Tax agent on fraud charges

Tax agent on fraud charges

A man facing 18 Crimes Act charges laid by the Serious Fraud Office (SFO) has appeared in the Manukau District Court today.

Michael Robert McDonald (40) faces four charges of theft by person in a special relationship, 13 charges of dishonestly using a document and one charge of false accounting.

Mr McDonald had been a registered tax agent since 2002. In that role he filed GST, PAYE and income tax returns on behalf of clients and their related entities.

Between 2007 and 2013, it is alleged that Mr McDonald received money from some of his clients for the purposes of paying tax but failed to forward the money to the Inland Revenue Department. He also allegedly filed approximately 250 false GST and income tax returns in order to receive money from Inland Revenue or to retain client funds that he was not entitled to. The SFO has also charged Mr McDonald for allegedly making false entries in one of his client's financial statements in order to conceal his offending.

SFO Director, Julie Read said, "The misuse of money entrusted to professional advisers breaches professional standards and undermines the confidence of the community. New Zealanders need to rely on experts when dealing with complex financial matters and it is critical that such professionals demonstrate that they are worthy of the trust placed in them."

The SFO acknowledges the assistance of Inland Revenue in the investigation of Mr McDonald.

Mr McDonald was remanded on bail without plea and his next appearance is set down for 11 December 2015.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Mr McDonald registered as a tax agent with the Inland Revenue in August 2002 through the company McDonald Reid Limited (McDonald Reid). The practice was sold in 2005 and he continued as an accountant and tax agent through his new company, McDonald and Co Accounting Limited, which was incorporated on 21 October 2005.

Mr McDonald is not, and has never been, a member of any professional accounting body.

Mr McDonald was initially investigated by Inland Revenue and in early 2013 a complaint was made to the NZ Police by one of Mr McDonald's clients. The Police referred the matter to the SFO in May 2014.

Crimes Act offences

Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person-
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

Section 228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,-
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.

Section 260 False accounting
Every one is liable to imprisonment for a term not exceeding 10 years who, with intent to obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration, or to deceive or cause loss to any other person,-
(a) makes or causes to be made, or concurs in the making of, any false entry in any book or account or other document required or used for accounting purposes; or
(b) omits or causes to be omitted, or concurs in the omission of, any material particular from any such book or account or other document; or
(c) makes any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.

About the SFO

The SFO was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO's role is the detection, investigation and prosecution of serious or complex financial crime. The SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:

• business and investor confidence in our financial markets and economy
• public confidence in our justice system and public service
• New Zealand's international business reputation.

The SFO operates three operational teams; the Evaluation and Intelligence team along with two investigative teams.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part 2 of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:

• the suspected nature and consequences of the fraud and/or;
• the suspected scale of the fraud and/or;
• the legal, factual and evidential complexity of the matter and/or;
• any relevant public interest considerations.

The SFO's Annual Report 2014 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO's strategic goals and performance standards. Both are available online at www.sfo.govt.nz