Deputy commissioner and his family caught in a web of intrigue
IT was the blockbuster tax investigation that promised to bust rich Australians, even celebrities. But three years on investigators were losing the war in the nation’s biggest offshore tax dodge.
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- Adam Cranston allegedly used fleeced funds for renovations
- AFP had ATO boss Michael Cranston in their sights
IT was the blockbuster tax investigation that promised to bust rich Australians, even celebrities.
But three years on and despite deep pockets — $430 million deep — investigators were losing the war in the nation’s biggest offshore tax dodge.
Celebrity Paul Hogan had embarrassed Operation Wickenby investigators by invoking his own on-screen character Hoges to “take the mickey” out of suggestions he was in their sights.
“You got me. Almost. The last problem I had with the ATO was in 1972 when they claimed that I had fudged the overheads on my earnings from my pub chook raffles,” Hogan said the year after the 2005 raids which triggered the nation’s biggest ever multi-agency tax fraud investigation.
By 2008 Wickenby’s sole criminal conviction was music entrepreneur Glenn Wheatley, who pleaded guilty and was jailed for 15 months for evading $318,092 in tax.
The tax office needed a crack lead investigator.
Enter Michael Cranston.
Tough. Effective.
Straight shooter.
He hammered home the message that Wickenby’s work had many indirect benefits.
“One of the messages that has got out is that when people get involved in this type of behaviour, they are participating in tax fraud, and when it’s fraud, it becomes criminal.”
Around this time, his son Adam had graduated from the local Catholic school at Menai, Aquinas College, and was studying an accounting and commerce degree at Swinburne University of Technology in Melbourne.
Back in Sydney, Adam began building a flourishing career, specialising in helping businesses restructure through financial troubles.
His father was, by then, scoring goals with Operation Wickenby, nailing 46 convictions and raising $2.36 billion in tax revenue.
He was elevated to deputy commissioner in 2014 and was fast making himself a key lieutenant to top brass Chris Jordan.
He attacked rich people and private businesses, overseeing a staff of 2000 chasing tax dodgers in a sector worth $112 billion in tax revenue.
By the age of 28, Adam, with his girlfriend Elizabeth Rouhliadeff, had splashed out $1.85 million on a waterfront property on the most exclusive peninsula in the Sutherland Shire, Burraneer Bay.
He was also indulging his love of fast cars, driving his own Porsche, and establishing a racing team through his company Synep, which in February raced a Porsche 991 in the Class B GT3 Bathurst 12 Hour.
Deciding which car to race, Adam said: “We were looking at the 997 Porsche GT3 Cup Car, but I was adamant that I wanted the 991 — I have one myself and I love to drive it.”
When he married Elizabeth in October last year, bride and groom left the ceremony in a Ford GT40 racing car.
But police now allege that hidden behind this indulgent lifestyle was a double-life.
Since at least June last year, Australian Federal Police have been tracking Adam Cranston’s alleged dodgy dealings.
On May 17 cops swooped, arresting Adam, his 24-year-old sister Lauren Cranston and another eight people, accusing them of the nation’s biggest tax conspiracy.
Seven Porsches and two Mercedes cars are among the fleet of 33 vehicles seized in the raids.
Police have also frozen at least three properties collectively worth around $5 million and owned through companies and trusts associated with Adam Cranston, as well as an $8.75 million property held in the name of the wife of alleged co-conspirator Jason Onley.
Michael Cranston’s hard-won reputation as an esteemed 35-year veteran of tax investigations was ripped to shreds.
He faces court next month on a charge of abusing his position as a public official.
He is not accused of any involvement in the syndicate.
The allegations in the biggest white-collar fraud case in Australian history start with a payroll company Adam Cranston controlled with accused co-conspirator Simon Anquetil.
Plutus Payroll’s legitimate arm paid, on behalf of real companies, their employees’ salary, superannuation and tax obligations. It offered these services for free and used an ex-beauty queen to recruit new clients.
Police allege that running concurrently were layers of sham companies and stooge directors, recruited and managed through a core network of seven key members of the syndicate, led by Adam Cranston and Anquetil.
Police recordings assert that managing this complex network — which pocketed $165 million in unpaid tax — was a messy operation that left the group exposed to sham directors going rogue and ripping them off, director managers secretly skimming extra payments for themselves and, ultimately, a blackmail attempt.
Referring to two of the companies, alleged co-conspirator and lawyer Dev Menon told Adam Cranston in October last year “the tax balances have got hectic, hectic, hectic like three million dollars that we’ve got to pay to keep it going”.
