Operation Protego investigation into GST BAS fraud lands 'brickie' behind bars
Date of Judgment: 23 August 2023
Court: County Court of Victoria at Melbourne
Partner Agency: Victoria Police, ATO and AFP Criminal Asset Confiscation Team
Linden Phillips submitted fraudulent GST claims, was audited, investigated, charged and pleaded guilty to two charges of dishonestly obtaining a financial advantage from the Commonwealth contrary to s134.2(1) of the Criminal Code, one charge of attempting to dishonestly obtain a financial advantage from the Commonwealth contrary to sections 11.1 and 134.2(1) of the Criminal Code and one charge of dealing in proceeds of crime worth $100,000 or more contrary to s400.4(1) of the Criminal Code.
On 23 August 2023, he was sentenced to a total effective sentence of 7 years and 6 months of imprisonment with a non-parole period of 5 years.
In 2017, Mr Phillips applied for an Australian Business Number (ABN), stating that he was carrying on a brick paving or bricklaying business. He was incarcerated between 13 June 2018 and 31 August 2021. Following his release, Mr Phillips registered for GST, which he backdated to 26 January 2018. On 22 October 2021, he lodged one Business Activity Statement (BAS), claiming a net GST refund of $13,158. This was paid into his bank account on 27 October 2021. The court accepted that this was a ‘test run’, to verify whether claiming GST refunds would result in payments from the ATO.
Following the success of the first lodgement, Mr Phillips proceeded to lodge 46 BAS in 10 days from 13 to 23 November 2021. The 46 BAS covered the period from 1 January 2018 to 30 November 2021. The total GST refund claimed for that period was $821,279, which was paid into Mr Phillips’ bank account on 30 November 2021.
Between 30 November and 9 December 2021, Mr Phillips used the $834,437 fraudulently obtained from the ATO to purchase a $55,000 Porsche Cayenne car, fund the purchase of a $515,000 property, as well as making several transfers to family and friends.
Mr Phillips was subsequently audited by the ATO, whereby he told several lies during a telephone conversation with an ATO auditor to try to cover-up his offending. After being made aware of the audit, Mr Phillips continued to offend by lodging one further BAS claim for $17,520 in December 2021.
He also changed the bank account details for this last claim to an account in a friend’s name. This claim was not paid by the ATO.
The information contained in the 48 BAS lodged by Mr Phillips with the ATO between 22 October and 31 December 2021 was wholly false because he did not carry on any business activity and had no business income or expenses. This was a deliberate fraud on the Commonwealth. Mr Phillip’s bricklaying business did not exist. Although not sophisticated in nature, the offending was serious, deliberate, methodical and systematic but was not impulsive or reactive.
As a result of his offending, Mr Phillips obtained a total of $834,437 in GST refunds and attempted to obtain $17,520.
The CDPP, ATO, AFP and other partner agencies work together through the Serious Financial Crime Taskforce (SFCT) to investigate and prosecute this type of tax fraud and other types of financial crime.
The successful prosecution of this matter is testament to the continued strong collaboration between Victoria Police, the ATO, the AFP and the CDPP in investigating and prosecuting GST fraud.
The Court found that deliberate GST fraud on the revenue needs to be met with stern punishment and that general deterrence, given the seriousness of the offending and the amount obtained, was a primary consideration. The Court found Mr Phillips had ample opportunity to desist and chose not to do so. The Court accepted that his anti-social personality traits might have helped him to justify his offending, which was motivated by desire for money.
The sentencing judge was not satisfied that impaired moral development in childhood had a causal link to the offending or was a factor reducing the moral culpability of the offender. The Court found that Mr Phillips knew what he was doing was wrong and against the law.
The court moderated general deterrence to a small degree by taking Mr Phillips’ personal circumstances into account. His sentence was also slightly moderated by taking into account the fact that Mr Phillips’ cognitive condition, mental health and personality disorders might make imprisonment more onerous.
The judge found that specific deterrence was a significant factor in sentencing in this case, noting Mr Phillips’ prior criminal history, including dishonesty offences, and the fact that he offended within a short time after being released from prison.
Charge 1 (s134.2(1)) – 2 years of imprisonment
Charge 2 (s134.2(1)) – 6 years of imprisonment
Charge 3 (ss11.1 & 134.2(1)) – one year and 6 months of imprisonment
Charge 4 (s400.4(1)) – 5 years of imprisonment
Total effective sentence was 7 years and 6 months of imprisonment with a non-parole period of 5 years. A reparation order was made for $834,437 in favour of the Commonwealth of Australia pursuant to s21B of the Crimes Act (Cth).