The Supreme Court of NSW has today convicted and sentenced 2 men to jail for conspiring to cause a loss of approximately $40 million to the Commonwealth following ATO action.
Co-conspirators, Cedric Adrian Millner and Jonatan Kelu were convicted of 2 offences of conspiring to dishonestly cause a loss to the Commonwealth contrary to s135.4(3) of the Criminal Code Act 1995 (Cth) and each sentenced to 8 years imprisonment with a non-parole period of 4 years and 6 months for their role in committing gold bullion fraud over a 2-year period.
The ATO-led investigation, known as Operation Nosean, found the 2 men purchased GST-free gold bullion, refashioned it into scrap and then sold it inclusive of GST to a gold refiner.
Investrix Pty Ltd, of which Kelu was the sole Director, then claimed GST input tax credits in business activity statements by falsely stating that the GST-free gold bullion was purchased inclusive of GST under the GST second-hand dealers rules, which resulted in approximately $40 million of lost revenue.
Serious Financial Crime Taskforce (SFCT) Chief John Ford said the taskforce had been concerned about precious metal fraud for some time.
‘In this case, these individuals thought they were clever and could get away with rorting Australians out of revenue that could ultimately have been put towards essential services such as health and education,’ Mr Ford said.
‘This outcome sends a clear message to the community that we have robust systems in place to stop all forms of financial crime, including those that involve gold bullion. Those who try to exploit the tax and super system will be brought to account for their actions by our dedicated team of experts.’
‘Our message is clear to those who seek to evade or cheat the tax system; there is no place for you to hide and we will not tolerate this behaviour.’
Operation Nosean was established to fight back against gold bullion fraud involving gold recycling arrangements, exploiting the GST rules in relation to precious metals. Identified participants in gold bullion fraud have included refiners, bullion dealers, gold kiosks, dealers, and buyers including ‘missing traders’. The frauds sometimes involve multiple participants in the supply chain being complicit and benefiting to different degrees, other times with innocent parties being exploited without their knowledge.
In 2017, the SFCT issued an Intelligence Bulletin reinforcing its efforts to target fraud in the precious metals refining industry. Following this, new laws came into effect on 1 April 2017 which reverse charge GST on gold supplies to refiners, traders and other businesses that purchase scrap gold, silver and platinum.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
