A lawyer and accountant caught up in Australia’s largest fraud scam, which robbed the Tax Office of over $100 million, has faced court.
Lawyer and accountant in $105m Plutus Payroll scam faces court
For an alleged period of two years, Dev Menon was involved in the Plutus Payroll scam that funnelled funds meant for wages, tax, and superannuation into side companies directed by “vulnerable” people.
It was alleged the company used its fee-free service to attract legitimate clients and received around $141 million. Over $105 million that was set aside as GST and PAYG for the Australian Taxation Office was instead syphoned by the primary conspirators.
After a lengthy hearing, before which defence filed a number of pretrial applications, the Crown submitted, were an attempt to “prolong the proceedings”, Mr Menon was found guilty by a jury for his role.
The NSW Supreme Court heard on Thursday (29 June) this allegedly included concealing the fraud from the ATO, the Australian Federal Police, and the Office of the State Revenue and advising the primary conspirators in fraud, creating false deeds and a cover-up attempt.
It was submitted Mr Menon was part of the blackmail of “impoverished, vulnerable, and often drug-affected” directors. These directors, the Crown said, have been left with multimillion-dollar debts.
In sentencing submissions, the Crown submitted Menon was in an “intentional situation” where he managed trust accounts and created false fee notes and legal bills as a “mechanism for the money to be taken out of the structure and sent to second-tier companies”.
It was alleged the Commonwealth lost around $76 million during the two-year period Mr Menon was involved in the conspiracy.
It was not proposed Mr Menon was “principally motivated by greed”.
“Because of the nature and background (of Mr Menon), he’s not a man without some sophistication, knowledge, and training. He has been a solicitor for some time, he was an accountant, and was qualified in both arms of his practice,” the prosecution said.
There was a dispute between the parties as to when Mr Menon became involved, with the Crown submitting it had to have begun as early as March 2015 because it would have been clear to him as a legal and financial professional that “none of this was above board”.
“It was obvious to anyone, and was particularly obvious to a solicitor and an accountant, that Plutus Payroll as a fee-free service, (sent money to) second-tier companies that did nothing, (and to) directors who were obviously not equipped to be directors,” the prosecution submitted.
“His role was not as a solicitor or an account, but as a dishonest participant in this conspiracy.”
Defence instead argued Mr Menon’s involvement was “very sporadic” up until he learnt of the conspiracy “until at least May 2016”.
The court heard while Mr Menon may be able to return to accountancy, he has lost any prospects of working in the legal profession.
“The court can take into account that this is not just a solicitor losing his legal career … but somebody who has offended in the context of using and abusing his position as a lawyer and (using) his very own trust account in carrying out the offence,” the Crown said.
Justice Anthony Payne agreed his “career in the law is over”.
Justice Payne said he will return next week to sentence Mr Menon.
What is the Plutus Payroll scheme?
The scheme was said to have started in a Sydney CBD strip club in 2014 by five men, including Adam Cranston, the son of then deputy commissioner of the ATO, Michael Cranston. It was not alleged Michael Cranston was involved in the alleged wrongdoing.
The alleged co-conspirators were former fund manager and property investor Peter Larcombe, who was also believed to be associated with motorcycle gangs; former professional snowboarder Jason Onley; entrepreneur Simon Anquetil; and experienced operator in the recruitment industry, Josh Kitson.
By the time police closed in on the scheme in May 2017, Adam Cranston’s sister Lauren Cranston was involved as was Mr Menon.
Plutus Payroll was charged with transferring its clients’ GST and PAYG obligations to the ATO, but these funds were allegedly instead transferred to the second-tier companies run by the phony directors.
The second-tier companies then allegedly transferred a portion to the ATO but pocketed what was reportedly 40 per cent. This was then allegedly transferred to the conspirators.
A taped conversation obtained by Four Corners between Mr Cranston and Mr Menon was heard by police near the end of 2016. In it, Mr Cranston allegedly told Mr Menon it was a “Ponzi” scheme and assured him the “ATO won’t know … not until well down the track”.
Other recordings allegedly captured Mr Menon meeting with Adam and Lauran Cranston to discuss a plan to blame Mr Larcombe.
In the conversation, obtained by ABC, Mr Menon told the siblings “this protects everyone, right. Me, every single person”.
Mr Larcombe had been found dead at the bottom of a multistorey car park in Los Angeles in August 2016 after he sent a text to Mr Cranston that he had “heard from different sources the whole business is about to be rolled”. His death was ruled a suicide.
In April 2017, the ATO issued garnishee notices and, by May 2017, police moved to raid the homes of the key conspirators.
Mr Menon, Adam and Lauren Cranston, Mr Onley, and Mr Anquetil were charged with conspiring to dishonestly cause a loss to the Australian government and dealing with proceeds of crime.
In March this year, Lauren Cranston was sentenced to eight years’ imprisonment. Justice Payne said she became involved because of a “misguided sense of loyalty to her brother”.
Mr Anquetil was sentenced to just over seven-and-a-half years behind bars and Mr Kitson was jailed for four-and-a-half years.
Adam Cranston and Mr Onley are due to be sentenced in the coming weeks.