Lauren and Adam Cranston, children of ATO deputy commissioner Michael Cranston, face charges of laundering more than $1 ...

Lauren and Adam Cranston, children of ATO deputy commissioner Michael Cranston


Money laundering charges have been laid against key players allegedly involved in the $130 million Plutus tax fraud, including the son of the former deputy tax commissioner.

Sydney Magistrate Jennifer Atkinson confirmed the new charges against six of the 10 accused conspirators, including alleged mastermind Adam Cranston, at Downing Centre Local Court on Tuesday as four new people faced related charges.

The tax fraud allegations now stretch across three years, as opposed to the original 12-month period, with police claiming the “conspiracy to defraud” dated as far back as March 2014 and up to May 2017.

Accused syndicate members Mr Cranston, his sister Lauren and her friend Devyn Hammond, Jason Onley, Plutus founder Simon Anquetil and lawyer Dev Menon also face charges of conspiring to launder more than $1 million in proceeds of crime.

The Plutus conspiracy allegedly involved a payroll company skimming millions of dollars due in income tax through a network of subsidiaries run by “straw directors” from June 2016 until 2017.

However, The Australian Financial Review has reported the alleged fraud started as early as April 2014 when Plutus Payroll was first incorporated.

The additional money laundering charges, which cover activity from March 1, 2014 to January 31, 2017, follow a Supreme Court proceeds of crime case that looked at how the syndicate allegedly apportioned its loot between members.

Despite being charged in May last year, the original 10 syndicate members are yet to face an estimated six weeks of committal hearings to test the strength of the prosecution’s evidence before trial.

However, former deputy tax commissioner Michael Cranston, who is not accused of being part of the alleged tax fraud, is set to face a 15-day trial in the NSW District Court on January 21 on charges of abusing his office to help his son Adam.

Image result for Michael Cranston, deputy commissioner of taxation. afr

Michael Cranston, deputy commissioner of taxation

Too big for court

Commonwealth prosecutors on Tuesday said they were ready to proceed with the fraud case but lawyers for the accused objected as the brief of evidence was “voluminous”. The index alone totalled 468 pages and there was even “an index to the index”, the court heard.

Magistrate Atkinson also raised logistical difficulties for the case as the total 14 accused, with three legal representatives expected per person, would require an “enormous court room” that may not even be in Sydney.

“It won’t be ready before next year,” she said. “We just won’t be able to find a courtroom or a magistrate [to be assigned for that amount of time].”

The case also threatens to be caught up in a wave of objections over legal privilege.

Much of the Australian Federal Police’s evidence comes from emails and wiretaps of the offices and phones of Clamenz Lawyers, where Mr Menon spoke with the Plutus accused as the alleged conspiracy unravelled.

Mr Cranston’s and Mr Onley’s lawyers flagged they would be opposing admission of evidence from the firm due to legal privilege.

New accused

Former television journalist Stephen Barrett and Rose Bay lawyer Sevag Chalabian, who were both charged mid-July with blackmail and post-blackmail fraud conspiracy respectively, will face hearings on bail in the next two weeks.

Paul O’Leary, who the AFP previously named as a “straw director” in the scam, also appeared for the first time in court on charges of dealing with proceeds of crime worth more than $100,000.

The 55-year-old man from Cherrybrook was observed playing a game on his iPhone in the back of the hearing room while waiting to be called. McGirr Lawyers represents Mr O’Leary along with Daniel Rostankovski, who police allege ran the network of Plutus straw directors. Mr Rostankovski is charged with fraud and blackmail.

The case is set for mention again on October 2.

BACKGROUND: The inside story of the $165m scam on the ATO


It was probably around January 25 this year that the alleged conspirators in one of Australia’s greatest tax scams first felt the net closing around them.

The Australian Tax Office was on their tail.

There were fights within the group. Unbeknown to them the Australian Federal Police had been bugging their conversations for months. And then, suddenly, their bank accounts were frozen.

Dev Menon, a 34-year-old tax lawyer, called another member of the gang and said, “Hey this is Defcon 5, man. No payments can f..king go out, hey.”

It sounds like dialogue from an indie-heist movie. And that is the exact vibe that emerges from a statement of facts tendered in court by the Australian Federal Policeabout an incredible and also uniquely 21st century scam in which a group of seven Generation-WTF marketing and IT professionals along with some smart lawyers and grifters allegedly conspired to defraud the ATO of $165 million in income tax.

