King of the camouflage: Money laundering lawyer joins clients behind bars

Justice has finally caught up with one of the state’s most crooked lawyers, who after laundering millions of dollars for organised crime groups has now joined a number of his ex-clients, including former MP Eddie Obeid, behind bars.

Last June Sevag Chalabian, 52, received a hefty 12-year jail term, with seven-and-a-half years non-parole, for a single count of money laundering. The jury heard he used his solicitor’s trust account to launder $24 million that he knew was the proceeds of crime.

Describing the solicitor as “an important cog” in the wheel of organised crime, NSW Supreme Court Justice Peter Johnson said Chalabian had used “disguise and deception” to create a “veneer of legitimacy” to enable his clients to launder dirty money associated with one of the nation’s biggest tax frauds, the Plutus Payroll saga.

The details of Chalabian’s conviction and sentence were suppressed until the jury delivered verdicts in the trials of Adam and Lauren Cranston, the son and daughter of the former deputy tax commissioner Michael Cranston, along with Jason Onley, Dev Menon and Patrick Willmott who were found guilty of a conspiracy to defraud the tax office and money laundering.

For years, Chalabian has been the king of the camouflage, providing the means for his clients to remain in the shadows. Even his unwitting 84-year-old widowed mother has been used as a front for some of his dubious deals.

Eddie Obeid hired Sevag Chalabian to negotiate and then disguise his family’s receipt of a $30 million payout. Credit: Daniel Munoz

On May 17, 2017, the Australian Federal Police executed search warrants at a number of premises across Sydney in connection with the Plutus Payroll saga. One of the premises raided was Chalabian’s York Street law firm, Lands Legal.

Several weeks earlier, two of Chalabian’s clients, who have also been jailed, threatened to expose the masterminds of the Plutus Payroll fraud, who had cheated the Commonwealth out of more than $100 million. For a handsome cut, the lawyer was happy to wash the $24 million from his clients’ successful extortion endeavour through his firm’s trust account.

Just the day before his firm was raided, Chalabian transferred his $880,000 share of the blackmail money to Hong Kong. On paper, the investor was KSE Property, the sole director and shareholder being his mother Sosi.

On this same day, a caveat was registered with the NSW Land Titles office indicating that Chalabian’s private company Eastprop had taken out an option on behalf of an unknown person to purchase a mansion in Woollahra for $13 million. The deal later fell over.

His mother’s company later came in handy to hide another astonishing amount of money.

Despite Chalabian being the subject of a police investigation for money laundering and having quit as a lawyer, in July 2017 controversial Chinese property developer Huang Xiangmo used him to channel $11 million to a secret beneficiary.

The Financial Review revealed that KSE received an $11 million payment as part of Huang’s company Yuhu’s $380 million purchase of the former Arnott’s Biscuits factory site in North Strathfield.

Chalabian’s mother Sosi, who speaks only limited English, told the paper she knew nothing about the payment. “How do I know? You ask my son,” she said. “I no see him much.”

“On the surface it has many of the hallmarks of money laundering,” Matt Fehon, a forensic investigator from McGrathNicol, said of the $11 million payment.

Last year, the ICAC recommended that the Director of Public Prosecutions consider criminal charges against Huang for delivering $100,000 in cash in an Aldi shopping bag to the NSW Labor head office in 2015. Donations from property developers have been banned since 2009. Huang has not been charged.

More than a decade ago, during the heady years of the mining boom, Chalabian was involved in dozens of speculative mining and resources companies some linked to the mysterious Perth businessman Michael Mihran Shemesian.

Michael Shemesian, aka Mick “Many Names”, has been linked to Sevag Chalabian.

Known as Mick “Many Names” due to multiple spellings of his surname (Shemessian, Shmazian, Shamazian and Chammassian) which appear on corporate records, it was under the name “Mihran Shemessian” that the reclusive prospector, now based in Dubai, was charged with possessing drugs and implicated in a money laundering scandal in the mid-1990s.

He was acquitted on both matters and there is no suggestion Shemesian has been involved in any wrongdoing.

When Eddie Obeid, the state’s most corrupt politician, needed a lawyer with skills in duplicity, he knew just who to turn to. “Mr Chalabian, a solicitor ... was retained by the family” to achieve “the maximum return possible” for their 25 per cent interest in a joint venture with Cascade Coal, said the judge in Obeid’s later criminal trial.

In December 2012, Chalabian found himself in the unwelcome glare of adverse publicity via the witness box at the ICAC explaining how he’d finessed a deal that secretly delivered $30 million to his clients.

