Going rogue in plain sight

A black Lamborghini sports car

By Dom Byrne

For almost seven years the AFP and ATO pursued businessmen Anthony Dickson and Michael Issakidis down every conceivable, partially covered, financial rabbit hole – meticulously compiling evidence of large scale tax evasion and money laundering against them as part of AFP Operation Beaufighter.

Calm, but energised, the AFP pursued justice for one of Australia's greatest 'victimless' crimes – financial fraud – too often left to 'page 2' behind convictions for drug trafficking and counter terrorism.

So why do AFP Federal Agents and those in partner agencies pursue this line of work? Partly, it's the thrill of the chase and the fascinating insights into often legitimate business people who – for all intents and purposes – go rogue in plain sight of close financial services colleagues. And it's the feeling of outrage that people think they can get away with this type of crime.

Platypus recently travelled to Sydney, interviewing AFP Coordinator Organised Crime Superintendent Brett James, and Federal Agents Ian Durrand and Scott Miller, who have both worked on major AFP financial fraud investigations – Operations Beaufighter and Starlifter.

From money laundering to tax offences, insider trading and unexplained wealth, proceeds of crime and foreign bribery – it all needs to be investigated. And the big results are starting to come – 14 years imprisonment for the co-conspirator in the Op Beaufighter investigation – the largest and most complex tax fraud investigation in Australia's history.

Superintendent James said there's been a move to harsher sentencing around these crimes.

"'White collar crime' sounds so innocent," he said. "But there's a real shift now, it's not as acceptable as it once was. Large global companies are now struggling with their reputation because of being exposed for a whole raft of issues."

a table covered in fifty dollar notes
From money laundering to tax offences, insider trading and unexplained wealth, proceeds of crime and foreign bribery – it all needs investigating by the AFP and its partner agencies.

So just who is up for the chase? Superintendent James says he looks for a certain kind of person to work financial fraud investigations.

"I think some people have a natural slant towards it – people that are really resilient, have an inquisitive mind, and like the complexity of a problem. They are analytical and want to work through detail to get to the crux of the issue.

"It's a hard situation to be in because people like to see success all the time – and in this crime type you've got to be patient.

"Some of the people that I've got here in Sydney – particularly those who've worked on Ops Beaufighter and Starlifter – are high quality investigators. They're resilient, they love the chase and they're really passionate about the work that they do.

"Offenders in this area are as much members of organised crime as the traditional groups are. The crimes that we're looking at – they're super complex, well planned, organised, and they morph with the legitimate world. There's legitimacy woven into that illegitimacy – which can make it even more complex.

"To tell anyone coming to this area that it will be easy is lying. But to tell someone that they're going to get a really awesome challenge – you know, truly investigating and digging deep into information to find those little pearls – those little pieces of gold – it's the place for you to come."

three men walking out of a house
Michael Issakidis is arrested during AFP Operation Beaufighter.

Federal Agent Miller said he worked on a number of cases early in his career before deciding on financial crime investigations as a career path.

"These fraud cases take years to get through court – so you carry them with you. Having said that, I love it.

"The court process is just as hard as the investigation – even harder. You're dealing with high level, rich people – they use all of the resources they can to get the best lawyers. They delay it, they use every trick in the book – it's quite demanding the back end of the job."

Federal Agent Durrand – who joined the Op Beaufighter team months before the matter went to court – said when he arrived he was faced with getting his head around the very large, complex fraud.

"Having come from uniform policing, it was intense. I worked very closely with the Commonwealth Director of Public Prosecutions and the ATO - we ended up having four trials due to disclosure issues. In my mind, the only way I was going to succeed was to treat it like mine. We were able to get convictions for both offenders over the more than three years I was involved."

three men standing on the back of a yacht
A motor yacht belonging to Michael Issakidis was restrained as part of Operation Beaufighter.

Federal Agent Miller said an appetite – and an understanding – for complex information is a 'must have'.

"You need to understand the complex evidence…and then go the other way and simplify it for the jury [when the time comes]. It's tricky, but you need to do that. The jury are the men and women in the street who have bills, who pay tax. We've had a lot of success because we've been able to simplify it.

"There was one matter where a man allegedly earned about $80,000 a year – that's all he declared – yet he ran an insurance company, a farm, lived on the water in Sydney harbour, had girls at the top private schools in Sydney and had a yacht. The jury saw right through it – because we were able to really bring it down to the roots level."

Federal Agent Miller said the criminals he's dealing with are very high up in society and well known through major organisations and through governments – the 'Mr Bigs' in their field. "These blokes are doing these frauds over 10, 11, 12 years – the criminality is massive, you're talking millions and millions of dollars of unpaid taxes.

"They are very good at what they do – they make a lot of money legitimately – it's what they do with it from the ATO's point of view [that counts]. They are very creative with the way they hide their money."

According to Federal Agent Durrand, both sides need to be in it for the long haul.

"Our investigations tend to be long term, where we gather a lot of evidence before we even go up and knock on the door. A lot of them can afford to delay proceedings – so it can be a case of who outlasts whom."

Part of the energy needed to do this stems from a genuine commitment to Australian tax payers.

"The AFP and ATO investigators pay their tax like most other Australians. Being involved in these fraud investigations uncovers a whole different criminal mentality that rejects the value of a 'fair go'. We are in the unique position of being able to do something about this for the unwitting victims of tax fraud," he said.

Overall, Federal Agent Miller believes that when weighing up law enforcement careers it's worthwhile taking a sense check on where you'd really like to end up. "That's the beauty of policing – there are so many different areas you can go into without having to change jobs.

