Key conspirators charged in the Plutus tax fraud secretly controlled a separate network of labour hire firms and payroll companies that were wound up owing the tax office, former business associates have alleged.
The conspirators’ relationship to Rush Recruitment and other national labour hire firms have been detailed as part of an ongoing court dispute and is the subject of documents handed over to the Australian Federal Police.
Adam Cranston, son of former deputy tax commissioner Michael Cranston, and his alleged co-conspirators are facing $130 million in tax fraud and money laundering charges after their arrests in May last year.
The charges relate to Plutus Payroll, which serviced legitimate recruitment companies but retained millions of dollars in pay as you go tax and GST by funnelling the money through a complex network of “lower” companies.
However, the AFP is understood to be continuing its criminal investigation into the Plutus saga, including into previously unreported parts of the scheme.
New allegations, drawn from court documents filed this year, suggest key players accused in the Plutus fraud also controlled several labour hire companies, which used a different web of payroll companies also under their control.
The companies were all covered under insurance negotiated by broker Philip Milne, a bankrupt who operated Southside Insurance Brokers.
In an affidavit filed in the Victorian Supreme Court in May, Mr Milne said he took instructions from Mr Cranston, accused Plutus co-conspirator Jay Onley and their lawyer Dev Menon, with meetings at restaurants in Woolloomooloo.
He said in May 2016, Rush Recruitment head Greg Mitchell negotiated the sale of his company’s shares to Mr Cranston’s and Mr Onley’s investment firm Synep.
The sale agreement was drafted by Mr Mitchell’s accountant Philip Scahill, who shared offices with Rush and in August was found guilty of laundering drug money on behalf of the boyfriend of a Rush employee.
While the sale was never finalised, with the last payment withheld, the deal meant Synep took control of Rush and related companies from July 2016.
Cranston’s high school mate ‘took control’
Mr Mitchell, who claims he had no control over Rush from July 2016 to May 2017, is a veteran of the labour hire industry and was banned as a director for three years in 2007 for his involvement in failed companies.
Mr Milne says Mr Mitchell first introduced him to Mr Onley, a former insolvency adviser, as his “business associate” in 2014.
Mr Onley allegedly told Mr Milne that Synep had acquired other labour hire entities along with Rush, including Plutus, Rensol and National Distribution Centre Services.
In the case of Rush, Mr Milne said the firm would operate by supplying labour hire workers who were then contracted to clients through “lower companies” including Denbrashe, TWM Services, DWB Capitol, and The Recruitment Zone.
The lower companies would bear the responsibility for any taxes and wages but would later fold claiming they were owed hundreds of thousands of dollars that were “wrongly” transferred to Rush Corporation as “tender discounts”.
For TWM Services, whose registered director is a 74-year-old from Coffs Harbour in intensive care, those “tender discounts” climbed to more than $2 million.
Denbrashe, which paid Rush workers supplied to Metcash warehouses, was wound up last year claiming Rush owed it almost $1 million.
Mr Milne says the lower companies were actually managed by Synep chief operating officer Darren Stewart, who acted at the direction of Mr Onley.
Meanwhile, Mr Cranston’s high school friend from Aquinas Catholic College, Chris Guillan, who is facing charges of dealing with proceeds of crime over Plutus, allegedly took control of Rush’s finances.
‘Dishonest or fraudulent acts’
Mr Milne, who has provided thousands of emails related to the companies to police, told The Australian Financial Review through his lawyer that he had no dealings with the entities other than as insurance broker.
Mr Milne’s brother, Ian Milne, was a director of Denbrashe from 2015 to the start of 2017 while another employee from the Milne family insurance company is the registered director of DWB Capitol.
A former Southside Insurance employee, Rachael Wheatley, supplied models to corporate client events hosted by Denbrashe through her company Oxford Consulting.
Ms Wheatley was also the fiancé of Mr Stewart and is understood to have helped recruit people to act as directors for some of the “lower companies”.
One director, who had no knowledge of the specific work done by their company, told The Australian Financial Review they felt like they had been “set up to take the fall” and feared speaking out.
Ms Wheatley, who was unaware of any fraud scheme, told The Australian Financial Review that when the AFP raided Mr Scahill’s offices last year Denbrashe shifted about $90,000 into her company’s accounts. She returned the money when Denbrashe was later wound up.
There is no suggestion Greg Mitchell, Philip Milne, Ian Milne, Philip Scahill or Darren Stewart knew about any alleged fraud scheme either.
The AFP has not laid any charges in relation to Rush Recruitment or the other labour hire companies.
Legal action alleges links
However, the alleged links to Plutus have been detailed as part of legal action Rush has filed against Southside and Lloyd’s underwriters to recover money it claims was defrauded by the Plutus players.
Rush alleges Mr Cranston’s friend Mr Guillan took “exclusive control” of Rush’s bank accounts and finances from July 2016 to May 2017 and had day-to-day management of its affairs.
The company accused Mr Guillan of committing “dishonest or fraudulent acts” by allegedly transferring $1.2 million from Rush to Synep and paying $1 million on behalf of Rensol, which shared offices and staff with Rush.
Mr Mitchell, who took back control of Rush after the Plutus arrests last year, has now sold his company’s labour contracts to Switch 4, a separate business that he set up and was director of up until April.
Meanwhile, ASIC deregistered Rush Recruitment last month and has started strike-off actions against some of its “lower companies”