Current Trial Plutus Payroll Tax Fraud * The biggest tax fraud in Australia's history

[Kurve]

The Plutus Payroll case was a payroll tax scam to divert PAYG withholding owed to the ATO.

In this case, the operators of the scam took control of Plutus Payroll and its legitimate client base. The clients, outsourcing their payroll, would transfer funds to Plutus to pay the wages and salaries of their employees, with an amount expected to be withheld for PAYG. While wages and salaries, as well as a portion of the PAYG withholdings were paid, the remainder of the PAYG withholdings (often 40% or more of the amount owing by any company) remained with Plutus or was diverted to second tier companies run by dummy directors to protect the identity of the phoenix operators.

These dishonestly obtained funds were then transferred to the scammers through false invoices or other companies’ bank accounts.

Still going through the courts with seven co-conspiractors alleged to have defrauded the ATO (the public) of $165 million over the period of a couple of years.

The Cast of Characters

Michael Cranston, 58​

ATO Deputy Commissioner​

Started working at ATO in 2003 and now leads its audits of the country's richest people and private businesses.

Carnston was charged on June 13 with abusing his position as a public official to gain advantage. The AFP will allege he accessed confidential information for his son, Adam Cranston.

No suggestion he was involved in the tax fraud syndicate exposed on Wednesday.

The seven alleged co-conspirators​

Adam Cranston, 30​

Son of Michael​

Listed as a director of Plutus' sole shareholder, Synep Limited, and allegedly controlled Plutus.

Lauren Cranston, 24​

Daughter of Michael​

Allegedly ran so-called "second tier" companies that received cash paid to Plutus which should have gone to ATO.

Dev Menon, 33​

Tax lawyer and partner at Sydney law firm Clamenz lawyers​

Previously worked at KPMG. Allegedly gave advice about how the scheme should be managed.

Jason Onley, 47​

One of Adam Cranston's business partners and a director of Synep​

He is a former sports commentator who has worked with Channel Nine and Foxtel.

Simon Anquetil, 34​

Former chairman and CEO of Plutus​

Allegedly managed Plutus during the conspiracy.

Daniel Rostankovski, 28​

Allegedly recruited and managed "straw directors" who appeared, on paper, to run the "second-tier" companies that received cash paid to Plutus which should have gone to ATO. AFP alleges he turned on members of syndicate and tried to extort money from them.

Devyn Hammond, 24​

Worked with Lauren Cranston to run the "second-tier" companies which received cash from Plutus.

Also charged​

Dan Hausman​

Former director of Plutus' sole shareholder, Synep​

Charged with demand with menaces with intent to obtain or gain or cause loss.

Blackmail attempt​

Steve Barrett​

Veteran Sydney journalist​

Was allegedly involved with Rostankovski in an attempt to blackmail members of the syndicate. Barrett has not been charged.

How the alleged $165 million tax scam worked

The AFP allege the scam was a conspiracy to divert money owed to the ATO. It worked like this.

www.smh.com.au

Final conspirator found guilty of $105m Plutus tax fraud

A school friend of the son of a former ATO commissioner has been found guilty of one of Australia’s biggest ever corporate tax frauds, marking the end of a marathon trial.

www.afr.com

 

[Angry Red Bull]

Being a 40 year veteran of tax practice I have to say.....what the hell were they thinking? A company which collects but fails to pay PAYG withholding to the ATO owes that money. Reasonably quickly the ATO will liquidate Plutus for that arrears. I presume that the scheme was to have liquidation occur before directors notices were issued perhaps by voluntary appointment. After those notices issue rather than Plutus being liable as the only party with inability to pay (insolvent) there would be joint and several liability between Plutus and those directors who had received the notice. It's a fail safe. This type of scheme is very similar to bottom of the harbour schemes of the 1970s which also failed

A liquidator has wide ranging powers of investigation and would quickly work out what was happening and inform ASIC and police unless they planned to have a friendly liquidator involved too.

This is basically just fraud or an attempt at fraud. Dev Menon was a tax lawyer for goodness sake. lol Shake my head. It's not a very sophisticated attempt either.

