It comes after his son Adam was charged over his role in a $165 million tax scam.
The Daily Telegraph today revealed Cranston’s son, Adam was charged over his alleged role in a fraud syndicate that police claim stole more than $165 million — one of the biggest white-collar crimes in Australia’s history.
The Daily Telegraph can reveal Australian Federal Police yesterday arrested Adam Cranston at his Bondi flat in one of 27 raids on homes and businesses across Sydney.
Cranston was charged last night with conspiracy to defraud the commonwealth and is expected to face Central Local Court today.
It’s understood eight others were arrested and facing possible charges.
The 30-year-old Cranston is the son of ATO deputy commissioner Michael Cranston, but there is no suggestion Michael Cranston had any involvement in or knowledge of the criminal syndicate.
Sources close to the investigation claim Adam was a “co-conspirator” in a group that used an elaborate tax scam to fund a celebrity lifestyle that included prime Sydney real estate, boats — and even a racing car team.
“This investigation has uncovered high-level organised activity; it is complex (and) sophisticated,” the source last night told The Daily Telegraph.
“I think it will take the police a long time to figure out exactly how much money (is involved).”
It is believed police will allege the fraud is one of the largest ever seen in Australia.
Investigators allege Sydney financial services firm SYNEP, of which Adam is co-chairman and managing director, was part of the operation.
Payroll contractor Plutus Payroll, controlled by SYNEP, was the centrepiece of the alleged hustle.
Police will claim it would allegedly funnel wage payments through a series of “second tier” companies. who then paid the ATO only a fraction of the required income tax.
The remaining withheld tax would then allegedly flow into the pockets of syndicate operators.
The scammers believed they had struck a sweet spot where each individual fraud was too small to prompt action from the ATO.
One source said it was “like saying to your schoolteacher, ‘I’ve done most of my homework, I’ll bring the rest next week’.”
The net tightened when both the AFP and ATO noticed alleged discrepancies in parallel investigations.
The sum of the frauds is understood to be more than $165 million, with the extent of Cranston’s own alleged profits expected to be revealed in court.
Investigators said their probe focused on a 12-month snapshot of the group’s alleged activities.
Sources also allege the scheme had another sinister angle.
Police will claim the syndicate would pay struggling people a regular fee so they could set up the second tier companies in their names. However, the syndicate had total control of the companies.
Plutus Payroll hit the headlines earlier this month when the ATO froze its bank accounts over unpaid tax debts, meaning its clients’ staff could not be paid.
In a statement earlier this month, Plutus apologised to its customers “continuing distress caused by our inability to process your pay since 27 April”.
“Our dispute is with the Australian Taxation Office who believe that Plutus owes the ATO money,” the statement said.
“Acting in a draconian and unfair manner, the ATO froze Plutus’ bank accounts on 27 April without prior warning or any consultation.
“We received no notice of intention to audit, no complaint and no other advance warning of noncompliance from the ATO.
“When the ATO acted, without notice, they froze our bank accounts and we became unable to pay our contractors the money owed to them.”
On May 10, the company announced the ATO had allowed the release of the money.
With more than 35 years at ATO, Michael Cranston has spearheaded many public campaigns to catch tax cheats.
“I am responsible for increasing compliance and willing participation in our tax and super system,” one of his social media accounts states.
“I recently chaired the OECD Task Force on Tax Crimes.”
The ATO last night refused to comment on the investigation.
And Michael Cranston did not respond to questions put to him through the ATO.
The ATO said it “will not comment on ongoing investigations at this time”.
“Due to privacy considerations the ATO is unable to comment on individual employees,” it said.
A CASE OF LIVE FAST AND FRY YOUNG
POLICE claim assets linked to an alleged $165 million tax fraud case include sports cars, expensive properties, boats and even a race team.
Cars were a particular passion for one of the alleged “co-conspirators” of the crime. Adam Cranston loved them so much there’s even a wedding day photo of the now 30-year-old with his wife and a slick race car.
There is no suggestion Cranston’s wife had any knowledge of or involvement in the alleged fraud.
A source said that among the property seized by police is an orange and blue Ford GT in Cranston’s possession.
Cranston started a race car team last year. And he named it after the financial services firm now at the centre of the alleged crime, SYNEP. The team competed in the Australian Prototype Series and in February celebrated a podium finish at Mount Panorama.
ATO official Michael Cranston facing charges over son’s alleged 65m fraud – ABC News (Australian Broadcasting Corporation)
ATO official Michael Cranston facing charges over son’s alleged $165m fraud
18/03/17 Updated 8 minutes ago
One of Australia’s most senior tax officials has been embroiled in a major fraud investigation following the arrest of his son, which allegedly involved $165 million being stolen from the Commonwealth.
Deputy tax commissioner Michael Cranston has been issued with a court attendance notice, while his son, Adam Cranston, was arrested in Sydney yesterday as part of an Australian Federal Police sting.
Michael Cranston will be charged with abusing his position as a public official relating to the fraud, although he is not believed to be a conspirator.
Adam Cranston, 30, was arrested at his flat in the affluent beach suburb of Bondi during raids yesterday and has been charged with conspiracy to defraud the Commonwealth.
At a press conference in Sydney today, officials said Michael Cranston could have been unwittingly involved in his son’s alleged crimes.
In all, nine people were arrested in Sydney yesterday as the AFP carried out 28 raids.
At a press conference today, the AFP alleged the group used “lavish lifestyles” to help hide the funds, including 25 motor vehicles, $15 million in cash, 18 residential properties and two aircraft.
Adam Cranston will face Central Local Court in Sydney later today.
Federal Treasurer Scott Morrison said the arrests served as a warning.
“This is a major government crackdown and what the events today with this major fraud bust … demonstrates is that if you are a crook and you are seeking to defraud the taxpayer, we will find you,” he said.
“We will track you down. We will make sure you are brought to justice.”
The ABC understands Michael Cranston has been employed by the ATO for more than three decades and is involved in the organisation’s private groups and high wealth segment.
Part of his biography on his LinkedIn account reads: “My personal philosophy is that the tax system belongs to all Australians and we all need to work closely together to ensure that it is administered fairly, efficiently and causes the least pain for all that participate.”