AFP bugs in Cranston fraud inquiry ‘invalid’

A law firm was improperly bugged four times by federal police investigating the son of a former senior ATO official, a court has heard.

Adam Cranston. Picture: John Grainger

A law firm was improperly bugged four times by federal police investigating the son of a former senior ATO official over an alleged $100m tax evasion scam, a court has heard.

At a pre-trial hearing on Monday, the NSW Supreme Court heard the AFP covertly recorded a series of conversations between Adam Cranston and his tax lawyer Dev Menon at Clamenz Lawyers in January 2017.

Adam and Lauren Cranston — the adult children of then deputy commissioner of taxation Michael Cranston — are facing a joint criminal trial with Mr Menon and Jason Onley, their alleged co-conspirators.

They are among nine people accused of creating a payroll ­administration company, Plutus Payroll, and using the business to  withhold pay-as-you-go tax worth an estimated $105m.

Barrister Peter Bruckner, for Mr Menon, urged the court on Monday to reject evidence gathered from four listening devices that were planted by police inside conference rooms at Mr Menon’s law firm. When AFP officers used the warrant in January 2017, Mr Bruckner said, they failed to show a “reasonable belief” that Mr Menon was a “central participant” in the alleged “ongoing criminal conduct”.

“They did not have the requisite state of mind to justify wiring up all the conference rooms of a law firm,” he told the court. “They were motivated to rush in and see what they could record.”

Mr Menon also held meetings at Clamenz’s office inside Sydney’s MLC Building, including one in which alleged syndicate member Daniel Rostan­kovski is accused of threatening Mr Menon with violence.

Raelene Sharp, a barrister for the commonwealth, said the ­defence had failed to establish “impropriety” under the Sur­veillance Devices Act, arguing that the recorded conversations were “admissible” evidence.

Ms Sharp said the AFP was permitted to plant listening devices in places where Mr Cranston could “likely or reasonably” visit, including inside multiple rooms at Clamenz Lawyers.

“There were four devices installed in three separate rooms; it’s clear the warrant authorised one of those to be installed at a place where Adam Cranston was likely to be,” she said.

“The day after the devices were installed, Adam Cranston was in those rooms.”

When arrested in May 2017, the syndicate members were allegedly three years into a conspiracy to defraud the federal government. They are also accused of dealing with crime proceeds exceeding $1m. Mr Cranston, who on Monday appeared without legal representation, has denied being the alleged ringleader.

Mr Menon has been accused of spending some of the proceeds on at least three properties, including a $752,000 penthouse and a $2.3m mansion.

Michael Cranston was acquitted by a jury last year of misusing his role to assist his son.

The hearing continues.