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Financial crime case studies

Case studies that demonstrate how we prevent, detect, disrupt and bring the perpetrators of financial crime to account.

Last updated 10 June 2024

About financial crime

While the majority of people comply with their tax and superannuation obligations, there are a small percentage of people who deliberately abuse the tax and superannuation system for their financial benefit.

Financial crime is not victimless and has a serious economic impact on the community. It decreases the revenue that is available to fund essential community services. Funds that are illegally obtained are often used to facilitate other crimes causing real harm to real people.

Our financial crime case studies demonstrate that criminals who dishonestly target financial or revenue systems to extract money and misappropriate or hide illicit funds will be caught and prosecuted.

If you know or suspect that someone may be committing tax crime you can report it by either:

Stay up to date with the latest financial crime case studies by subscribing to our general email updates. You will receive updates on all new general content on our website.

Serious outcome for fraudulent tax agent

On 23 February 2024, former tax agent Ismail Mustapha faced the Paramatta District Court. His charges included obtaining financial advantage by deception and attempting to obtain financial advantage by deception. In total, he defrauded the ATO of $193,549 and attempted to obtain a further $36,293.

Between 30 January 2018 and 11 April 2018, Mr Mustapha abused his position as a registered tax agent. He lodged 43 fraudulent income tax returns on behalf of individuals without their knowledge or consent, keeping the refunds for himself.

Mr Mustapha falsely advertised a job online, asking respondents to provide their personal details. Mr Mustapha then used this information to carry out the fraud.

Red flags were raised when a high number of lodgments were traced to Mr Mustapha’s Tax Agent Portal.

The Tax Practitioners Board also investigated Mr Mustapha’s misconduct and found he did not act with honesty and integrity and was no longer a fit and proper person to be a registered tax agent. His tax agent registration was terminated as a result.

Mr Mustapha was sentenced to 3 years imprisonment, to be served as an Intensive Correction Order with 500 hours of community service. He was also ordered to repay the $193,549 he fraudulently obtained.

We work with partner agencies, including the Tax Practitioners Board to detect fraudulent activity and bring those who choose to engage in it to account. This outcome is also a timely reminder to be aware of what you share and treat all requests for personal information with caution.

GST fraud costs man more than 10%

A man who conspired to lodge fraudulent business activity statements (BAS) has been convicted and sentenced to 10 years in jail with a non-parole period of 6 years and 8 months.

Li Zhang was involved with 2 companies that formed part of a group known as the ‘Hightrade Group’. The Hightrade Group developed properties such as a hotel and golf course in the Hunter Valley, New South Wales.

Between February 2004 and June 2007, Mr Zhang conspired to lodge fraudulent BAS, intending to cause a loss to the Commonwealth of $15 million by:

  1. Establishing 3 tiers of companies:
    1. Tier 1 – developer
    2. Tier 2 – building companies
    3. Tier 3 – suppliers
  2. Making the Tier 1 developer contract the Tier 2 building companies to construct a development. The Tier 1 developer claimed they paid GST to the Tier 2 companies.
  3. Having the Tier 2 building companies obtain supplies or labour from the small (shell) Tier 3 suppliers. The Tier 2 companies claimed they paid GST to the Tier 3 companies.
  4. The Tier 3 companies existed solely to aid the Tier 1 and 2 companies in committing tax crime. They grossly inflated tax invoices – often for goods and services which didn't exist or weren't supplied.

Mr Zhang was able to obtain a refund as a person or entity can claim back the GST tax component of purchases made or supplies obtained by them in the course of their trade.

The complex investigation involved:

  • an international extradition
  • multiple search warrants
  • hundreds of witness statements
  • 220 lever arch volumes of evidence (approximately 80,000 pages).

Mr Zhang’s sentencing demonstrates that people who deliberately try to cheat the tax system will be caught and prosecuted accordingly.

Our reach is far and our net is wide. There is no place to hide.

For more information read Golf course developer finds himself in the rough after dodgy tax deals come unstuck ,or find out more about how the scheme was set up

Tax agent gets 5-year ban

The ATO targets tax evasion in many ways, including through investigations as part of the Serious Financial Crime Taskforce (SFCT). We make referrals to the Tax Practitioners Board (TPB) where it is identified that a tax agent is involved in misconduct.