The scam was huge in itself. In just 11 months before it collapsed the group managed to convince government departments and prestigious IT companies to funnel as much as $1.3 billion in payments to tens of thousands of contractors through a series of “straw companies” run by nobodies who the conspiracy controlled.

The cash was destined to be legitimate salary payments for the contractors but the trick was that those involved in the conspiracy held back for themselves as much as 40 percent of the $400 million that was supposed to be paid as income tax. Their desperate gamble was that by the time the ATO caught up with them, the conspirators would have long since vanished and only the straw directors would be left holding the baby.

Yet the story has become even more shocking because it has implicated Michael Cranston, deputy commissioner of taxation and until now a man with an unblemished reputation. In the days after Menon warned of “Defcon 5” Cranston allegedly improperly accessed ATO files at the request of his son Adam, who was a key conspirator and one of the biggest spenders of the cash that they stole from the ATO.

The scandal around Cranston senior has turned the scam from a crime story in to an institutional crisis for the ATO’s reputation. The incident in the longer term also raises serious questions for government departments, recruitment companies and the labour hire industry over whether the spread of out-sourced contract work is encouraging tax avoidance and allowing employers to skirt other legal obligations.

There is also an immediate human toll because many of the clients of Plutus Payrolland its subsidiaries have had their pay frozen and could theoretically be on the hook for millions of dollars in unpaid taxes.

The idea began in 2014 when a young IT executive called Simon Anquetil founded an external payroll company called Plutus Payroll Australia. This is a common and legal process in the world of sub-contracting. A worker finds temporary work with a big company or government department via some recruitment company but their formal employer is an “external payroll” firm which takes the gross pay, pays the income tax and super and then deducts a fee of 2 to 3 percent for itself. It is supposed to allow for flexibility and easy hiring and firing.

Anquetil, a graduate of Sydney’s elite St Aloysius College, stood out however because he was offering external payroll services for free. Zero. Nada.

The oddity of providing something for nothing was apparent as soon as Anquetil launched it. Many contractors say they did not simply accept Plutus Payroll’s promise of zero fees.

Contractors were assured by the recruiters like Hudson and Hays – often regarded as the trusted third parties – that Plutus was part of the digital disruption in the contracting industry.

Plutus could offer zero fees because the payroll business was just a very small part of a much larger business, clients were told.

The contractors’ pay was supposedly invested on the overnight money market. The interest earned on the money market helped Plutus offer zero fees, the spiel went.

Many of public service contractors are involved in the technology industry and those with doubts went to their own peers to double check Plutus’s credentials through the chat forum Whirlpool.

And sure enough Plutus Payroll was right there too.

As early as November 2014, chatter started about the Plutus model.

And over the next couple of years, a succession of Plutus “general managers of customer care” were on hand to assuage the doubters.

“We do frequently get asked about our business model,” former Plutus employee Tim Munk wrote in May 2016:

“Here’s the simplest answer: we are a financial services provider. Our biggest source of revenue is our outsourced payroll and payroll-funding options for dozens of businesses around the country. Also on the list of revenue contributors is mortgage brokerage. We source competitive mortgage rates (or car loans, personal loans etc) for our extensive customer base.

“There is no obligation to our contractors to take out any of these products, though they are all available to be used, if the contractor so desires. It’s a simple but effective business model that works for us, and for our contractors and clients.”

Gift card

There was also the incentive of “Plutus Points” which was essentially a monthly gift-card loyalty program equivalent to the amount contractors would have spent on other payroll agencies charging the two to three percent fee.

Recruitment companies were given an incentive to use the system because Plutus paid them kickbacks of as much as $900 for each client they referred. Recruiters and government departments were invited to parties at Canberra’s QT Hotel and the Hilton Hotel in Sydney. Anquetil appeared at these events with Erin Holland, a former Miss Australia and Miss Oceania, who was paid to attend to raise the tone.

Whether or not this business model added up, it changed dramatically in March 2016 when Anquetil allegedly teamed up with Adam Cranston, 30, who had been working in various financial services jobs in Sydney and Jason Onley, 47, a former TV sports commentator. The latter two formed a company called Synep. Cranston’s LinkdIn profile claims he is co-chairman and managing director of Senype which is a vehicle for investing in ventures with an enterprise value from “$20 million to $200 million.” In a complicated series of transactions, Synep was registered as a public company which means it is hard to know who owned it but Onley and Cranston were the director and Anquitel sold his stake in Plutus Payroll to it.

