One of the individuals accused of being an alleged co-conspirator in the largest tax swindle in Australian history, Simon Anquetil, reportedly engaged in phoenix activity and alleged fraud during his time at his former IT company, EStrategy Group.
Anquetil is the alleged former director of Plutus Payroll, the outsourced payroll management service company that left hundreds of IT contractors around the country without wages for weeks after its accounts were frozen by the Australian Taxation Office (ATO) in late April.
According to a report by Fairfax Media, Anquetil's previous IT business entered insolvency in 2013 owing more than $200,000 to the ATO and American Express.
The liquidator’s preliminary report showed EStrategy Group failed due to offences and frauds, insolvent trading and setting up group companies with the intention of alluding creditors, according to Fairfax.
Anquetil was named as one of the employees whose fraudulent activities led, in part, to the demise of the company. While only listed as an employee, the auditor came to believe that Anquetil was the “mastermind” behind the scheme, the report stated.
Both American Express and the ATO attempted to recoup funds from the business. American Express was owed $117,712 on corporate credit cards, and the ATO was short $101,752 due to EStrategy’s failure to contribute Pay As You Go tax and GST, according to Fairfax.
During a hearing in 2013, a Federal Court heard that Anquetil spent $63,000 on company American Express cards for strip clubs in a four-month period, Fairfax reported. It is said he racked up $12,000 at one strip club in one day.
In his defence, Anquetil said he had secured a lot of work by using the clubs to entertain prospective clients.
Anquetil’s subsequent venture was Plutus Payroll, which now sits at the centre of a $165 million fraud against the ATO.
The fraud scheme allegedly involved the payroll company, run by the syndicate members, accepting money from legitimate clients to process payroll on their behalf.
This money was allegedly transferred to seven sub-contracted companies known as Tier 2 companies, which then made payroll payments to individual workers of clients.
The directors of these Tier 2 companies were known as “straw directors”, according to the AFP.
“They are essentially a front – individuals recruited to appear to be running the companies, but the syndicate members retain effective control,” the AFP said on 18 May..
One of Anquetil’s alleged co-conspirators in the scam was Adam Cranston, the son of deputy ATO commissioner, Michael Cranston, according to reports, while the commissioner himself has been issued with a court attendance notice, although the AFP stresses that the senior Cranston was not part of the criminal syndicate.
Employers who used Plutus may be up for lost tax bill
To add to the pain that those caught up in the scandal are likely feeling, employers caught up in the fraud are now being told they could be liable for tax that wasn't paid because it was being siphoned off by a criminal syndicate, BDO tax partner Mark Molesworth told Fairfax Media.
In certain cases, the ATO would be able to hold an employer responsible even though payroll services had been outsourced to Plutus, he said.
"If the service provider does not make the payments to the ATO as required, it will be the employer who the ATO will target for payment, not the service provider," Molesworth said.
"An employer could potentially have to pay the amount again to the ATO even though they have already paid the amount to the service provider," he said.