By Shane Wright
Two men who pretended to be among the world’s largest gold bullion buyers and fleeced the federal government of almost $41 million in GST have been stripped of assets including luxury homes, bank accounts and $250,000 in cash.
The NSW Supreme Court issued the orders against Jonatan Kelu and Cedric Adrian Millner, who are both serving eight years in jail, for their role in defrauding the Commonwealth in a gold scam they ran more than a decade ago.
A criminal asset taskforce, headed by the Australian Federal Police, launched an investigation codenamed Operation Nosean in 2012 that included agencies such as Border Force, the Australian Taxation Office, AUSTRAC and the Australian Criminal Intelligence Commission.
Electric kilns that were used to melt down gold bullion and turn it into scrap gold as part of a $41 million gold scam.Credit: AFP
The taskforce started after authorities received intelligence that high quantities of pure gold bullion had been bought from a broker in Sydney. About the same time, the Tax Office had noted an unusual pattern of large GST refunds being paid to several gold refiners in Sydney and Melbourne.
They identified what is described as “missing trader fraud” in which fake transactions between companies are made to claim illegitimate tax refunds.
The scammers initially used families and friends before moving to the identities of foreign students to purchase pure gold bullion from a broker, which does not attract GST.
The gold was then melted down or defaced so that it could be described as scrap gold, which attracted GST at the time.
Shell companies controlled by Kelu and Millner then bought the scrap gold and on-sold it to a gold dealer, adding the 10 per cent GST.
The companies then claimed GST input credits from the government which, over 2012 and 2013, amounted to almost $41 million and are supposed to compensate businesses for things they use in production.
The two men were convicted and sentenced in late 2023, but the orders for seizing the assets they accrued have only now been processed.
Some of the gold on its way to being turned into scrap gold and used in a GST scam.Credit: AFP
The assets include four Sydney homes worth almost $7 million, four bank accounts containing more than $2 million, five ounces of gold worth about $23,000, and almost $250,000 in cash.
Taskforce head Stefan Jerga said the case and forfeiture of assets showed the federal police and other agencies would continue to work to bring criminals before the courts and confiscate proceeds of crime.
“The nature of this crime was extremely intricate and took a significant amount of effort, time and commitment to untangle the web and identify the complex ownership structures set up to hide the true beneficiaries and wealth of these criminals,” he said.
“With the persistent work of all involved including the ATO, all partner agencies and the CACT’s forensic accountants, lawyers, financial experts and investigators, we were able to deconstruct and dismantle this illegal operation.”
The assets will now be liquidated by the Australian Financial Security Authority and the proceeds will then be put into the Commonwealth’s Confiscated Assets Account.
Money in that account can then be spent on crime prevention programs or other law enforcement initiatives.
Since 2019, the taskforce has held more than $1.2 billion in assets, including houses, cars, yachts, cryptocurrency, fine art and luxury goods.
The GST loophole on gold was created when the tax was established in 2000. It was removed by the Turnbull government in 2017.
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