Nick Di Girolamo (far left) acted for Moses Obeid (back, left), Eddie Obeid junior (centre), Paul Obeid (right) and father Eddie Obeid (not pictured) in their failed lawsuit against ICAC in 2016.Credit: Peter Rae

Having used inside information to acquire a stake in the winning bidder Cascade, Eddie Obeid hired Chalabian to extract a handsome exit payout.

Chalabian negotiated a $60 million payment, telling ICAC he had set up an “elaborate installation of trustees and companies so no one could find the Obeid name”. Chalabian acknowledged that concealing the Obeid name was essential “for fear that it would alert people to the chance that this exploration licence had been corruptly obtained”.

The first $30 million, paid in instalments, flowed into Chalabian’s firm’s trust account and out into the Obeids’ coffers. In May 2012, a Herald investigation spelled the beginning of the end for Eddie Obeid and his associates who stood to make millions of dollars from lucrative coal licences.

Because of the adverse publicity and the fact that the corruption watchdog was now circling, Cascade’s director Travers Duncan rejected Chalabian’s efforts to get his clients the second $30 million tranche.

“They argued, whinged, pleaded and I refused,” the late mining magnate later told the ICAC.

Chalabian had no findings made against him. However, former ministers Eddie Obeid and Ian Macdonald are currently serving jail terms over the matter.

This was not Chalabian’s only dealings with the Obeids to be examined by the ICAC. In November 2010, using $3 million they had corruptly acquired through their coal deal, Chalabian helped the Obeid family acquire a 25 per cent stake in a water infrastructure company Australian Water Holdings (AWH) from major shareholder and chief executive Nick Di Girolamo.

Di Girolamo, a lawyer, told ICAC it was a loan from his friend Eddie Obeid jnr, who worked for AWH.

At the time AWH was pushing for a billion-dollar privatisation deal with the then state Labor government. The water company was also lobbying the opposition.

In June 2012 Di Girolamo and Chalabian became business partners, establishing Anconna Resources, which was used to lobby on behalf of Korean-government-backed mining company Korean Resources Corporation (Kores) for approval of the Wallarah 2 coal mine, southwest of Newcastle.

The company records indicate that, once again, Chalabian was holding shares in Anconna for a mysterious person whose identity has never been ascertained.

Before the 2011 election, then-opposition leader Barry O’Farrell and his shadow resources minister Chris Hartcher, wearing “Water Not Coal” T-shirts, attended a rally opposing the proposed Wallarah 2 mine. “No ifs, no buts, a guarantee!” O’Farrell promised the rally.

However, once in government the Liberals had an about-face, reopening discussions with Kores.

Joining Chalabian and Di Girolamo at their newly established firm was Hartcher’s recently departed staffer Tim Koelma, whose wife was a shareholder in the company.

Koelma, who had worked for Hartcher for more than a decade, had left in April 2012 when it was revealed he was under investigation for using what ICAC later heard was a “sham” consulting company Eightbyfive to funnel prohibited donations to the Liberal Party. As ICAC later determined, it was Hartcher himself who was the mastermind behind Eightbyfive and one of those companies which paid handsomely for Eightbyfive’s services was AWH which forked out $183,000 leading up to the 2011 state election.

Parliament later heard that Hartcher “attended a private dinner at the home of Nick Di Girolamo with a director of Korea Resources Corporation” and that in early December 2012 Di Girolamo accompanied Hartcher on a “more than $19,000 ... taxpayer-funded trip to Korea” where the delegation met Wallarah 2 proponent Kores Resources.

Tim Koelma leaving ICAC.Credit: Rob Homer

On December 16, the Herald reported that ICAC was looking at AWH and Eddie Obeid’s lobbying efforts on the company’s behalf. ASIC records show Di Girolamo quit Anconna the following day.

The corruption watchdog found that Di Girolamo, Koelma and Hartcher and others evaded the election funding laws relating to the disclosure of political donations. However, under the existing laws at the time, the three-year timeframe within which prosecutions could be brought had already expired.

Koelma has since pleaded guilty to several counts of lying to the ICAC and has been sentenced to an 18-month intensive corrections order.

There were no corruption findings against Di Girolamo or Chalabian. However, Eddie Obeid and two other former ministers are facing criminal charges over a doctored AWH cabinet minute which, if accepted, may have delivered $60 million to the Obeid family.

