The daughter of a former ATO deputy commissioner will serve at least five years in jail for her role in a $105 million tax fraud and money laundering conspiracy.

Lauren Cranston is the daughter of Michael Cranston, a deputy ATO commissioner for over 40 years, and the sister of Adam Cranston, who has also been found guilty for his part in the conspiracy.

Michael Cranston was not involved in the conspiracy.

Ms Cranston was sentenced in the NSW Supreme Court on Monday to a maximum eight years by Justice Anthony Payne.

 Adam Cranston is yet to be sentenced.

Payroll company set up to defraud ATO

Justice Payne said  at least $105,625,304 was misappropriated from the ATO as a result of the conspiracy involving Lauren and Adam Cranston and others, with Ms Cranston benefitting to the tune of $181,639 from her part in the scheme.

Her participation was primarily the result of a “misguided sense of loyalty to the people directing the conspiracies, particularly her brother, Adam Cranston”, the judge said.

Justice Payne said the conspiracy involved the establishment and operation of a payroll services company, Plutus, and subcontractors controlled by some of the conspirators.

Legitimate clients of Plutus included contractors, large companies and government agencies.

The purpose of the payroll company was to defraud the ATO, Justice Payne said, with the conspirators agreeing to launder the money that should have gone to the tax office.

“The tax fraud and money laundering conspiracies involved a significant level of sophistication, premeditation, planning and deception and a high degree of dishonesty and corresponding breach of trust,” he said.

“The conspiracies involved the conspirators setting up a large number of corporate entities via which the conspiracies could be implemented and mechanisms could be put in place to conceal the involvement of the conspirators.

“The money laundering conspiracy involved the creation and exchange of hundreds of false invoices to launder the tax fraud proceeds.”

‘A collective financial injury’

Justice Payne said deterrence was a critical consideration in sentencing for white collar offences like the one at hand, which were difficult to detect, investigate and successfully prosecute.

“There is no doubt that revenue fraud on the scale here has a corrosive effect on our society,” he said.

“Our system of tax collection relies on taxpayers acting honestly. If the perception became widespread that the payment of millions of dollars in tax was in effect voluntary, and non-payment of tax was effectively risk free, no doubt others would structure their affairs to avoid paying tax. The burden on other taxpayers would be correspondingly increased.”

He said fraud on the Commonwealth revenue was easy to commit, difficult to detect and came at a great cost to the community, with the offences representing “a collective financial injury for all taxpayers”.

There was also a “gross violation of societal norms” involved in dishonestly taking over $100 million of taxes which the government should have spent on behalf of the community.

“The loss to the Commonwealth of over $100 million will need to be made up from additional taxes levied on other taxpayers, by borrowings which must be repaid with interest by taxpayers in the future or by cuts to government spending,” he said.

Loss of potential covid services funds

The judge noted the scamming of the millions dollars worth of taxes occurred in the years before the outbreak of Covid.

“During that period, the calls on services supplied by government were as urgent as they have been at any time since the Great Depression. The loss of over $100 million which would otherwise have been available to fund government services is a very significant injury suffered by all Australians,” he said.

The stolen money would now have to be recouped by cuts to government services or from increased taxes, either now or in the future, he said.

Read Justice Payne’s full sentencing comments here.