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12 charged in $17m fraud

A joint-agency investigation into an elaborate $17 million fraud has resulted in charges against 12 people.

Australian Federal Police (AFP) investigators executed search warrants at 10 locations across Sydney, nine in south-east Queensland and two in the ACT in a "coordinated strike" against a transnational and serious organised criminal syndicate.

It is alleged the accused used labour hire and payroll companies associated with the building and construction industry to defraud the Commonwealth.

A joint statement between ASIC, the ATO and the AFP said the investigation into the syndicate began in December 2018 by the AFP.

"The principals of this syndicate were identified and an innovative whole-of-government approach to the investigation was established," the regulators said.

"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 ATO."

The statement said the total value of the fraud has amounted to over $17 million since July 2018.

The statement said that money eventually made it into bank accounts controlled by syndicate members and their associates.

A 49-year-old man is alleged to be the director of the organised crime syndicate was arrested at his Surfers Paradise home.

The joint statement said his primary co-conspirators included a mix of financial industry experts and former bankers, demonstrating the level of expertise required to operate and facilitate what it describes as a very complex fraud.

Seven men were arrested in Queensland who are 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 in September.

The AFP has obtained restraining orders under the Proceeds of Crime Act 2002 for assets allegedly belonging to, or under the effective control, of the syndicate.

These assets include 12 real properties, 17 motor vehicles, 65 bank accounts, a caravan and a boat with a total value of approximately $21 million.

The regulators said the Singapore Police Force have assisted the AFP in identifying and restraining approximately $1.3 million held in Singapore bank accounts.

"The AFP's commitment to developing private sector partnerships was instrumental in the success of this, with the ANZ Bank and Westpac providing significant assistance to this investigation," the statement said.

"The ATO is undertaking action to target the outstanding tax obligations incurred by this syndicate and address the phoenix activity. ATO officers have initiated debt recovery processes relating to tax debts. The Australian Securities and Investments Commission will target corporate compliance and regulatory issues."

ATO assistant commissioner Aislinn Walwyn, who leads the agency's operational activity said that the arrests show that the taskforce is 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."

An ASIC spokesperson said this investigation highlights the importance of ASIC's position as a member of the SFCT to conduct joint agency work into serious financial crime and illegal phoenix activity, which continues to be a priority for ASIC.

"ASIC views seriously any attempt by individuals to facilitate or conceal illegal phoenix activity and other related contraventions of the law," ASIC said.

"Illegal phoenix activity is unacceptable and together with our SFCT member agencies, we will work to ensure any persons suspected of engaging in such activity, including directors who breach their duties, are held to account."

Read more: ATOAFPASICFraudSerious Financial Crime Taskforce
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