In 2014 O’Farrell lost his premiership when he failed to recall at the ICAC that Di Girolamo had given him a $3000 bottle of Grange Hermitage upon his 2011 electoral victory.

The Wallarah 2 coal mine was approved in January 2018.

Having sailed through two corruption inquiries, Chalabian’s luck finally ran out in May 2017.

At their recent trial, the jury heard that Adam Cranston, his sister Lauren, Dev Menon, Jason Onley, Patrick Willmott, Simon Anquetil and others skimmed off more than $100 million that should have been remitted to the Australian Taxation Office (ATO).

The conspirators set up a company, Plutus Payroll, which offered payroll services to legitimate companies. However, the payroll tax responsibilities were subcontracted to second-tier companies. The “straw directors” or fronts were left to face the music when these second-tier companies went down the gurgler owing millions to the ATO.

From left to right: Jason Onley, Adam Cranston, Lauren Cranston, Patrick Willmott and Dev Menon.Credit: Faifax Media

Chalabian’s client Daniel “Big D” Rostankovski was in charge of recruiting and managing the straw directors, who included an 18-year-old single mother, an ex-Nomads bikie, a pole dancer and several drug addicts.

For months leading up to May 17, 2017, the AFP was monitoring the conspirators. Rostankovski had joined forces with eastern suburbs property developer and former bankrupt Daniel Hausman.

In 2015 Hausman shared business connections and an office in Double Bay with Adam Cranston and Jason Onley. It was through them that Hausman met Rostankovski and, by early February 2017, the pair had devised a plan to blackmail Cranston and the other Plutus conspirators by threatening exposure or violence unless they paid $5 million.

Daniel “Big D” Rostankovski was in charge of the “straw directors”.Credit: James Brickwood

“I’ve got all boys, all the Como boys [Comanchero bikie gang] waiting downstairs. They all want to come up and belt the f--- out of you guys...” Rostankovski was recorded telling Cranston, Onley and Menon as they met in Menon’s law office in Sydney’s Martin Place on February 1.

Rostankovski told them “I’ve used Sevag on purpose here” and that if they wanted to avoid being “f---ing arrested and denied bail,” then Chalabian is “waiting for your phone call”.

Menon was later heard on a phone intercept complaining, “They don’t teach you at law school how to deal with extortions.”

After receiving $5 million, the extortionists then demanded another $20 million.

As well as receiving $51,000 in legal fees, Chalabian’s cut for laundering the money through his trust account was $20,000 per million.

Property developer Daniel Hausman pleaded guilty to money laundering. Credit: Janie Barrett

Between February 1 and April 26, 2017, $24.2 million of the blackmail funds was deposited into Chalabian’s firm’s trust account. While his real clients were Hausman and Rostankovski, Chalabian pretended the clients were some Rostankovski’s straw directors.

During his trial, the jury heard an exchange via WhatsApp about the blackmail Hausman was planning. He told Chalabian they had enough dirt on the Plutus conspirators that could result in them “all going to long bay (sic)” – a reference to the well-known prison – unless they paid up.

In another message from Hausman to Chalabian, the property developer said they needed to keep “the pressure on that scumbag Dev [Menon, lawyer for the Plutus conspirators]... as well as the other 2 C---s Jay Onley and Adam Cranston, Who’s daddy is Michael Cranston, deputy comm of T[axation]...”

Hausman signed off telling Chalabian, “Go get them you animal.”

Property developer Michael Teplitsky was another longstanding client of Sevag Chalabian. Credit: Brook Mitchell

The judge observed that these were “telling and extraordinary communications to be sent to a solicitor”. As Johnson noted, Chalabian did not query Hausman as to what the “pressure” might be or why the people who were the source of the funds might be “all going to Long Bay”.

A large portion of the $24 million which came into his trust account was invested in property development projects involving another of Chalabian’s longstanding clients, Michael Teplitsky, who was also a close associate of Hausman.

Teplitsky has not been charged with any offence and there is no suggestion he knew about the blackmail. However, Plutus liquidators are still trying to claw back $11.6 million. It is also understood the liquidators are pursuing Chalabian.

Hausman, who was the architect of the money laundering scheme, was jailed for three years non-parole after receiving a discount for his early guilty plea. Rostankovski, who was also involved in the main Plutus conspiracy, received a non-parole term of nine years and six months.

In sentencing Chalabian to 12 years’ imprisonment, with a non-parole period of seven and a half years, Johnson said that an example should be made of the former high-flying solicitor who was motivated by greed to offer his “considerable professional skills” to advance the interests of organised crime.

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