Top 10 White Collar Corporate Crimes

#1 Michael Issakidis & Anthony Dickson

The case of 67-year-old Michael Issakidis and 54-year-old Anthony Dickson was the largest ever successfully prosecuted tax fraud and money laundering case in Australia, involving over $135 million. The pair were directors of a company called Neumedix Health Australasia Pty Ltd.

The company purported to purchase and invest in medical technologies from a Cayman Islands company known as ‘Athena’, with the funds partly provided by a Samoan financier. The technologies were valued by a supposedly independent valuer.

However, it was ultimately found that all of these entities were set up and controlled by Dickson and Issakidis. The inflated valuations, provided by the supposedly ‘independent’ valuer controlled by the pair, allowed the pair to claim massive tax deductions based on the depreciation of their value over time.

Dickson and Issakidis created numerous false identities and siphoned money through the UK, Hong Kong, and the United Arabic Emirates via illegitimate domestic and international companies.

The money was then transferred back to them, often disguised as loans.

The money was utilised to buy luxury cars, holidays, yachts, properties, jewellery, and even a shopping centre in Queensland. All such materials were seized as ‘proceeds of crime’ by police after the two were arrested in April 2012.

The fraud investigation and court proceedings spanned 6-years, involving the Serious Financial Crime Taskforce, and members of the ATO, AFP and CDPP.

Issakidis was sentenced to 10 years’ jail in relation to charges of tax fraud and money laundering.

Dickson was originally sentenced to 11 years’ jail but had his sentenced increased to 14 years on appeal. This is the longest jail time imposed for a tax fraud and money laundering matter, thus far.

Upon sentence, Dickson showed little to no remorse, claiming that the only lesson he learnt was: “to avoid doing business in Australia.”

#2 Plutus Payroll

Plutus Payroll was a company which provided payroll services to various companies, and operated a tax fraud scheme, defrauding the Commonwealth of more than $105 million over three years.

The scheme involved the company accepting money from legitimate clients to process payroll on their behalf. As part of their obligations in processing payroll, the company was to remit pay as you go withholding tax payments to the ATO on behalf of their clients.

However, only part of these tax obligations were paid, with the remaining money siphoned off by the syndicate members and channelled through a complex series of companies and trusts for their own personal gain.

The company’s scheme involved 6 main conspirators, namely Adam Cranston, Lauren Cranston, Dev Menon, Jason Onley, Patrick Wilmott, and CEO Simon Anquetil.

The group were investigated by the police, including via phone taps. During one conversation, it was alleged that Mr. Cranston and Mr. Menon discussed the size of the fraud, in which they referred to it as probably: “the biggest tax fraud in Australia’s history.”

Mr Simon Anquetil was the principal conspirator in the syndicate and was sentenced to seven years and six months in jail for his role. Mr Anquetil pleaded guilty to charges of conspiring to defraud the Commonwealth and dealing with the proceeds of crime worth $1,000,000 or more.

He had $15.8 million in assets confiscated by the Australian Federal Police. This included six properties, three vehicles, multiple bank and investment accounts, shareholdings, as well as several luxury items including watches.

#3 Kawasaki Kisen Kaisha Ltd

Kawasaki Kisen Kaisha Ltd or ‘K-Line’ is a Japanese shipping company which has faced the largest ever criminal fine imposed under the Competition and Consumer Act, totalling $34.5 million.

K-Line pleaded guilty to engaging in a cartel with other shipping companies in Australia between 2009 and 2012, in order to fix prices on the transportation of cars, trucks, and buses.

There were over 20 instances in which the company gave effect to cartel provisions between 24 July 2009 and 6 September 2012.

The 20 instances were rolled-up into a single charge of giving effect to those provisions, contrary to s44ZZRG(1) of the Competition and Consumer Act 2010 (Cth).

A ‘cartel’ is deemed to exist where businesses agree to act together, instead of competing with each other. Conduct involved includes fixing the prices of goods or services, rigging bids, sharing markets, and controlling the amount of available goods or services.

Cartel conduct is criminalised due to its impact in restricting economic growth through increasing prices for consumers and businesses, reducing innovation and choice, and restricting growth of other uninvolved businesses.

K-Line participated in an arrangement with other vehicle shipping companies, in which they agreed to not seek to alter their existing market shares of cargo from manufacturers or otherwise try to win existing business from each other.

