A Sydney-based property developer has been directed to repay $11.2 million for his involvement in “washing” funds linked to the Plutus Payroll tax fraud scheme, recognised as one of Australia’s largest white-collar crimes in recent times.
On Wednesday, the New South Wales Supreme Court ruled that Teplitsky violated director duties and engaged in non-commercial transactions to move money extorted by the fraud ring.
The Plutus Payroll scam involved a plot to misappropriate pay-as-you-go withholding tax and GST through Plutus, a start-up payroll company.
Between 2014 and 2017, the scheme siphoned off $105 million from legitimate clients, who were drawn in by the fee-free service, and the funds were then laundered through secondary companies.
The operation was uncovered following a joint investigation by the Australian Taxation Office (ATO) and the Australian Federal Police (AFP), known as Operation Elbrus. This investigation was a significant focus for the Serious Financial Crime Taskforce.
The investigation culminated in the arrest of several conspirators in May 2017, less than a month after the ATO issued a garnishee order on Plutus Payroll’s accounts.
In total, 15 individuals have been convicted for their roles in the scheme, including the “mastermind” Adam Cranston, who is the son of Michael Cranston, a former deputy tax commissioner.
Liquidators of Plutus, Timothy Norman and Salvatore Algeri, filed a lawsuit against Teplitsky, identifying him as an associate of Plutus employee Daniel Rostankovski, who turned against his co-conspirators and demanded millions to keep quiet and not expose the scheme to the media or police.
The liquidators claimed Teplitsky assisted Rostankovski in orchestrating the blackmail scheme and in laundering the funds received.
Evidence presented in court showed that over $24 million was transferred from the account of Lands Legal, which was held on behalf of Plutus by now-convicted lawyer Sevag Chalabian as part of the blackmail.
Teplitsky and his companies were then involved in two sham transactions involving Lands Legal.
In the first transaction, $4.3 million was advanced to purchase third-party rights in a Surry Hills property development, in which Teplitsky had a stake.
The second transaction saw $6.85 million used to repay a debt owed by Tepcorp Holdings.
Justice Nixon concluded that Teplitsky “assisted Mr Rostankovski in the implementation of his dishonest and fraudulent design, by negotiating, entering, and implementing” the two transactions.
“These payments were made from the Plutus funds held in the Lands Legal Trust Account, and Plutus Payroll received nothing in return for those payments,” Justice Nixon noted.
“The evidence … shows that Mr Teplitsky agreed to ‘wash’ the money … for the benefit of Mr Rostankovski and his associate, Mr Hausman.”
He declared that Plutus was entitled to an order against Teplitsky for $11.2 million in equitable compensation, representing the total amount of the Plutus funds disbursed from the Lands Legal trust account.
