The AFP yesterday raided 10 locations across Sydney, nine in southeast Queensland and two in the ACT in a coordinated strike against an organised criminal syndicate that was using labour hire and payroll companies associated with the building and construction industry to defraud the Commonwealth.

It followed an 18-month investigation into the syndicate and it was estimated the alleged fraud was worth about $17 million.

“A 49-year-old man alleged to be the director of this organised crime syndicate was arrested at his Surfers Paradise home early yesterday morning,” according to the Australian Securities and Investments Commission.

“His primary co-conspirators included a mix of financial industry experts and former bankers, demonstrating the level of expertise required to operate and facilitate such a complex fraud.”

Seven men were arrested in Queensland yesterday – six are scheduled to appear before Southport Magistrate’s Court tomorrow, with all seven expected to be extradited to NSW to face court in the near future. Two men and two women were arrested in Sydney, while a man in the ACT was served with a court attendance notice to face court in NSW on 3 September 2020.

The AFP has seized 12 real properties, 17 motor vehicles, 65 bank accounts, a caravan and a boat with a total value of approximately $21 million. The Singapore Police Force have assisted the AFP in identifying and restraining about $1.3 million held in Singapore bank accounts.

“The principals of this syndicate were identified and an innovative whole-of-government approach to the investigation was established. The AFP engaged its partners through the Serious Financial Crime Taskforce to target this conspiracy to siphon off money that should have been remitted to the Australian Taxation Office.

The total value of the fraud has been calculated at more than $17 million since July 2018. These funds eventually made it into bank accounts controlled by syndicate members and their associates.

The ATO is undertaking action to target the outstanding tax obligations incurred by this syndicate and address the phoenix activity.

It will be alleged in court that the syndicate had effective control of labour-hire companies undertaking legitimate work in the building and construction industry. The syndicate then outsourced the processing of their payroll services to separate payroll companies. It will be alleged in court that the syndicate also operated and controlled these payroll companies for the sole purpose of not paying mandatory Pay As You Go Withholding (PAYGW) tax to the ATO.

Employee and contractor wages, superannuation and insurance were correctly paid, but money allocated to be paid to the ATO for tax obligations was diverted and allegedly laundered through a variety of other entities. When a substantial tax debt was accrued by these payroll companies, the syndicate would abandon them and create new payroll companies in an attempt to continue the fraud and conceal their illegal activities.

ATO Assistant Commissioner Aislinn Walwyn, who leads the agency’s operational activity under the SFCT, said that these arrests show that the taskforce was well equipped to deal with the most serious cases of financial crime.

“A common theme of serious financial crime is a business that may appear legitimate on the surface, but once you peel back the layers, you discover a web of well-organised syndicated activity, like phoenixing, which causes real harm to people’s livelihoods and lines the pockets of people who abuse the system,” she said.

“The SFCT is focused on pursuing people who deliberately try to rip off the country by evading their taxes. Not complying with tax obligations is not a victimless crime – the whole community is impacted by this behaviour. Revenue loss is a significant injury suffered by all Australians.”

“Together, we have pieced together a very complex set of arrangements involving members of a syndicate allegedly engaged in fraud, phoenix activity and tax evasion. The debt recovery actions we have taken ensure we can claw back as much of the money illegally obtained by these groups and direct it back to the community where it belongs.”