This arrangement ultimately impacted the transportation prices of cars, trucks and buses to Australia from the US, Asia, and various European countries.

Major car manufacturers such as Nissan, Suzuki, Honda, Toyota, Isuzu, and others, were also impacted.

#4 Avanteos Investments Ltd

Avanteos Investments Ltd was, at the time of offending, a subsidiary of the Commonwealth Bank Australia under the bank’s wealth management arm, Colonial First State, and a trustee of superannuation funds.

The company issued superannuation products, which were offered and sold to retail customers via their financial advisers. Avanteos deducted various fees from its member’s accounts, including a ‘adviser service fee’, which were paid to a member’s financial adviser.

Avanteos was found to have continued to deduct adviser service fees from its members’ accounts, even after they had been notified that the member had passed away.

It would only cease conducting the fees if requested by the members’ estate.

The company did not disclose this practice in its product disclosure statement, which contained a statement that they would not deduct those fees after death.

Senior management became aware of this; however, they did not rectify the situation.

Avanteos pleaded guilty to 18 charges under s1021J of the Corporations Act 2001 (Cth).

Section 1021J makes it an offence for a company to fail to rectify or prevent further distribution of disclosure statements, upon becoming aware that the statements are defective.

Avanteos was convicted and fined $95,000 for each of the 18 charges, amounting to a total penalty of $1.71 million.

#5 iWonder & iGrow Childcare Services

The case of 34-year-old Zahraa Saadi Majeed Lami and her two other co-conspirators, illustrates the capability of companies to take advantage of government rebates and benefits.

The trio defrauded the Commonwealth Department of Education, Skills, and Employment (‘DESE’) of more than $9 million through childcare fraud.

The offenders implemented a scheme in which two pre-existing companies (named ‘iWonder’ & ‘iGrow’) were purchased. The companies were used as ‘fronts’ to falsely claim childcare benefits for 398,936 family day care sessions relating to 2,132 children, which were never provided.

The DESE accepted these claims as genuine, paying $9,274,016 into the two respective entity’s bank accounts, between February to July 2017.

The information of the 2,132 children utilised was either purchased off various parents, or the black market. There were no legitimate claims, with the centres essentially inoperable.

Lami was the ‘front person’ for the ‘iGrow’ childcare centre, and personally dealt with proceeds of the childcare fraud amounting to $4,010,000.

She was ultimately sentenced to four years’ imprisonment for her involvement, pleading guilty to charges of dealing with proceeds of crime.

Her other co-conspirators, a 31-year-old woman and a 28-year-old woman also faced charges of dealing with proceeds of crime in relation to the enterprise, also receiving four years’ imprisonment.

#6 CommInsure

The case of Colonial Mutual Life Assurance Society Ltd, trading as CommInsure, was the first ‘hawking’ prosecution under the Corporations Act, in Australia.

CommInsure was fined $700,000 after pleading guilty to 87 counts of offering to sell insurance products in the course of unlawful, unsolicited telemarketing calls, otherwise known as ‘hawking’.

CommInsure, which is a wholly-owned subsidiary of the Commonwealth Bank of Australia, unlawfully sold life insurance policies known as Simple Life over the phone, via the telemarketing firm Aegon Insights Australia Pty Ltd.

Aegon was provided customer contact details via CBA’s existing customer database by CommInsure.

87 calls were deemed unlawful and unsolicited.

There circumstances involved customers being sold products in which they were unaware as to whether the insurance suited their personal circumstances, and what exclusions applied.

Customers were either discouraged from having to be advised of the full product disclosure statement or were only provided with it after they had become bound to acquire the financial product.

In an example of one of the calls, a telemarketer persisted and convinced a client that he should purchase the insurance, despite being clearly advised that he was not looking to buy insurance. The sale was eventually closed without the telemarketer offering to read the customer any of the disclosures associated.

The conduct was alleged to have occurred between October and December 2014.

Whilst the maximum penalty available was a $1,850,700 fine, the sentencing judge took the company’s cooperation with ASIC and their early guilty plea into account.

Under the new regime, which was affected March 2019, the maximum penalty for such conduct has increased to $10,962,000.

#7 Seng Leng Heng

Illegal phoenix activity is a corporate crime, which has faced a strict crackdown in recent years, including via a specialised taskforce.

The ATO defines illegal phoenix activity as where a new company is created, in order to continue the business of a company which has been previously deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.

The direct cost of the misconduct is estimated as between $2.85 billion and $5.13 billion.

