such a large amount of wealth in such a short amount of time? That is one thing that you have told people to watch out for. To actually proved where did the income come from. Surely, you as the most senior tax investigator in this country should have also potentially looked at your family.

I think that would be a reasonable question to be asking of Michael Cranston. His son, just 31 years old. I want to go now to Eddy Meyer, my colleague from 9News who has been all over these. I described to Eddy Meyer as one of the most bizarre days in my life seeing all of these different characters getting rolled into these today. In regards to you’ve been in the media conferences all the rest of it today, just tell me what you’ve seen.

Eddy Meyer: Ross, it’s been a remarkable day. I can’t remember stories large as this for some time. If I can just begin with one thing, you mentioned someone we both know, Steve Barrett. We should mention that police did go through his home yesterday and took files, but he has not been charged with anything at the moment. I think the newspapers have made more of it than has actually eventuated today.

Ross: Okay. That’s one thing because as I say, there were documents that were tendered in Central Local Court. As you say there’s no suggestion he has been charged at this stage.

No charges at all on $165 Million tax fraud

Eddy Meyer: No charges at all, there at the time. He’s not been charged, he didn’t appear in court at any stage today. He has no charge, but many others have been.

Ross: Okay. Tell me what did this raid by the Australian Federal Police and the tax office, what did it net today?

Eddy Meyer: Well, the total is $165 million and if we break it down we get 25 luxury cars, sports car and the like. We get a dozen motorbikes, we get $15 million in cash and one million of that was found in a safety deposit box and that was all bagged up and put on the table for display today. We had 18 residential properties, two planes, 100 bank accounts including shared accounts, jewelries, firearms, artwork, vintage wine. It is a whole that they now claim are all the proceeds of crime and has so all being seized.

Ross: All right. Then people would ask what happens next in this particular case.

Where does it go to after this?

Eddy Meyer: I think we are looking at a very long legal proceeding. There needs to be a brief of evidence put before the courts to each of the nine people. Now there were a series more raids today, six more raids today. We may actually see more facing accusations of being involved in this alleged fraud. It is simply remarkable how widespread it is, how large it is and the impact it’s going to have. The ATO itself has now put in place an investigations, its looking at it’s systems. It claims that nothing was breached, no systems involved in payments were breached in any way. But obviously, questions will have to be asked and answered of just what it knew, when it knew, why it didn’t pick it up sooner. What the role of one of its most senior people was. He’s been stood down without pay along with three other ATO employees who accessed material allegedly without the correct authority.

The ramifications could go on but the legal proceeding itself will go on for some time. It is so detailed just the facts that were presented to the court, to the Central Court for some five or six people was 25 pages long and that with very little of the actual detail. That just breaks down what they are going to look at. You can tell that this is going to be a very detailed case and one that will play out over a long time.

Ross: Eddy Meyer, my colleague from 9News was on that story today, was giving a bit of a hand on one aspect of it. Eddy thank you so much for your time.

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