"There'll be people out there who hate fraud – there's no doubt about it. But the big thing I like about it is that the targets we're chasing are the top of the pyramid – the ones that are benefitting the most. With some other crime types you're getting the bottom of the chain – you're not getting Mr Big," he said.

A CLOSER LOOK: HOW THE AFP OPERATIONS UNFOLDED

a large house
Luxury real estate was on the wishlist for the now jailed businessman Michael Issakidis.

Operation Beaufighter

In 2011, the AFP and ATO – under Project Wickenby and now the Serious Financial Crime Taskforce – began Operation Beaufighter. It was one of the largest and most complex tax fraud investigations in Australia's history.

Over seven years AFP members working out of its Sydney Office investigated and prosecuted a large tax evasion and money laundering syndicate headed by former Ernst & Young executive Anthony Dickson and Gold Coast businessman Michael Issakidis, who were claiming deductions for false intellectual property in the medical industry – receiving a tax benefit of about $68 million.

Issakidis and Dickson used a web of companies to evade $135 million in corporate tax, netting themselves millions in fees. In reply, the AFP Criminal Assets Confiscation Taskforce restrained more than $54 million of their assets including real estate, luxury cars, and yachts.

RESULT: On 29 March Issakidis 2018 was sentenced to 10 years and 3 months imprisonment with a non-parole period of 7 years, 6 months. This followed the 2015 sentencing of his co-conspirator Dickson to 11 years' jail – later increased to 14 years on his appeal of his conviction.

Operation Starlifter

In 2006 the AFP began tracking several Australian companies defrauding the Government of tax revenue by concealing their true taxable incomes offshore in Vanuatu.

A Vanuatu accountancy firm promoted the scheme through a firm of Australian accountants, who offered it to Australian companies. At its heart were fraudulent claims by companies for income tax deductions said to be for business expenses, where the companies were invoiced for services never intended to be provided.

The companies paid the amounts on those invoices into New Zealand bank accounts controlled by the Vanuatu firm. Monies paid into the accounts were then moved into other New Zealand bank accounts still controlled by the Vanuatu firm and then returned to Australia. To avoid appearing as income carrying a tax liability, they were paid into the accounts of the directors under the guise of a loan.

A forensic accountant conservatively calculated the benefit derived by the director of the Vanuatu accounting firm at $580,000. An opposing expert report calculated only $21,786 – a figure rejected by the NSW Supreme Court.

RESULT: On 18 April 2018 Robert Agius was sentenced to 8 years 8 months imprisonment and Anthony Castagna to 4 years for his involvement. Agius had a prior sentence increased to reflect his involvement in the Castagna matter.

TRACKING AND PROSECUTING FINANCIAL FRAUD: WHO'S INVOLVED?

The AFP and other government agencies comprise two major collaborative financial crime bodies: the Serious Financial Crime Taskforce (SFCT) and Criminal Assets Confiscation Taskforce (CACT).

The CACT refers eligible matters to the AFP Criminal Assets Litigation (CAL) Team – run out of its Headquarters in Canberra. Overall coordination of cases falls to the AFP Confiscated Assets, Fraud and Anti-Corruption Team.

Serious Financial Crime Taskforce

The Serious Financial Crime Taskforce forms part of the AFP-led, multi-agency Fraud and Anti-Corruption Centre. Established in July 2015 it draws together the knowledge and resources of relevant law enforcement and regulatory agencies to address serious and complex financial crimes.

Agencies in the SFCT include the ATO, AFP, Commonwealth Director of Public Prosecutions, Australian Criminal Intelligence Commission, Attorney-General's Department, Australian Transaction Reports and Analysis Centre (AUSTRAC), Australian Securities and Investments Commission and Australian Border Force.

Since its inception more than 634 audits have been completed, and liabilities have been raised in excess of $473 million. Five people have received custodial sentences following prosecution and there are currently 26 criminal, civil and intelligence matters in progress.

Criminal Assets Confiscation Taskforce

The AFP-led Criminal Assets Confiscation Taskforce (CACT) brings together the AFP, Australian Crime Commission, and the Australian Taxation Office (ATO) to identify potential criminal asset confiscation matters and prevent reinvestment of criminal profits in further criminal activity.

The CACT utilises experts in litigation, intelligence, operations, forensic accounting and other specialist areas. Sworn-in ATO officers are co-located with AFP Financial Investigation Teams to provide financial taxation analysis support.

AFP Criminal Assets Litigation Team

The Criminal Assets Litigation (CAL) Team brings together highly skilled individuals and teams to investigate and litigate proceeds of crime matters. In 2012 the AFP Commissioner was given powers to conduct proceeds of crime litigation, aligning the AFP with the Commonwealth Director of Public Prosecutions.

Is Fraud your fit?

Superintendent James said that current and aspiring police officers wanting to work in AFP Fraud and Anti Corruption should know that they'll be investigating some of Australia's smartest organised criminals.

"They're well educated. They've got huge amounts of money and backing. They know how to hide their behaviour in complex corporate structures. They interweave their illegitimate activity with legitimate activity.

a Rolls Royce luxury car
AFP officers confiscated multiple luxury cars – including this Rolls Royce – during Operation Beaufighter.

"From the really serious down to small offending – the people that we're looking at are the top echelon. The crooks in Ops Beaufighter and Starlifter – they're businessmen, but they are also criminals.

 "All their education, all the privilege that they've had – these are high net worth individuals who are really, really smart. Unfortunately, I don't think they are as smart as the guys investigating them, which is credit to Federal Agents Miller and Durrand."

National Security Hotline

Visit the AFP Futures Centre

The Australian Centre to Counter Child Exploitation

Platypus Online: Read. Discover. Enjoy.