NSW accountant Stephen Douglass charged with fraud

POLICE have laid a fraud charge against a NSW accountant who allegedly took more than $500,000 from one of his clients.

Warren and Sheenah Whitten say the ATO has explaining to do. Picture: Lindsay Moller

EXCLUSIVE

POLICE have laid a fraud charge against an accountant who allegedly took more than $500,000 from a client.

The accountant, who The Daily Telegraph can reveal is Stephen Raymond Douglass, was arrested on Thursday at his Coffs Harbour home.

Police seized electronic equipment including computers for forensic examination.

Douglass, 64, has been granted conditional bail and will face a charge of obtain benefit by deception at Coffs Harbour Local Court on November 13.

The Daily Telegraph understands the charge relates to Douglass allegedly failing to pass on tax payments to the Australian Taxation Office.

It’s understood Police will claim the payments were made by Woolgoolga’s Arc Attack Engineering, which used Douglass as their accountant.

Arc Attack is in liquidation. The ATO is the main creditor.

As reported by The Daily Telegraph earlier this week, Arc Attack’s owners, Warren and Sheenah Whitten, have cashed in investments and face having to remortgage their home if they are to be any chance of buying back the business.

The ATO fined them over the missing tax payments, after an audit in which it only dealt with Douglass.

Liquidator Steve Nicols of Nicols & Brien said were it not for the alleged misappropriation “this company would not be in liquidation”.

ADVICE: David & Libby Koch’s top tips for improving your cashflow

Stephen Raymond Douglass took clients’ tax payments. Picture: Lindsay Moller

In 2015, the ATO audited Arc Attack. But it did not speak to the Whittens. When News Corp Australia asked why, the ATO said “taxpayers may wish to have another person act on their behalf. The ATO will contact the nominated person to discuss related matters, for example during an audit.” After the audit, the ATO fined the Whittens $60,000.

In June, the ATO began winding up proceedings against Arc Attack in the Federal Court. The company, which employs seven people, went into voluntary administration in August.

Only then was the fact of the missing money identified — by Mrs Whitten.

MORE: ATO abandons plan for staff to work nine minutes more to 5pm

The Whittens did not know their accountant fleeced others. Picture: Lindsay Moller

Mr Nicols said he would sell “the assets to the highest bidder, which could be Warren. (But) they may not get the business back.”

The main creditor is the ATO. It is not yet known what dividend will be paid.

The Whittens said if it is less than 100 cents in the dollar they will pay the difference out of their own pockets.

“I want to walk around with my head up,” Mr Whitten said.

The couple had not wanted to go into administration. But Douglass encouraged them to do so, rather than hire business advisers the SR Group.

Its managing director Susie Bennell said it would have negotiated with the ATO to try to keep Arc Attack trading and in the Whittens’ hands.

Susie Bennell says her SR Group could have saved Arc Attack. Picture: Dylan Robinson

When News Corp Australia approached Douglass for comment he said: “I do not give you permission to write anything. My solicitor says she will sue for all the world if anything is written against me.”

Know more? [e-mail]

Follow this reporter on Facebook or Twitter

Originally published as NSW accountant Stephen Douglass charged with fraud