There is always a weakness within ATO tax practice with the time it takes for the machinery to function to outcome. But the higher the $s involved the greater the scrutiny and faster it works for obvious reason. Detection was always likely I'd say.

 

[Kurve]

The daughter of a former ATO deputy commissioner has been found guilty of siphoning more than $105m in taxes to fund a lavish lifestyle.

Lauren Cranston sobbed as the jury found her guilty of conspiring with four others to cause loss to the Commonwealth and conspiring to deal with the proceeds of crime.

https://www.news.com.au/national/nsw-act/courts-law/daughter-of-ato-executive-found-guilty-of-105m-fraud/news-story/a9b6178c90c5152e7b368ba6ff053e4d

https://www.news.com.au/national/ns...s/news-story/602345a4852715fb446d5a7c790dd4ee

 

[Kurve]

Being a 40 year veteran of tax practice I have to say.....what the hell were they thinking? A company which collects but fails to pay PAYG withholding to the ATO owes that money. Reasonably quickly the ATO will liquidate Plutus for that arrears. I presume that the scheme was to have liquidation occur before directors notices were issued perhaps by voluntary appointment. After those notices issue rather than Plutus being liable as the only party with inability to pay (insolvent) there would be joint and several liability between Plutus and those directors who had received the notice. It's a fail safe. This type of scheme is very similar to bottom of the harbour schemes of the 1970s which also failed

A liquidator has wide ranging powers of investigation and would quickly work out what was happening and inform ASIC and police unless they planned to have a friendly liquidator involved too.

This is basically just fraud or an attempt at fraud. Dev Menon was a tax lawyer for goodness sake. lol Shake my head. It's not a very sophisticated attempt either.

There is always a weakness within ATO tax practice with the time it takes for the machinery to function to outcome. But the higher the $s involved the greater the scrutiny and faster it works for obvious reason. Detection was always likely I'd say.

They drained the second tier companies of money so when the ATO went looking for outstanding PAYG liabilities there was not much to get and they'd wind it up. In the meantime, the scammers would birth another company run by dummy directors and start again.

They were given a heads up that the ATO was coming for one of their companies by looking for signs in the system, a garnishee notice for example.

 

[Kurve]

A Sydney lawyer has been jailed for 12 years for laundering $24 million as part of the Plutus Payroll tax fraud.

On Tuesday, a court order suppressing the details of Sevag Chalabian's conviction and sentence was lifted, following the guilty verdicts of five others involved in the $105 million tax fraud scheme.

Chalabian, 52, was found guilty by a jury and sentenced in the New South Wales Supreme Court last June for his role in knowingly dealing with the proceeds of crime.

He was sentenced to a non-parole period of seven years and six months, dating from June 23, 2022.

Sydney lawyer Sevag Chalabian, who was part of Plutus Payroll's tax fraud, is jailed for 12 years

A Sydney lawyer has been jailed for 12 years for laundering $24 million as part of the Plutus Payroll tax fraud.

www.abc.net.au

 

[Angry Red Bull]

They drained the second tier companies of money so when the ATO went looking for outstanding PAYG liabilities there was not much to get and they'd wind it up. In the meantime, they'd birth another company run by dummy directors and start again.

They were given a heads up that the ATO was coming for one of their companies by looking for signs in the system, a garnishee notice for example.

Yes that part is virtually identical to bottom of the harbour schemes.

A massive hobby horse for ATO are Phoenix operations that start again with new company. They wouldn't pick the new company because it had new dummy directors.

They must have had service agreements between Plutus and the second tier companies to shift PAYG Withholding liabilities to that lower tier and share it amongst perhaps dozens smaller companies. But at days end a liquidator is no fool. Bogus directors with no business acumen or wealth would be major red flag to them. They would have to have had a 'friendly' liquidator who collects his $15k fee and sinks the company. Yes that sort of thing happens. They do no investigation don't chase whereabout of where the money went and just sink the thing.

 

[Angry Red Bull]

The employees themselves are protected. They get a credit for PAYG withholding deducted but not paid. So they wouldn't be out of pocket.