In 2021, Seng Leng Heng, Nathan Sarinn, and Nay Chy were sentenced to imprisonment for conspiring to defraud the Commonwealth of $4,632,355, as a result of an elaborate illegal phoenix operation.

The trio established multiple labour hire companies to provide workers to vineyards, fruit and vegetable growers, and meat processers around South Australia and Queensland. The companies failed in their obligations to pay Goods and Services Tax (GST) and Pay as You Go (PAYG) withholding to the ATO.

This was despite their clients being charged ‘GST’ and figures indicated as tax withheld on employee’s payslips.

The entities accrued significant debts, with the companies holding insufficient funds at the time of liquidation to enable the recovery of the outstanding tax debts. Despite this, the men had been withdrawing funds on a frequent basis. Over a 25-month period, across all six entities, $23,131,414 was withdrawn in cash by the trio.

Essentially, they would cease operating one entity, and move onto another, beginning the cycle again.

Mr Heng was sentenced to 8 years’ imprisonment as the ‘instigator and architect of the scheme’. Mr Sarinn was sentenced to 4 years, whereas Mr Chy was sentenced to 5 years imprisonment, for their roles in the scheme. They have been ordered to pay back the full amount.

#8 Allianz

Allianz has recently pleaded guilty to criminal charges of making false or misleading statements in relation to the sale of travel insurance.

The charges relate to domestic and international travel insurance products, and their online advertisement on various web pages hosted and maintained by Allianz and its’ subsidiary AWP.

Allianz admitted to misrepresenting the characteristics or level of coverage provided by travel insurance products. This included via failing to disclose certain conditions or exclusions attached to products, whilst advertising the maximum benefits available.

In prior separate civil proceedings, ASIC secured $10 million for consumers in remediation from Allianz and AWP.

The criminal proceedings remain before the NSW Supreme Court, with a sentence date to be listed after 5 August 2022.

Allianz faces a maximum penalty of a fine totalling the greater of $8.1 million, or three times the total value of the benefits gained, or 10% of their annual turnover during a determined 12-month period.

#9 Westpac

Despite admitting to breaching money laundering and terrorism financing laws in 2020, Westpac and its executives failed to face any criminal sanctions or charges.

However, the bank received an enormous fine of $1.3 billion, amounting to one of the largest in Australia’s history.

The Australian Transaction Reports and Analysis Centre (‘AUSTRAC’) revealed that Westpac breached money laundering legislation over 23 million times, amounting to transactions in excess of $11 billion.

Westpac enabled customers to transfer money overseas in an undetected manner, with individuals conducting ‘suspicious transactions’ including with respect to alleged human trafficking.

This was attributed to Westpac failing to impose the global standard for international transactions, which it thought of as ‘too expensive’.

However, this meant that Westpac facilitated millions of transactions in which there were no details of the sender, where the funds originated from, the receiver of the funds or the purpose of the payment.

Despite being required to do so, it also failed to report international funds transfers to AUSTRAC.

The parties agreed upon the penalty, with the Federal Court imposing the $1.3 billion penalty on Westpac for its breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

#10 Crown Casino

Another high-profile example of a company engaging in criminal conduct, yet there being an absence of any criminal sanctions or charges laid, is that of Crown Casino.

Allegations surrounding the company have referred to breaches of money laundering legislation, and breaches of international laws.

A recent Victorian royal commission found that the Casino facilitated a scheme, enabling Chinese nationals to transfer mass funds, with the company issuing false receipts for hotel services, whilst they issued vouchers for gambling chips.

At the time, Chinese nationals were not able to transfer more than $50,000 out of the country per year.

The Crown was issued a $80 million civil fine for the conduct, resulting from contraventions of Victoria’s Casino Control Act.

It has also recently been confirmed by AUSTRAC that the Crown does not have suitable money laundering controls.

They are alleged to have pocked $1 billion in revenue from VIP customers considered ‘high risk’ due to known links to criminals and foreign governments, without investigating the source of their money.

It is reported that The Crown knew that numerous customers had had been arrested or charged with dealing with the proceeds of crime and money laundering.

Activities such as large amounts of cash being carried in plastic bags or shoeboxes, is alleged to have occurred throughout the casino.

The recent controversy led to the newly opened Crown Casino in Barangaroo not being granted a gambling licence, until recently, with the NSW Independent Liquor and Gaming Authority providing ‘conditional approval’.

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