Idiots steal $165million from Tax Office

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Matthew Ellard
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Idiots steal $165million from Tax Office

Postby Matthew Ellard » Mon May 22, 2017 12:39 am

A group of idiots stole $165 million from the Australian Taxation Office and forgot to cover their trail

The inside story of the $165m scam on the ATO
http://www.afr.com/news/policy/tax/the- ... z4hlHdz3mt

How the scam worked
They set up a payroll administration company. Innocent large companies would sent one weekly payment to the payroll company and, in theory, the payroll company would pay the individual workers, their PAYG, their insurance and their superannuation (retirement insurance). The payroll company didn't charge a fee to do this and claimed it made money selling other financial products to the large companies using the service.

In reality, the payroll company paid the money to a series of smaller "shelf companies". The shelf companies would pay the individual workers but strip out half of the tax payments and pay them to the individuals who set up the schemes. The tax office would receive half the due tax and send letters demanding the balance. In theory the tax office did not wind up the shelf companies if they made 50% payments and this would continue for a couple of years. When the tax office discovers in the future that the shelf companies had no assets they simply wind up the shelf companies with no further investigation.

What went wrong?
Firstly, the criminals were all young and inexperienced. They knew 90% of the methodology of earlier tax scemes but not the whole 100%. Therefore they started the sceme with no clear view how to hide their crime.

Secondly, they operated the entire series of self companies from one computer and lodged all the tax office forms from that one computer. In the same way Pyrrho knows who sock-puppets are, so did the tax office. They even left an excel spreadsheet on this one computer (now in possession of the tax office) with all their names and how much they took.

Thirdly, the idiots bought racing cars, aircraft, blocks of home units and told everyone how rich they were......including the tax office, who checks income against owned assets.

Fourthly, they started to blackmail each other to take larger amounts and some dobbed others in and unwittingly incriminated themselves.

Hang them high without mercy.
Australia's social harmony works on perceived equal treatment from the permanent arms of government (tax, roads, cheap transport and so on). Australians are allowed to hate & love politicians but accept a "fair go" from the tax office.
Therefore these people must be punished without mercy.

The sad part
Two of the baddies were the son and daughter of the Deputy Commissioner of Taxation. When the son worked out the Tax Office was "one to him", he asked his father to check if tax audits were proceeding. The father, who loved his son and who was not aware of the scheme did this and this is a crime. The father is an idiot for doing this but I have some sympathy for him. His career is dead and I hope the judge shows him some mercy.

Clawing back the money
About half the money is in real property. (houses, cars, cash & tangible assets) The ATO will recover this.

Crime simply isn't worth it.

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Re: Idiots steal $165million from Tax Office

Postby Gord » Mon May 22, 2017 4:01 am

Wait -- they bought race cars, aircraft, and houses but didn't think to use multiple computers? Were they trying to save money?
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Re: Idiots steal $165million from Tax Office

Postby Matthew Ellard » Mon May 22, 2017 4:23 am

Gord wrote:Wait -- they bought race cars, aircraft, and houses but didn't think to use multiple computers? Were they trying to save money?


They were idiots.

I studied tax law because I got busted for being a participant in a low level film finance scam. I certainly didn't get 100 out of a 100 in my law exams, meaning I had gaps in my knowledge. One of these idiots was a general insolvency lawyer. That mean't he had more gaps regarding tax scams that I had and the tax officers whom I studied with.

What happens is that these people read about older tax scams and understand 90% of the scam. It never occurs to them that they are missing a whole chunk required to make the tax scam actually work.

However this matter is pretty simple. They never thought they would be caught and thus have no arguments to justify what they did. A good tax scam is when, if you get caught, you can at least try to argue that the scheme had some legality.

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Re: Idiots steal $165million from Tax Office

Postby JO 753 » Mon May 22, 2017 4:40 am

KInda ruinz your faith in the institutionz wen idiots can get away with that level uv crime for so long.

I assume they coud hav gotten away with it indefinitely if they werent quite so stupid.

Here in America, the smart bad guyz run companyz, usually sum sorta money shuffling scam, such az insurans or a bank or an investment joint.

Try running out the door with a carton uv ice cream without paying and you hav a good chans uv spending the day in jail. Set up a bogus Wall Street firm and you can get away with it for decadez. Bernie Madoff made off with 65,000,000,000$ before the gooberment finally bothered to shut him down.
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Re: Idiots steal $165million from Tax Office

Postby Matthew Ellard » Mon May 22, 2017 5:00 am

JO 753 wrote:I assume they coud hav gotten away with it indefinitely if they werent quite so stupid.


No. That's the entire point. They started the plan without a complete exit strategy. As each shelf company was liquidated by the ATO each director would be prosecuted and start turning in the others for leniency.

JO 753 wrote:Here in America, the smart bad guyz run companyz, usually sum sorta money shuffling scam, such az insurans or a bank or an investment joint.
I agree. but not just the USA. It's international tax scams that do the greatest damage to our various economies.