The next step was to step up a series of what the AFP have called “Second Tier companies” which would take over all the legal responsibility of employing the contractors and paying the taxes. They were all registered from May to July 2016.

Another alleged conspirator Daniel Rostanovski, 28, had the responsibility of recruiting sole directors for each of the seven companies who would be paid a few hundred or thousand dollars a week and kept as ignorant as possible of what was being done in their name.

The “straw directors” he found were tradesman and drifters in Sydney’s outer suburbs and one person who police have as yet not been able to track down at all. Anquetil formally left the board of Plutus Payroll and was replaced by straw directors.

It remained the front company that would recruit and deal with employee/contractors but these employees would then be placed on the books of the straw companies with names like PPA Contractors Australia, PPA Services Australia.

The straw companies were all operated by Rostankovski and an IT team that included Lauren Cranston, Adam’s 25-year old sister and another IT boffin, 24-year old Devyn Michelle Hammond. They appeared to do most of the backroom work from premises in the Sydney southern suburb of Miranda. One of their toughest jobs was dealing with the insatiable demands for spending cash from Adam.

One wire tap reveals the frustration. Hammond asks Laura about paying “Adam’s invoices.” Laura: “He sends one and it gets (paid) and then that’s it boom, every week.” Evidence tendered by the AFP suggests invoices for Adam and perhaps other conspirators covered the purchase of two Ducati motorcycles, three Porsche Cayenne’s, a Ford Mustang, a Toyota Landcruiser and a $42,5000 caravan apparently custom-made by Aldom Body Builders.

Adam Cranston was not the only member of the group to demand money. He himself complained in conversations taped in November that Simon Anquetil was trying to retain 20 percent of gross funds. “It should still be at 0.2,” Cranston told his sister. “This is how much Plutus kept for itself. Then it turns out Simon is keeping 0.25.”

The demands for cash from the conspirators, including payments to the straw directors, created stress within the group because the official policy was to leave enough cash at the end to pay about 50 to 60 percent of what was owed to the ATO. The lawyer Dev Menon assured the conspirators that was enough to stop the ATO getting suspicous and ramping up an investigation. The AFP says Menon told Adam Cranston that “we can keep them going for years, better to wait till ATO “winds you up”.

The net started closing however on December 20 last year but it was not the ATO. One of the straw directors, Danielle McDonnell somehow took back control of an account which had over $1 million in it that she theoretically controlled. This meant that the conspirators could neither pay their contractors for the company PPA NT or pay the 50 to 60 percent needed to keep the ATO at bay. Rostankovksi, who handled that side, was told to work out a solution. The two back office women conspirators argued with the lawyer Menon about whether they could fill the hole with the cash from one of the other companies but Menon wanted to avoid anything that linked the separate straw companies to each other.

Around the same time in December the ATO finally twigged and tried to interview the director of PPA Services, formerly called Sonar, another one of the straw companies. The director was Anthony Palumberi, a 23-year old plumber from Bexley who was paid $127,004 for his role and his father apparently contacted one of the conspirators. It was a few weeks before the ATO froze another five accounts.

Betrayal of trust

The was the moment when Adam Cranston, in what a heartbreaking betrayal of trust between parent and child not seen since King Lear and his daughters, asked his father to make some inquiries. The AFP taped a conversation at Clamenz lawyers offices in the MLC building in Sydney where Cranston talked about his “dad”. In a quote that will haunt his father for the rest of his life, he said: “Yes he is looking into this but considering he doesn’t know about it it can’t be the like the biggest thing since Ben Hur if this was fully uncovered and they knew exactly what was going on.”

The AFP now alleges that Michael Cranston “abused his position as a public official, but he was not part of the criminal syndicate.”

The conspirators somehow managed to keep things afloat for another few months but by May they had stopped paying clients and presumably the ATO. A contractor complained to Senator Doug Cameron who raised a public outcry. Plutus still had enough cash to pay a public relations firm to call Senator Cameron and put out the story that it was only delaying payments because of a commercial dispute. It also paid off some of the most vocal complainants.

But the indie-music sound track finally stopped this week when Cranston junior and Anquetil were hauled before a court. And perhaps the most tragic part of the drama will unfold on June 13 when Michael Cranston, the honoured public official, is due to explain how he allegedly came to play a bit role in this off-beat comedy.