 

[utility]

It's one thing not to pay tax, but to 'collect it' and not give it to the ATO... nah, not smart.

 

[Angry Red Bull]

Signs in the system would indeed be a different approach to payment arrangements or garnishee or quicker than usual director notices

 

[Kurve]

Caught cold with nowhere to go here, expressing full knowledge that what they were doing was tax fraud. Their phones were tapped and the police heard this.


He told the court that the jury would hear a tape of Mr Cranston saying: “If this was fully uncovered and they knew exactly what was going on it would be f***ing Ben-Hur, man. This is a big-sized company.”

It’s alleged that Mr Menon responded: “It would be the biggest tax fraud in Australia’s history. Definitely, there is no question, it would be the biggest tax fraud.”

https://www.news.com.au/national/nsw-act/courts-law/plutus-payroll-court-told-of-biggest-tax-fraud-in-australias-history/news-story/bbadf2e915525ee32b5a122658cea222

 

[Angry Red Bull]

You would be horrified if I told you all that I had seen in my 40 years. There was a major privately owned retailer whose name you would all know. ATO did an audit and as a result they had disputed debt of $53M.(circa 25 years ago). They ended up calling a creditors meeting attended by receiver appointed by them. The creditors value on vote was controlled by them. ATO failed to attend meeting which advisors knew would happen for a receivership. They ended up legitimately selling that business to their new company for $1. The $53M was written off in liquidation

 

[Kurve]

The daughter of a former deputy commissioner of the ATO has been sentenced to a maximum of eight years in prison for her role in a $105 million tax fraud conspiracy.

Lauren Cranston jailed for role in tax fraud scheme

The daughter of a former deputy commissioner of the ATO has been sentenced to a maximum of eight years in prison for her role in a $105 million tax fraud conspiracy.

www.abc.net.au

 

[Kurve]

While the AFP was listening in.

Adam Cranston: If this was fully uncovered and they knew exactly what was going on it'd be f**king Ben Hur, man, this is a big-sized company.

Dev Menon: It would be the biggest tax fraud in Australia's history. Definitely. There is no question.

'Oh, we're cooked': Australia's biggest tax scam is unravelling. Police are listening to every word

As the walls close in on the conspirators behind the massive Plutus tax scam, they have no idea police are listening in on every conversation.

www.abc.net.au

 

[Kane McGoodwin]

On 4 Corners tonight.

 

[Kane McGoodwin]

Another reminder how toothless ASIC are... they can't be bothered investigating the dodgy liquidators to bring them to justice for their role in this scam.

 

[Golden_6]

It worries how widespread these sort of practices are and how easy it is to get away with. I mean these guys only got caught due to the huge scale they tried to implement these schemes.

I wonder how many get away with it at a much lesser scale. We're talking tens of millions in this scenario.

 

[Kurve]

There was a lawyer involved in it as well who's earned a 14 year jail term.

Unlike many of his co-conspirators who pocketed millions of dollars from the fraud to fund their lavish lifestyles, Justice Payne said Menon "was not principally motivated by greed".

Despite this, Justice Payne said Menon was still a key figure in the scheme.

"Mr Menon's accounting and legal skills and his professional reputation as a commercial and taxation lawyer were crucial for the long-term successful operation of both conspiracies," he said.

"He took substantial steps to try and conceal the fraud from detection, including by lying to authorities, orchestrating the forging of documents, discussing and directing the destruction of evidence, and coaching others to tell false stories to authorities."

Corrupt lawyer jailed for 14 years over $105m Plutus Payroll tax fraud

A court hears former lawyer Dev Manon "was not motivated by greed" but was a key figure in the scheme to defraud the ATO of $105 million.

www.abc.net.au

 

[Kwality]

Also charged​

Dan Hausman​

Former director of Plutus' sole shareholder, Synep​

Charged with demand with menaces with intent to obtain or gain or cause loss.

Blackmail attempt​

Steve Barrett​

Veteran Sydney journalist​

Was allegedly involved with Rostankovski in an attempt to blackmail members of the syndicate. Barrett has not been charged.

