- TILE ACCESSORIES LIMITED | CIV 2017-404-2207
- PACIFIC NATURAL GUT STRING CO. LIMITED | CIV 2017-443-59
- KARAMEA HOLIDAY HOMES LIMITED | CIV 2017-409-765
- SCOTTISH MASONRY LIMITED | CIV 2017-425-97
- MR MERLIN LIMITED | CIV 2017-425-98
- DERMA BRANDS LIMITED | CIV 2017-409-749
- CURRY CORNER LIMITED | CIV 2017-404-2098
- DBS TECHNOLOGY LIMITED | CIV 2017-404-2151
- HYDRA CONSTRUCTION LIMITED | CIV 2017-419-237
- LIGHTWEIGHTROOF LIMITED | CIV 2017-404-2135
Dishonest tax agent to pay for crime in jail
Michael Robert McDonald's sentencing hearing has concluded in the Manukau District Court in relation to theft of his clients' money and misleading the Inland Revenue Department.
Mr McDonald has been sentenced to four years' imprisonment following the Serious Fraud Office (SFO) prosecution.
He pleaded guilty in August to four charges of theft by person in a special relationship, 13 charges of dishonestly using a document and one charge of false accounting.
Mr McDonald had been a registered tax agent since 2002. In that role he filed GST, PAYE and income tax returns on behalf of clients and their related entities.
The prosecution was the result of an Inland Revenue investigation which began in 2012 and was later referred to the SFO.
Between 2007 and 2013, Mr McDonald received money from some of his clients for the purposes of paying tax but failed to forward the money to Inland Revenue. He also filed approximately 250 false GST and income tax returns in order to receive money from Inland Revenue or to retain client funds to which he was not entitled. Mr McDonald also made false entries in one of his client's financial statements in order to conceal his offending.
SFO Director, Julie Read said, "As a registered tax agent, Mr McDonald occupied a position of trust with both Inland Revenue and his clients. Trusted intermediaries like registered tax agents ensure that the system works efficiently for both Inland Revenue and the taxpayer. In stealing this money, Mr McDonald let down his clients as well as the community who are entitled to expect that tax monies reach their destination for the benefit of all."
Inland Revenue Group Manager Investigations and Advice Tony Morris said, "McDonald's scheme was picked up during a routine audit check and eventually the complex web of transactions he devised was exposed. He clearly had no regard for his clients, taxpayers or the concept of fair play on which our tax system relies."
For further media information
Serious Fraud Office
027 705 4550
BACKGROUND TO INVESTIGATION
Mr McDonald registered as a tax agent with the Inland Revenue in August 2002 through the company McDonald Reid Limited (McDonald Reid). The practice was sold in 2005 and he continued as an accountant and tax agent through his new company, McDonald and Co Accounting Limited, which was incorporated on 21 October 2005.
Mr McDonald is not, and has never been, a member of any professional accounting body.
Mr McDonald was initially investigated by Inland Revenue and in early 2013 a complaint was made to the NZ Police by one of Mr McDonald's clients. The Police referred the matter to the SFO in May 2014.
The SFO acknowledges the assistance of Inland Revenue in the investigation of Mr McDonald.
CRIMES ACT OFFENCES
Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person-
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
Section 228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,-
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.
Section 260 False accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,-
(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.
ABOUT THE SFO
The SFO was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO's role is the detection, investigation and prosecution of serious or complex financial crime. The SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:
- business and investor confidence in our financial markets and economy
- public confidence in our justice system and public service
- New Zealand's international business reputation.
The SFO operates three operational teams; the Evaluation and Intelligence team along with two investigative teams.
The SFO operates under two sets of investigative powers.
Part 1 of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."
Part 2 of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."
In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:
- the suspected nature and consequences of the fraud and/or;
- the suspected scale of the fraud and/or;
- the legal, factual and evidential complexity of the matter and/or;
- any relevant public interest considerations.
The SFO's Annual Report 2016 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO's strategic goals and performance standards. Both are available online at www.sfo.govt.nz