A Sydney property developer has been ordered to repay $11.2 million for his involvement in laundering funds connected to the notorious Plutus Payroll tax fraud scheme, one of Australia’s most significant white-collar crimes.
On Wednesday, the New South Wales Supreme Court found that Teplitsky breached his duties as a director and engaged in non-commercial transactions to facilitate the movement of money extorted by the fraud network.
The Plutus Payroll scheme was an elaborate plot to defraud the Australian government by misappropriating pay-as-you-go withholding tax and GST. Plutus Payroll, a start-up company, was used as a front, offering a fee-free payroll service that lured in legitimate clients. Between 2014 and 2017, the scheme diverted $105 million from these clients, laundering the funds through a series of secondary companies.
The scheme was exposed following a joint investigation by the Australian Taxation Office (ATO) and the Australian Federal Police (AFP), known as Operation Elbrus. This investigation was a key focus for the Serious Financial Crime Taskforce and led to the arrests of several conspirators in May 2017, just weeks after the ATO issued a garnishee order on Plutus Payroll’s accounts.
In total, 15 individuals were convicted for their roles in the fraud, including the scheme’s mastermind, Adam Cranston, son of Michael Cranston, a former deputy tax commissioner.
The liquidators of Plutus, Timothy Norman and Salvatore Algeri, filed a lawsuit against Teplitsky, identifying him as an associate of Plutus employee Daniel Rostankovski. Rostankovski, who later turned on his co-conspirators, had demanded millions of dollars to keep quiet and not expose the scheme to the media or police. The liquidators claimed that Teplitsky assisted Rostankovski in orchestrating this blackmail scheme and laundering the funds received.
Court evidence revealed that over $24 million was transferred from the account of Lands Legal, held on behalf of Plutus by the now-convicted lawyer Sevag Chalabian, as part of the blackmail. Teplitsky and his companies were then involved in two sham transactions with Lands Legal.
The first transaction involved $4.3 million, which was advanced to purchase third-party rights in a Surry Hills property development in which Teplitsky had a stake. The second transaction saw $6.85 million used to repay a debt owed by Tepcorp Holdings.
Justice Nixon ruled that Teplitsky “assisted Mr. Rostankovski in the implementation of his dishonest and fraudulent design, by negotiating, entering, and implementing” these transactions. The payments, made from the Plutus funds held in the Lands Legal Trust Account, provided no benefit to Plutus Payroll, according to Justice Nixon.
Justice Nixon further stated that Teplitsky had agreed to “wash” the money for the benefit of Rostankovski and his associate, Mr. Hausman. Consequently, Plutus was entitled to an order for $11.2 million in equitable compensation, representing the total amount of Plutus funds disbursed from the Lands Legal trust account.
