ato logo
Search Suggestion:

Tax crime prosecution case studies

Our tax crime prosecution case studies show that people who deliberately cheat the tax system will be held accountable.

27 June 2024

Capone jailed for dodging lodgments

A South Australian business owner has been sentenced to 3 months imprisonment after failing to comply with court orders to lodge several outstanding business activity statements (BAS) and tax returns.

In May 2019, Robert Capone was convicted in the Adelaide Magistrates Court and fined $12,000 for failing to lodge 18 BAS and 4 tax returns across several years. The court ordered Mr Capone to lodge the outstanding statements within 90 days, however he failed to do so.

Mr Capone was convicted for a second time in 2021 for failing to follow court orders to submit the outstanding BAS and tax returns. He was sentenced to 3 months imprisonment and released immediately on an 18-month good behaviour bond. The court again ordered Mr Capone to submit the outstanding statements within 6 months. Again he failed to do so, resulting in him breaching his good behaviour bond conditions.

Mr Capone then missed several court attendances relating to the breach of his good behaviour bond and was apprehended in April 2023 after a warrant was issued for his arrest.

Her Honour remarked that due to Mr Capone’s blatant disregard for his taxation obligations, the only appropriate order was a sentence of imprisonment.

If you’ve made an honest mistake or are falling behind on your obligations, we will work with you to find a solution, but people who deliberately ignore their responsibilities and fail to engage with us will be held to account.

Lawyer fails to lodge

A corporate lawyer from Western Australia has been convicted of 9 counts of failing to comply with a legal requirement under a tax law.

Mr Marcus Gracey pled guilty to failing to lodge his tax returns for 9 financial years between 2011 and 2021.

Mr Gracey only lodged his outstanding tax returns after prosecution began. These included a significant capital gain, which resulted in a substantial tax debt.

At the time of sentencing, Mr Gracey applied for no conviction to be recorded due to the risk of being dismissed by his employer. The courts rejected his application and on 11 March 2024 he was convicted of all charges and fined $10,000.

In reaching their decision, the Court highlighted the importance of offences like Mr Gracey's. This is because we need to be able to properly assess and collect tax owed. The court also said that:

  • these offences are serious, prevalent and can be difficult to detect
  • there is a need to deter people from committing these offences.

The impacts of tax crime are widespread:

  • Receiving a criminal conviction can have a significant effect on your reputation, career prospects and ability to travel overseas.
  • Tax crime reduces the amount of revenue available to fund essential community services such as health, education and welfare.

Former tax agent found guilty

Former Sydney tax agent, Ahmed Afifi, has been found guilty and sentenced to a 3-year intensive corrections order. This was for dealing with the proceeds of crime after he lodged false and fictious tax returns on behalf of his clients.

Under the intensive corrections order, Mr Afifi:

  • will complete 430 hours of community service work
  • is prohibited from associating with his ex-business partner
  • was fined over $20,000
  • was ordered to pay reparation of over $175,000.

Through his Darlinghurst-based accounting practice, Coreplex Consultants, Mr Afifi abused his position as a tax agent and received refunds relating to tax returns that contained false information. The tax returns were lodged on behalf of 4 separate clients. They resulted in more than $175,505 in fraudulent refunds being released into a bank account controlled by Mr Afifi, without the consent of the taxpayers.

In 2018, we conducted an audit into the details claimed in the tax returns of several of Mr Afifi’s clients. We found false information about:

  • gross income amounts
  • tax withheld amounts
  • work-related expenses claimed as deductions.

Mr Afifi was disqualified from practicing as a tax agent and deregistered from the Taxation Practitioner’s Board in 2018.

You can confidentially report suspected tax crime to us by completing the tip-off form or phoning the tip-off hotline on 1800 060 062.

Brothers busted for fake document scheme

Two brothers who ran an accounting firm have received criminal convictions for a scheme to falsify Commonwealth documents in order to obtain bank loans.

Yevgeni Bezhenar (also known as James) and Alexander Bezhenar of Halifax Business Consulting Pty Ltd (Halifax) in Melbourne were convicted on all counts after pleading guilty to several charges. They admitted commissioning the creation of false Commonwealth documents to obtain bank loans for their business and a number of clients. These included Business Activity Statements (BAS) and Notices of Assessment (NOA).

We uncovered the scheme after auditing another matter and launched an investigation that saw search warrants executed at Halifax’s office as well as an employee’s home.

We found evidence that the Bezhenar brothers had paid employees and others to create false BAS and NOAs. These inflated sales or earnings, which would then be passed off as genuine to banks and other lenders.

In several cases, they had commissioned the firm’s graphic designer, Eugene Vinarsky, to alter documents at their request.

The Bezhenar brothers would make handwritten amendments to the documents – sometimes doubling their clients’ actual earnings. They then sent them to Mr Vinarsky to digitally manipulate.

Mr Vinarsky went to great lengths to make the documents look legitimate. In one email, he reminded his boss, Yevgeni Bezhenar, to only provide one of the doctored documents by facsimile or hard copy, to avoid someone noticing he had edited the original document’s security stamp.

Mr Vinarsky was convicted for the part he played in the offending. He was sentenced to a 12-month community correction order requiring him to complete 200 hours of unpaid community work.

Yevgeni Bezhenar was convicted and sentenced to 10 months imprisonment. His brother, Alexander, was convicted and sentenced to 6 months imprisonment. Both were released immediately on a $1,000 recognisance release order requiring them to be of good behaviour for 18 months.

Receiving a criminal conviction is serious. It can significantly affect your reputation, career prospects and ability to travel overseas.

If you know or suspect phoenix, tax evasion or shadow economy activity, report it to us by completing the tip-off form or phoning us on 1800 060 062.

Former tax agent jailed

A former tax agent has been sentenced to 6 years imprisonment with a non-parole period of 3 years and 6 months for claiming more than $800,000 in fraudulent refunds.

In his capacity as a registered tax agent, Mr Peter Lines managed the tax affairs of numerous individuals and businesses.

Between December 2014 and January 2018, he submitted:

  • several false tax returns in his clients’ names without their knowledge or consent
  • some valid tax returns for his clients but directed the corresponding refunds to bank accounts he controlled.

Mr Lines tried to conceal what he was up to. But it all started to unravel when his firm detected a series of abnormal transactions and reported them to us.

In total, Mr Lines obtained $634,347 in fraudulent refunds, which he has been ordered to pay back. He also attempted to obtain an additional $180,986.

As part of our response to the shadow economy, we are committed to taking action against the small number of people who threaten the integrity of the tax profession.

This matter was also referred to the Tax Practitioners Board. Mr Lines’s tax agent registration has not been renewed.

 

58778