A recent example of an ATO referral to the TPB saw them launch an investigation into the conduct of a tax agent. We provided the TPB with information and evidence to build the case. During the investigation the agent stated that they did not have any outstanding lodgements. However, at the time of making the statements, they did in fact have multiple outstanding income tax returns (ITR).

The TPB found that the agent failed to declare over $16 million in assessable income in personal ITRs. This resulted in a tax shortfall of over $7 million and penalties of over $6 million being imposed. They also failed to lodge 54 business activity statements and 23 ITRs by their due date for themselves and their related entities.

As a result, the tax agent and their company’s registration were terminated. Both were banned from reapplying for registration for 5 years. The Board Conduct Committee noted the findings from our compliance action.

For more information read the Tax Practitioners BoardExternal Link case study.

GST fraudster sentenced over multi-million dollar scheme

On 23 November 2020, following a successful joint investigation by the Australian Taxation Office (ATO) and Australian Federal Police (AFP), a 38-year-old fraud syndicate member was convicted in the Melbourne County Court for conspiring to defraud the Commonwealth of GST refunds totalling over $5 million.

Michael Ray was a senior partner in a scheme where confidential taxpayer information was illegally obtained and used to create false entities and Australian business numbers (ABNs) and register them for GST. The fraud syndicate then lodged business activity statements (BAS) claiming false GST refunds. The refunds were directed to bank accounts that had been created using the stolen identities.

The scheme was uncovered by a taxpayer when they conducted a Google search and discovered their personal details located in a spreadsheet titled ‘wolf2012’. The taxpayer reported what they had found to both the police and the ATO. The taxpayer’s discovery uncovered a den of deceit for the agencies involved.

Mr Ray, the last pack member, pleaded guilty to conspiracy with the intention of dishonestly obtaining a gain from the Commonwealth. He was sentenced to 5 years imprisonment, with a non-parole period of 3 years, bringing the 8-year long joint investigation to a close.

Mr Ray's sentencing follows the sentencing of the scheme's orchestrator, Marc Christian, in May 2020. Mr Christian was sentenced to 12 months imprisonment, to be released after 6 months on a recognizance order, for money laundering and 5 years imprisonment, with a non-parole period of 3 years, for conspiring to dishonestly obtain a gain from the Commonwealth.

All convictions in relation to this matter are a successful result under the partnership of the ATO and AFP, who often work together to investigate serious criminal activities.

Tax crime affects the whole community. It reduces the amount of revenue available to fund essential community services.

This case demonstrates the power of tip-offs from the community. A tip-off could be the missing piece of the puzzle we need to successfully prosecute someone who is committing tax crime.

For more information, read the media release :

Two decades two agencies- one investigation

On 17 August 2020, Philip Northam faced the Brisbane District Court for his involvement as a key promoter in an intricate asset stripping arrangement.

He, and 4 other men who have previously been sentenced, initially touted that all tax laws are invalid and that no-one (persons or companies) need legally pay any tax. Their clients with companies that owed tax soon found that, despite their claims, we were pursuing those companies to recover the company tax they owed.

The fraudsters then established an intricate asset stripping arrangement to strip Australian companies of their assets and leave them in a position where they were unable to pay their tax liabilities.

The illegal scheme offered companies with a tax liability a way to transfer all assets of the company to directors and shareholders, leaving the company unable to pay its tax. Once the assets of the company were stripped, the company was dissolved. New directors and shareholders were put in as straw entities that had no means or intention to pay the tax liabilities.

Northam was sentenced to 6 years jail for his involvement in the scheme. This case demonstrates our commitment to maintaining the integrity of our tax system by catching those who evade their tax obligations no matter how long it takes.

The conviction of the fifth and final fraudster has brought the 19-year-long joint tax fraud investigation by the Australian Taxation Office and Australian Federal Police to a close. The investigation also resulted in almost $4.5 million of lost revenue being recovered. We are tenacious when it comes to taking legal action against people who deliberately facilitate tax evasion arrangements.

For more information, read the media release 19-year tax fraud probe ends in jail time for scheme promoter

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