Police target lawyers and accountants helping families become frauds

Federal police are to target lawyers and accountants promoting tax avoidance schemes to mums and dads looking to defraud the Commonwealth through Medicare, NDIS and family day care frauds.

EXCLUSIVE

ORDINARY mums and dads are effectively joining organised crime networks through unscrupulous lawyers, accountants and liquidators promoting ways to defraud the Commonwealth of millions of dollars, the Australian Federal Police has found.

Such is the extent of the structured scam, the AFP in unison with 17 partner federal agencies including the ATO and Department of Human Services is to priority target “professional facilitators” in the legal, financial and insolvency sectors.

Just a single professional facilitator could be helping as many as 10 to 15 people rip off various Commonwealth services.

While reticent to detail precisely how the fraud is being carried out, the AFP has the following rackets in its sights:

* Medicare

* PAYG tax

* the National Disability Insurance Scheme (NDIS)

* childcare

* overseas money laundering

Pictured outside AFP Headquarters in Sydney today is Head of AFP Fraud Squad, Simone O'Mahony. Picture: Tim Hunter.

“That’s why we are not calling it white collar crime anymore,” AFP’s Fraud and Anti-Corruption’s Detective Acting Superintendent Simone O’Mahony said yesterday.

“It’s not the (high level financier) putting the greatest threat against our programs like the NDIS scheme, it’s not going to be your high level senior executives. It is sometimes just the mums and dads but it’s the professional facilitators that are actually helping setting up these ‘companies’ for them, giving them advice about how to do that, so that’s where we are spending a lot of the AFP time in taking out those facilitators. The offshore nature of organised crime means that people are becoming more calculated in their attempts to cheat our tax system.”

In some cases, through the use of lawyers working in with accountants, shelf companies for child services were created to either directly defraud the NDIS and other Commonwealth social services and the ATO and or actively move monies offshore.

Accountants were also assisting families make fraudulent claims and through family networks of the parents, the unscrupulous accountant would get referrals to help other mums and dads set up scams.

And liquidators would help struggling family businesses close down and claim a loss to just reopen again under a different name but with the same assets.

Supt O’Mahony said the “empowering and structured advice” was giving ordinary people direct access to organised criminal structures operating in some instances offshore like Vanuatu and it wasn’t a victimless crime because it was stealing the nation’s wealth.

Outside AFP Headquarters in Sydney today is Head of AFP Fraud Squad, Simone O'Mahony. Picture: Tim Hunter.

“It’s not as visible as say your guns or drugs but financial crime is happening against the Australian community not the government, it’s the Australian community that owns the money,” she said in detailing the tens of millions of dollars that gets defrauded each year.

“That’s money that could be going into our Medicare program, can be going into hospitals can be going into education, into the NDIS schemes and welfare schemes so when that money is not getting to the programs that it’s supposed to, the victim is the community, it’s people who want access to NDIS funding or want to go to hospital for an operation but can’t because there is backlog in funding there.”

The law enforcer cited the case of family day care fraud where earlier this year more than 50 centres lost, temporarily or permanently, government subsidies after being caught for alleged fraud or providing false documents for services not carried out. About half of self-employed educators or day care operators caught up were in Victoria with at least three fraudsters fined and sentenced after three-year-long proceedings.

Rosa Riak and Kuol Deng were sentenced to four years jail, while Achai Deng was given 18 months.

The trio, nabbed as part of a broader Operation Caulis looking at Commonwealth frauds, defrauded the sector of at least $1 million.

In NSW, several cases of childcare fraud are before the courts including one centre which allegedly falsely claimed $5.4 million in rebates and benefits.

Robert Agius, the former Vanuatu-based accountant taken away after sentencing Picture: Sam Mooy

Supt O’Mahony also said it could be networked and part of a scam known as “phoenixing” where liquidators or pre-insolvency operators were targeting businesses and helping them shut down with the aid of a corrupt accountant and writing off their “debts” before an equally corrupt solicitor then assists them set up a new company structure.

“So they aren’t necessarily white colour groups that wouldn’t typically been involved in such massive organised crime, and these are highly organised criminal networks we are dealing with, the professional facilitators have given them access to that,” she said.

In the past year, three significant police operations some started more than a decade ago were closed after securing convictions.

In 2006 the AFP’s Operation Starlifter began tracking several Australian companies defrauding the Commonwealth with a scam promoted by a Vanuatu firm via a string of Australian accountants offering tax avoidance schemes, moving monies under the guise of loans via Vanuatu and New Zealand. Former finance professor and Macquarie Bank executive Tony Castagna and his cousin Robert Agius were sentenced to four years and eight years respectively for the fraud.

AFP officers confiscated multiple luxury cars — including this Lamborghini — during Operation Beaufighter. Picture: AFP

Operation Beaufighter was the most complex in Australian fraud history and involved a money laundering syndicate headed by former Ernst & Young executive Anthony Dickson and Gold Coast businessman Michael Issakidis.

The pair was claiming deductions for false intellectual property in the medical industry through a string of fake companies, receiving a tax benefit of about $68 million and evading $135 million in tax. Both were sentenced to 10 to 14 years jail.

The AFP together with the Australian Securities and Investments Commission was also involved in the successful investigation and prosecution of former Leighton Holdings chief financial officer Peter Gregg.

Gregg, who was also at one time former CFO of Qantas, was found guilty of falsifying Leighton’s company records for the unlawful payment of $15 million to a United Arab Emirates firm; he is to be sentenced on January 31 and faces up to two years jail.

Originally published as Police target lawyers and accountants helping families become frauds