Inside Australia’s biggest tax scam

Samantha Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal Land. This is ABC News Daily. The Australian Tax Office is meant to be one of the most secure and forensic agencies in the country. We trust it to get things right. But its vulnerabilities were exposed after a criminal syndicate managed to steal more than 100 million taxpayer dollars. Today, Four Corners reporter Paul Farrell takes us inside the biggest tax fraud in our history and explains how it was exposed. Paul, you’ve pieced together the biggest case of tax fraud in Australia’s history by trawling through police and court documents and recordings, surveillance recordings. How did you do it?

Paul Farrell: Yeah, look, I mean, this has been a fascinating story to tell and a fascinating story to work through. The $100 million fraud and the key conspirators in this case have recently been found guilty. And so we applied to the to the court, as a lot of journalists do, to get access to a lot of the exhibits and the materials. And what was released to us was just this absolute treasure trove of documents. And amongst this incredible archive was around 70 hours of police surveillance footage and and audio of of phone intercepts.

Phone tap: “…we’re not talking logic here, are we? We’re talking extortion or the beginnings of extortion…”

Phone tap: “Where are we moving this money to? Can’t just pay it all to the tax office… We need something…”

Phone tap: “It’s the money, Adsie. It’s like, he has become delusional with money. When I was like, mate, you’re earning 4 million bucks… on the books….”

Paul Farrell: It’s the story of this scheme told in the words of the conspirators themselves.

Phone tap: *Phone rings* “Lozza” “Yeah, we have a massive issue…” “Have they blocked the accounts?” “No, they haven’t blocked them, every single one, nothing’s going out.”

Paul Farrell: It’s their own undoing.

Phone tap: “This is F***d.”

Samantha Hawley: Fascinating. So let’s unpack this a bit more. What you found out by listening to all of this audio and looking at all these documents and it all began, didn’t it, Paul, in a Sydney strip club in 2014?

Paul Farrell: This meeting begins, there’s five men at the Men’s Gallery, a strip club in in Sydney, in Pitt Street, and what they’re having a discussion about is this plan that they’ve hatched to basically to rip off the Australian Tax Office by what ends up being $100 million. And this one particular individual sits down, pulls out a bunch of phones and says, ‘these are what we’re going to use to communicate from now on’. And it’s very clear that this is about ‘we are going to cover our tracks, we’re going to use these specific phones’.

Samantha Hawley: Okay. So remind me now who’s involved in this?

Paul Farrell: So there were five men at this Men’s Gallery meeting, and one of the men who was key to this scheme is Adam Cranston. So he’s this up and coming corporate player. He’s been involved in the insolvency and liquidation space and he also has this really high profile family connection and that’s that his dad is Michael Cranston, then a deputy commissioner of the ATO. So, Michael Cranston isn’t in any way a part of this scheme. He had no knowledge of it at all. But I think what most people found so shocking is that there’s this real tragedy around it that the son of someone in such a high profile commission would end up ripping off the very agency that his dad works for. There’s a real tragedy around that.

Lauren Cranston: “This is, I cannot handle humans anymore. Can’t do humans…”

Paul Farrell: Lauren Cranston, Adam’s sister, is also drawn into this scheme and she’s working in what they describe as payroll’s kind of back office. So they have a separate office where the money is kind of being moved around into accounts. And so Lauren is kind of acting as a sort of a bookkeeper in some respects for them.

Samantha Hawley: Yeah. And Michael Cranston hasn’t ever been found to be linked to this in any way. They set up a payroll company with the name of a Greek God; Plutus.

Surveillance audio: “The benefit we do have is the Pluto is a money machine. And it generates a f**k load. So, it’s a Ponzi, but the ATO won’t know it’s a Ponzi. Not until well down the track.”

Paul Farrell: Basically, what these guys did was they processed wages from companies and instead of paying the taxes that they were supposed to be paying on behalf of people, they were funnelling the tax debts down to a group of other companies run by what are called straw or dummy directors. In reality, those people were were just kind of fronts for the company. A lot of them were homeless. Some of them were drug dependent. They were really vulnerable people and they were really taken advantage of by these people. And what they did was they basically just collapsed or let these companies be wound up with these massive tax debts and they were just pocketing the money and they were just relying on doing this over and over again. It was just like wash, rinse, repeat. They just build up a tax debt with one of these companies and then they just let it go under. And they just kept doing it over and over again.

Samantha Hawley: Tell me, how were they dissolving the companies without the tax office then actually coming knocking and saying we need our money?

Paul Farrell: Yeah. So this is one of the interesting things about it. And this case, it really highlights some of the vulnerabilities in our corporate system. What would happen? You know, a company goes into liquidation. The liquidator says it’s unlikely we’re going to get any funds back. And so the debt’s just written off by the tax office. So they kind of took advantage of this system in some ways and made it as difficult as possible for there to be any recovery of these funds.

Phone tap: I’m looking and I’m looking at Mitch and he walked past me and he just goes, ‘you’re doing it tough, Adam?’ I said ‘we’re not doing it tough, Mitch’ I said, ‘We’re doing all right. We bought a lot of companies and they’re making good money’. I said, ‘we’re doing all right… There’s like over $1 million of cars sitting here, which I know you guys didn’t have loans on, right?’ Yeah *laughs*….

Samantha Hawley: So, Paul, things are going really smoothly and before long, they’re rolling in money.

Paul Farrell: Yeah. I mean, when you think about the money that they were starting to rake in, it is extraordinary.

