Two men get 8 years’ jail for $40m gold bullion fraud
An ATO-led investigation uncovered false claims for GST credits in a gold recycling scheme.
Two men have each been sentenced to eight years’ jail for a $40 million gold bullion fraud in the wake of an ATO investigation.
The Supreme Court of NSW convicted Cedric Adrian Millner and Jonatan Kelu last Friday of conspiring to dishonestly cause a loss to the Commonwealth through a scheme to falsely claim GST credits for the purchase of gold.
An ATO-led investigation, known as Operation Nosean, found the co-conspirators 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 BAS by falsely stating that the GST-free gold bullion was purchased inclusive of GST under the second-hand dealer's rules, which resulted in approximately $40 million of lost revenue.
Serious Financial Crime Taskforce chief John Ford said it 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 concerning precious metals.
Participants in gold bullion fraud included refiners, bullion dealers, gold kiosks, dealers and buyers. The frauds sometimes involved multiple participants in the supply chain being complicit and benefiting to different degrees while at other times innocent parties were 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.
Each eight-year sentence involves a non-parole period of 4 years and 6 months.
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