If we can bust these international scams in places where there is still capital punishment....then we can send a message.
:D

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Re: Idiots steal $165million from Tax Office

Postby bobbo_the_Pragmatist » Mon May 22, 2017 5:12 am

Matthew Ellard wrote:What happens is that these people read about older tax scams and understand 90% of the scam. It never occurs to them that they are missing a whole chunk required to make the tax scam actually work.


I love reading about high crimes and scams. Thing is: everything "we" read is about the ones that get caught.....so not only did the idjits not note the missing 10%, they didn't study the setup long enough to figure (or just read) how they got caught and therefor how to evade.

"In my life"..... I've read of 4-5-6 "can't fail" schemes.... you just have to be of the mind to do it. One of my fav's because it isn't illegal (on its face but calculated fraud always is?) was years ago you could roll over credit card balances to new cards and as your credit history aged, you got higher credit amounts. Some guys were rolling over 2-3-4 Hundred credit card accounts. Some cards allowed cashed disbursements but the usual scheme was to buy stuff on the card and then go to store for a cash refund. Over time.... this all got closed down..... but I kinda "fumed" everytime I saw it reported. Most were caught by not reporting their income from the crime.

My view: decide how much you are in for.... get that amount.... and move to Switzerland.

Hmmmm.....I wonder how those other 5 scams are still going?

EDIT: In USA there is A LOT OF Medicare and Medicaid fraud. Lots of it by our honest doctors who finagle the system to maximize their reimbursement (Most of it is fraud...billing a 30 minute visit when a 10 second one was actually given...some docs racking up 8000 working hours per year sort of thing) but some outright fraud is a bit like the Oz Tax Fraud. Just get a business license and send the Feds a bill for medical equipment. It takes them 3-5 years to send out the first auditor to see if you are even there .... or just a postal drop. So, as above....figure how much time before you quit and go to Switzerland. This was still doable.... last year. More again in the future as those "Evil Regulations" are repealed.
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Re: Idiots steal $165million from Tax Office

Postby TJrandom » Mon May 22, 2017 7:20 am

Back in the day... when I was using `temp/contract staff` instead of hiring them directly, I had one of these staff supplier reps suggest that they could bill me for more than they supplied, and put that extra amount into any account I named. At that time anyone could open an account in a fake name, without ID, so there was a chance that it could work undetected. However, in addition to not wanting to screw my firm, I also realized the power over me that doing so would have given that supplier. I slowly wound down that relationship. Lots of scams out there....

I was also once `tested` by my employer. In the name of one of my suppliers, they sent `year-end` gifts to my home that exceeded in value a policy limit they had set, to see if I would report it. Report it I did, and thus kept my job, and the gift. It all came to light when I told that supplier to cease sending such gifts, only to find that they indeed had not. My firm`s internal audit, in conjunction with HR, routinely checked on staff with spending/contracting limits that exceeded a certain value. The government could learn a bit from private enterprise.

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Re: Idiots steal $165million from Tax Office

Postby bobbo_the_Pragmatist » Mon May 22, 2017 9:13 am

TJ==good call on your part. "Just being reasonable." After seeing just about every "Senior Executive" at my corporation that got terminated for cause included a charge for "excessive charges on expense accounts" I got into the habit of only submitting charges for what could not be denied: Seminar Fees, Hotel Room, and Air fare. I figured I eat at home, why should I file an expense for it?

I'm not totally sure..........but I never got fired for cause. Silly what people will put at risk for so little. I remember VP Agnew under Nixon being bribed for $5,000. "What a cheap stupid bastard".... is what I thought.
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Re: Idiots steal $165million from Tax Office

Postby Gawdzilla Sama » Mon May 22, 2017 2:51 pm

I'm not sure why you'd call them idiots. They did a great good deed, keeping that money out of the hands of the government.
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Re: Idiots steal $165million from Tax Office

Postby bobbo_the_Pragmatist » Mon May 22, 2017 10:01 pm

Gawdzilla Sama wrote:I'm not sure why you'd call them idiots. They did a great good deed, keeping that money out of the hands of the government.


.... because they got caught?
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Re: Idiots steal $165million from Tax Office

Postby Gawdzilla Sama » Mon May 22, 2017 10:24 pm

bobbo_the_Pragmatist wrote:
Gawdzilla Sama wrote:I'm not sure why you'd call them idiots. They did a great good deed, keeping that money out of the hands of the government.


.... because they got caught?

Until they got caught. And pissing away most of it means the government will have less money to do mischief with.
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Re: Idiots steal $165million from Tax Office

Postby OlegTheBatty » Tue May 23, 2017 6:24 pm

Gawdzilla Sama wrote:
bobbo_the_Pragmatist wrote:
Gawdzilla Sama wrote:I'm not sure why you'd call them idiots. They did a great good deed, keeping that money out of the hands of the government.


.... because they got caught?

Until they got caught. And pissing away most of it means the government will have less money to do mischief with.


No matter what, they don't shrink the mischief accounts.
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