Jamie Ferrill, Anti-money laundering expert: “…there were Porsches, there were BMWs, there was an aircraft. Some of it just went into their their bank accounts, padded their bank accounts. Real estate. Real estate was a big one…”

Paul Farrell: They are just pocketing it and they are absolutely living large.

Samantha Hawley: Okay. And we get a really good glimpse, I think, about Adam Cranston’s approach to this, that he’s sort of really enjoying this money, isn’t he? He gets married. Police are listening to every word he’s saying. And, you know, he’s enjoying this. He’s bragging about it?

Paul Farrell: I mean, one of the very first phone calls is actually just after Adam’s wedding, you hear in amongst the dirty kind of misdeeds of their conspiracy. You just hear this kind of inane banter about the wedding and how nice the wine was.

Phone tap: “Oh, mate, thank Liz for everything, mate. That was such an amazing wedding, mate. We had such a blast, hey?” “You liked it, it was good?” “Wine. Good wine. I love my good wines.”

Paul Farrell: There’s this one particular day where Adam hired out a private racetrack where they going to race cars and, you know, they’re talking about the juice bar they’ve got. They’re talking about the hundreds of thousands of dollars in cars.

Phone tap: “Like over $1 million of the cars sitting here, which I know you guys didn’t have loans on, right? And he goes, you put on this ridiculous day and the day itself would have cost 30 grand….”

Samantha Hawley: It sounds like the syndicate members felt like they were somehow invincible, judging by what they were saying in these tapes. It was all going really well for them, wasn’t it, until 2017?

Paul Farrell: So 2017 is just this point where just everything starts to go wrong.

Phone tap: “This is Defcon 5, man. No payments can go out, hey” “Bro, but what does that mean, man?”

Paul Farrell: They realise that the ATO is on to them and they start having meetings discussing what they’re going to do to  combat the ATO. And of course, they’re being captured on tape. But then further into 2017, word has really gotten around that they’ve got this grift going on.

Surveillance audio: “The tax office will be ringing us and going off their head, right? But what we do is we just keep marching forward until literally they get to the point where they go, we’re going to wind you up… So this is now a full time job for Dev and I keep this thing alive.”

Paul Farrell: And one of their own syndicate decides to turn on them and blackmail them. And there’s this incredible moment where this blackmail attempt is actually caught all on tape. This one particular individual, Daniel Rostankovski… walks in, he’s turned on them, and he says, look, I’ve got a bunch of Comancheros, a bunch of bikers downstairs, and they’re going to beat the crap out of you guys.

Surveillance audio: “I’ve got all the boys… all the Commo boys waiting downstairs…”

Paul Farrell: And then he threatens to expose them. He says he’s got a director who’s sitting outside the Australian Federal Police who’s going to expose them and just all hell breaks loose. It’s madness. And ultimately, the syndicate agrees to pay Daniel Rostankovski $5 million initially. And then he comes back and says, actually, I want 25 mil… And they pay that as well.

Samantha Hawley: Shows how much money they had.

Paul Farrell: It’s astonishing. Yeah. I mean, they were just the cash that was flowing around was just remarkable. So federal agents swoop in in May 2017. I mean, they execute dozens of search warrants. They arrest nine people. And what they seize is just remarkable.

Leanne Close, AFP Deputy Commissioner: “…at least $15 million in cash, 25 motor vehicles, 18 residential properties, 12 motorbikes, in excess of 100 bank accounts and share trading accounts. Two aircraft…”

Paul Farrell: And Adam Cranston and several of his co-conspirators are all charged. They’re charged with causing a loss to the Commonwealth, so causing a loss to taxpayers. And with dealing with the proceeds of crime. A couple of them plead guilty to some of the offences they’re charged with. But Adam Cranston and four others plead not guilty. They actually face this marathon trial in 2022. It goes for more than 100 days, and that trial has only just recently come to a close with all of them being found guilty.

News presenter: “The AFP has called it a case of blatant and deliberate fraud. Now three people have been found guilty…”

Samantha Hawley: Yeah, yeah. Heaps of evidence against them. And some of them have been sentenced. And others, like Adam Cranston, are still waiting for sentencing. So, Paul, I guess the question is, how common is this sort of crime and what does it mean for us as taxpayers if this sort of thing is actually going on?

Paul Farrell: I think in the course of doing this investigation, what really surprised me is that this seems to be really common. There’s this real sense that this syndicate exploited a lot of loopholes in our corporate system. You know, they were tapping into the vulnerabilities that already existed. And many of those vulnerabilities still exist. And there’s no reason why different versions of this scheme, you know, can’t and won’t continue to occur unless some of those issues are resolved.

Samantha Hawley: And Paul, we might not love the ATO, but this is not a victimless crime, is it?

Paul Farrell: Yeah. I mean, fundamentally, this is all our money. You know, these guys were stealing our money. You know, it’s our taxes that they were trying to rip off. And something that really struck with me is when Anthony Payne, who is the Supreme Court judge who’s presiding over the matter in his sentencing of Lauren Cranston, he made this real point about how all of this money that they stole, it could have been used during the Covid pandemic, for all of the many services that needed to be funded through that time. This just isn’t a victimless crime. It’s much more than that. It affects all of us.

Samantha Hawley: Paul Farrell is a reporter with Four Corners. Adam Cranston is due to be sentenced in coming weeks. His sister, Lauren has been jailed for eight years. Others involved have been sentenced to between 7 and 10 years in jail. This episode was produced by David Coady, Veronica Apap, Flint Duxfield, Anna John and Sam Dunn, who also did the mix. Our supervising producer is Stephen Smiley. I’m Sam Hawley. ABC News Daily will be back again tomorrow. Thanks for listening.