Son of key tax official one of nine arrested in fraud case

Michael Cranston’s 30-year-old son Adam and eight other people have been arrested over a $165 million tax fraud investigation.


Adam Cranston was charged with conspiracy to defraud the government.

The Australian Federal Police have described it as one of the biggest white-collar fraud investigations in Australian history.

Almost 300 AFP officers executed raids across Sydney, Wollongong and the New South Wales Southern Highlands.

It was the culmination of an eight-month sting, codenamed Operation Elbrus, led by the AFP with assistance from the Australian Taxation Office.

Among those arrested was Adam Cranston, apprehended at his flat in the affluent beach suburb of Bondi.

He is the son of one of Australia’s most senior tax officials, Michael Cranston.

AFP deputy commissioner of operations Leanne Close says it is a significant fraud investigation, with the proceeds funding lavish lifestyles.

“Some of the assets and proceeds of crime seized include at least $15 million in cash, which is being held in personal and business company accounts; 25 motor vehicles, which include luxury, vintage and racing vehicles; 18 residential properties; 12 motorbikes; in excess of 100 bank accounts and share-trading accounts; two aircraft; firearms, jewellery, artwork, vintage wines, and also at least $1 million we located in a safe-deposit box.”

The AFP alleges the conspirators ran a legitimate payroll company.

The money accepted by the company would allegedly be paid into secondary companies, run by what Ms Close describes as “straw directors” as a front.

“What we alleged is that the people involved in Operation Elbris, the syndicate members, retained effective control of those companies. And as part of their contractual obligations to those legitimate payroll-company clients, these tier-2 companies are required to remit payments to what you call pay-as-you-go, withholding-tax payments to the ATO. Through our investigations, we found that only part of the tax obligations were paid. So, as you can see, it’s a significant defrauding of the Commonwealth, where we are alleging $165 million was diverted to illegal gains.”

The AFP alleges the group used the lavish lifestyles to help hide the funds.

ATO deputy commissioner Michael Cranston was issued with a court-attendance notice.

It is alleged he publicly abused his position as a senior official of the Commonwealth.

Police say he could have been unwittingly involved.

Two other ATO employees have also been suspended while the organisation carries out an internal investigation.

The ATO’s acting commissioner, Andrew Mills, explains.

“The people being investigated have been suspended without pay. I cannot overstate the seriousness of these matters. Australians must have a tax administration that they can trust, and the people of the ATO must be of the utmost integrity and good judgment. This is even more important for those in leadership positions.”

Michael Cranston will front the Downing Centre Court on June 13.

Police say he faces five years’ imprisonment if found guilty.

His 24-year-old daughter Lauren Anne was also charged and will appear at Narellan court next month.

Treasurer Scott Morrison has hailed the raids as a win for the government.

“This is a major government crackdown, and what the events today, with this major fraud bust today, demonstrate is that, if you’re a crook and you’re seeking to defraud the taxpayer, we’ll find you, and we’ll track you down. And we’ll make sure that you’re brought to justice. And what this is showing is that the system works when it comes to tracking down tax cheats.”

Prime Minister Malcolm Turnbull has also praised the authorities, but he sidestepped suggestions the government was to blame for allowing such fraud to occur.

“Our police, our agencies will catch them. Catch them, prosecute them and bring the full weight of the law down to bear on them. We have zero, zero tolerance, zero tolerance, for this type of conspiracy, this type of fraud, this type of abuse of public office.”