The syndicate’s ringleader is alleged to have enlisted financial industry experts and former bankers to operate and facilitate the A$17mn tax fraud.
The AFP (Australian Federal Police) and ATO (Australian Taxation Office) have charged 12 people in a case involving fraud, phoenix activity and tax evasion.
In an investigation that began in December 2018, the AFP on Wednesday (22 July) executed search warrants at 21 locations across Sydney, Queensland and the ACT in a “coordinated strike” against a criminal syndicate that is alleged to have dodged an estimated AUD 17 million in taxes.
The AFP alleges the syndicate had effective control of construction industry labour hire companies, and outsourced their payroll processing to companies controlled by syndicate members to avoid paying withholding tax to the ATO.
While employee and contractor wages, superannuation and insurance were correctly paid, money allocated to be paid to the ATO was diverted and laundered through other entities. When a substantial tax debt was accrued by these payroll companies, the syndicate would abandon them and create new payroll companies to continue the fraud.
The syndicate’s alleged ringleader, 49-year-old George Alex, was arrested on Tuesday (21 July) and denied bail on Friday (24 July). He is charged with conspiring to defraud the Commonwealth and conspiring to deal with proceeds of crime over AUD 1 million, which carry maximum penalties of 10 and 25 years imprisonment, respectively.
Alex is alleged to have enlisted financial industry experts and former bankers to operate and facilitate the fraud.
“Transnational and serious organised crime groups are evolving,” said AFP commander Kirsty Schofield. “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.”
The AFP has restrained assets worth AUD 21 million, including 12 real properties, 17 motor vehicles, 65 bank accounts, a caravan and a boat – belonging to or under the control of the syndicate.
The Singapore Police Force assisted in identifying and restraining an additional AUD 1.3 million held in Singapore bank accounts.
Australian banks ANZ and Westpac also provided “significant assistance” to the investigation, the AFP said.
The ATO has initiated debt recovery processes relating to tax debts, while ASIC (Australian Securities and Investments Commission) will target corporate compliance and regulatory issues.
“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,” said ATO assistant commissioner Aislinn Walwyn.
“ASIC views seriously any attempt by individuals to facilitate or conceal illegal phoenix activity and other related contraventions of the law,” said a spokesperson for the agency. “We will work to ensure any persons suspected of engaging in such activity, including directors who breach their duties, are held to account.”
Additional reporting from New.com.au