Gold fraudsters jailed over ‘brazen’ fraud, each slapped with 8 year sentence

Two men have been jailed for eight years each after they were busted for fleecing the tax office out of $40m.

Jonathan Kely and Cedric Millner have been sentenced to eight years in prison each. Picture: David Gray

Two architects of a “brazen” gold fraud scheme in which more than $40m was fleeced from the tax office have each been jailed for eight years.

NSW Supreme Court judge Richard Cavanagh handed down identical jail terms to Jonatan Kelu and Cedric Millner, who duped relatives and strangers referred to in court as “the Koreans” into participating in schemes involving the purchase of millions of dollars of pure gold bars without paying GST.

The court heard Kelu, 48, and Millner, 56, worked together in 2012 and 2013 “with the intention of defrauding” the commonwealth of goods and services tax revenue.

Justice Cavanagh said he could not establish who was the architect of the scheme, but said Kelu was “more significant”.

“Tax fraud is not a victimless crime. (It) causes loss to the community as a whole,” he said.

“There is a significant loss of money which could have been used for the benefit of the community.”

Justice Cavanagh said the 2013 scheme was particularly “brazen” because Kelu and Millner duped non-Australian citizens into the scheme who could not have understood what they were being paid for.

Kelu and Millner were each sentenced to a total of eight years jail, with a non-parole period of four years and six months.

They defended their conduct by claiming the money was to support a project “intended to be a large-scale scientific endeavour”, and said the situation was a “misunderstanding”.

Handing down the sentences, Justice Cavanagh acknowledged Kelu’s diagnosis of autism-spectrum disorder but said it did not mean he failed to understand what he was doing was dishonest.

While neither man showed any remorse for their actions, they also did not live a “lavish lifestyle” despite their successful tax evasion scheme, Justice Kavanagh said in his sentencing remarks.

Pure gold bars were bought from a legitimate business in Sydney called ABC Bullion, transferred to Millner’s house in Ashfield — in the city’s inner west — where they were melted in one of 18 furnaces stored at the premises.

It was then resold as scrap gold to another reputable business — Melbourne company Focus Gold — and transacted through Kelu’s company, Investrix Pty Ltd.

GST does not have to be collected for the sale of pure gold, but it must be collected for scrap gold.

Investrix correctly received GST payments from Focus for the transactions, but then they claimed entitlement to Input Tax Credits by offsetting the amount of GST they received.

Kelu and Millner were each convicted of two offences of conspiring to dishonestly cause a loss to the Commonwealth in July.

Justice Cavanagh said the two schemes resulted in a loss of GST revenue to the sum of $40,911,685.

He said the 2012 scheme, in which five separate gold-trading accounts where set up in the names of Kelu and Millner’s friends and family, resulted in GST revenue loss of $15,925,956.

And the 2013 scheme, in which Kelu and Millner co-opted a group of Korean nationals who were living in Australia temporarily, short-changed the Commonwealth by $24,985,729.

The Australian Taxation Office also claim they are owed a penalty of $36m and additional general interest charges of $86m, but these amounts were not considered by Justice Cavanagh in sentencing.

The tax office’s serious financial crime taskforce Chief John Ford said: “Our message is clear to those who seek to evade or cheat the tax system; there is no place for you to hide and we will not tolerate this behaviour.”

To date, $16m has been recovered and there are ongoing proceedings seeking to recover the rest of the money.

Kelu has already filed a notice to appeal his conviction.