'Extortion charges against veteran crime journalist Steve Barrett have been sensationally dropped after it was revealed the principal witness against him was such a serial liar and fabricator of evidence that police refused to continue taking statements from him.
The high-profile journalist had been accused of blackmailing the Plutus tax fraud syndicate in a joint effort to extort $5 million from the scam’s mastermind Adam Cranston but his trial ended in a hung jury in May 2021.'

'On Friday, NSW Supreme Court judge Natalie Adams ordered that Mr Barrett’s proposed retrial be dropped after a direction from the Commonwealth Director of Public Prosecutions that there be no further proceedings.

The CDPP’s backflip followed a submission by former District Court judge Greg Woods KC detailing the extraordinary web of lies spun by the prosecution’s principal witness, property developer Daniel Hausman.'

 

[jason_recliner]

Thread title is ioncorect. Perpetrator of the biggest tax fraud in Australia's history is PWC and their clients.

 

[Kurve]

 

[Kwality]

Thread title is ioncorect. Perpetrator of the biggest tax fraud in Australia's history is PWC and their clients.

Are you sure we even know about 'the largest'.

 

[jason_recliner]

Are you sure we even know about 'the largest'.

Who knows? It's the biggest we know about. But not to worry, Albo is on to them. In fact, he made sure his son got an internship with them to bring them down from the inside.

 

[Writergirl]

Being a 40 year veteran of tax practice I have to say.....what the hell were they thinking? A company which collects but fails to pay PAYG withholding to the ATO owes that money. Reasonably quickly the ATO will liquidate Plutus for that arrears. I presume that the scheme was to have liquidation occur before directors notices were issued perhaps by voluntary appointment. After those notices issue rather than Plutus being liable as the only party with inability to pay (insolvent) there would be joint and several liability between Plutus and those directors who had received the notice. It's a fail safe. This type of scheme is very similar to bottom of the harbour schemes of the 1970s which also failed

A liquidator has wide ranging powers of investigation and would quickly work out what was happening and inform ASIC and police unless they planned to have a friendly liquidator involved too.

This is basically just fraud or an attempt at fraud. Dev Menon was a tax lawyer for goodness sake. lol Shake my head. It's not a very sophisticated attempt either.

There is always a weakness within ATO tax practice with the time it takes for the machinery to function to outcome. But the higher the $s involved the greater the scrutiny and faster it works for obvious reason. Detection was always likely I'd say.

I'm currently researching Plutus. Do you know any more than what you're saying here? You've worked in the tax industry?

 

[Angry Red Bull]

I'm currently researching Plutus. Do you know any more than what you're saying here? You've worked in the tax industry?

Yes worked 40 years in tax. The scheme wasn't very sophisticated. It was fraud designed to defraud ATO of PAYG withholding applicable to wages of clients contracting plutus to provide a payroll service. Money comes in goes down to second tier coys who payout net wage I assume and keep PAYG withholding. Those second tier coys are set up to liquidate by not paying that ATO debt. Instead the money is siphoned off to the instigators.

An employee gets a a credit for PAYG withholding on their wage even though it's never paid to ATO by the coy deducting that PAYG withholding. That is the device to allow the fraud, that and the fact by the time ATO pursue the coys the only people who can be attacked are that second tier coys and it's directors who are people without means or sophistication.

A liquidator has a responsibility to investigate the insolvency and if something nefarious is happening report it to ASIC. They are not idiots and are motivated to collect as much as possible because their fee depends upon it. They have strong powers of investigation and would try and follow the flow of moneys.

It is very much modelled on bottom of harbour schemes of 1980s which sought to prevent tax on genuine profits by sinking coys with similar no means directors.

The ATO have sophisticated software programs that seek to detect strange events like a massive increase in liquidations of coys owing PAYG withholding. that would trigger closer investigation as would liquidators.

They set themselves up as zero fee service.that of itself begs the question how they make money. Answer they defraud ATO..Plain stupidity

The directors of these second tier coys would only get into trouble (instead of the coy) if the ATO issued a directors notice. They are notices on things like PAYG withholding where debt has been outstanding for a time and ATO take a precaution to create joint and several liability (the coy AND the directors)

If there are questions I can answer please ask