Police claim that stooge directors on the sham companies were paid for their service, but got vastly different sums.
The alleged manager and recruiter of this group, Daniel Rostankovski, was himself allegedly paid handsomely for his role, pocketing $173,609 in the six months to December last year.
Police recordings alleged Rostankovski was fleecing from the directors he was managing, taking up to $800 for himself out of the $1000 a week he was meant to pay them.
Ben Alaban is accused of being the stooge director behind sham company PPA Contractors, who pocketed $109,400 in just four months to October last year.
Anthony Palumberi, director of PPA Services, was allegedly paid $127,004 in the eight months to November last year.
But those recruited toward the end of the scam benefited less.
PPA (SA) director Angelo Coppola was allegedly paid $18,000 for four months until January this year and Danielle McDonell, director of PPA NT Pty Ltd, was allegedly paid $14,000 for three months to January this year.
None of the stooge directors are accused of being involved in the conspiracy.
Juggling the accounts and shadow books was allegedly the role of Lauren Cranston and Devyn Hammond, 24, with police recordings revealing the headaches involved in the task.
In January, director McDonell had cancelled the internet banking device used to access the PPA NT account, which held $1 million.
“One of the clients, Danielle, she’s been taking money,” Rostankovski allegedly told Menon on January 13, after $25,000 had been withdraw in the two days prior.
It forced Lauren Cranston and Hammond to allegedly pay funds to the ATO in order to avoid the possibility of more money being fleeced from the account.
But when a number of accounts were garnisheed and couldn’t be accessed, panic set in on January 25.
Menon allegedly said to Rostankovski, “this is defcon 5 man, no payments can go out hey”.
Menon said: “Ah I think it’s the bank, I don’t think it’s the government, I don’t think it’s the ATO or anything, it’s just the bank, because they are scared about the risk of AML, and the volume of transactions for wages and, but yeah, bro what’s scary is between you and me, I’m telling you this man, if we don’t pay this today I know Simon is going to pull the plug, like that’s it, all over.”
Crisis talks on January 30 at the office of Menon’s law firm Clamenz between Adam Cranston, Menon and Anquetil reveal Adam Cranston allegedly referring to a conversation with another person who police alleged was his father Michael Cranston.
“Yes he is looking into it but considering he doesn’t know about it, it can’t be like the biggest thing since Ben Hur if this was fully uncovered and they knew exactly what was going on he would be …. over this is a big size company.”
ATO deputy commissioner Michael Cranston will face court
The next day Hammond allegedly said she wanted to burn her computer and not touch it again.
Matters allegedly got worse for the syndicate on February 1 when Rostankovski tried to blackmail Adam Cranston and Menon with media exposure unless they paid $5 million that day.
When Onley and Anquetil joined the meeting later, Onley allegedly said: “Plutus is cooked. I came in here today before I knew about you. How we gonna shut it all down?
“It’s whether I just go ‘you know what, take the five million bucks, stick it under (something), and do my three months in jail’.”
Rostankovski allegedly replied: “I know I’m not going to jail.”
Onley: “No, no, we’re going to jail.”
In a phone call between father and son taped by police on April 28, Michael Cranston allegedly says he is worried about the accounts being garnisheed and says they have to think of a strategy.
In another call between the pair taped on May 2 at 8.36pm, Michael Cranston allegedly said: “The PAYG liability — what you’ve got to remember, Adam, what you did in the past you got away with, right? You get away with it when nobody knows about it, right? You think you get away with it, but you don’t.
“We’re so good at connecting people, that’s what’s worrying me about it. I know you had, you, you, I’m only, I’m really trying to, you just make sure you haven’t got anything in anywhere, you could be subject to search warrants, or, I don’t want to scare you, but you could be.”
Michael Cranston, applying his knowledge of prosecuting tax cases, allegedly said he could mount a civil action for common phoenix activity, adding that as a tax officer “it stinks of, you’re in a phoenix operation”.
“What I’m petrified about, Addy, is a massive conspiracy. I run phoenix in the organisation, and you’re involved in the, oh, the media go off their head with that.”
Police allege that Michael Cranston, between February 1 and May 2, abused his position as a public official through gaining unauthorised access to tax records.
As for Paul Hogan, Cranston’s Operation Wickenby never nailed him.
Years of legal fights ended without conviction and with Hogan successfully taking a civil action against the tax office.
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