Pre-insolvency provider charged for alleged illegal ‘phoenix’ activity

A long-standing Serious Financial Crime Taskforce (SFCT) investigation led by the Australian Taxation Office (ATO) and the Australian Federal Police (AFP) has seen a 62-year-old man charged in connection with allegations of illegal ‘phoenix’ activity.

The pre-insolvency service provider has been charged with nine offences of dishonestly causing a loss to the Commonwealth under the Criminal Code, with charges totalling $845,066, including a further four offences relating to the obstruction of ATO officers.

The investigation alleges the 62-year-old caused for PAYG withheld from employees’ wages to not be remitted to the ATO.

As part of this alleged scheme, the AFP and ATO believe the pre-insolvency provider caused for control to be taken of a number of businesses in financial difficulty, arranged for payment summaries to be issued to the employees using the details of these businesses and had straw directors appointed to the businesses to conceal his involvement and cause the alleged loss to the Commonwealth.

"Phoenixing is an intentional act that requires planning – planning to build up debts, extract profits, liquidate the company and start again in a new company name,” said ATO deputy commissioner and SFCT chief Will Day.

“The alleged behaviour in this case demonstrates a calculated and callous disregard for the law, by someone who took advantage of his clients for his own benefit. The community won’t tolerate this behaviour, and neither will the SFCT.”