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Tax investigators and federal police have raided the home and offices of a man at the centre of an alleged multi-million-dollar tax avoidance scheme.
It comes six months after the ABC revealed Philip Whiteman had masterminded a scheme that helped companies avoid paying tax on more than $20 million of income.
Dozens of investigators from the federal police and the ATO, including computer forensics experts, searched Mr Whiteman's offices in Prahran in Melbourne's inner-south, as well as homes and other addresses linked to the former bankrupt and "pre-insolvency adviser".
The raids came as a Federal Court judge granted an application allowing the ATO to seize control of four Mr Whiteman-linked companies and freeze the assets of Mr Whiteman and an associate, Timothy Batchelor.
The court heard Mr Whiteman had been served this morning with a personal tax bill of almost $8 million, with entities controlled by Mr Whiteman owing millions more dollars in unpaid tax.
A lawyer for the ATO said the companies — DNV Accountants, Ainslie Harding & Wood solicitors, A&S Services and Bolton & Swan Solicitors — were all controlled by Mr Whiteman and were used to facilitate the phoenixing of clients' companies.
Phoenixing is the illegal business practice of liquidating a company with debts and transferring its assets to a new entity that continues on the business of the original but without its debts.
It is estimated phoenixing costs the Australian economy more than $3 billion annually.
- When a director strips cash and assets before hiding them and liquidating the company, then restarting
- Usually restarted under a different name, 'like a phoenix from the flames'
- Done to deny creditors and ATO the money owed to them
The Federal Court judge granted an application by the ATO to put the four companies in provisional liquidation.
This type of application is rare, and usually takes place when there is heightened concern that the cash and assets of the company owing a tax bill will be hidden. Liquidator Pitcher Partners has been appointed to investigate the companies.
The lawyer for the ATO told the court three properties valued in the millions of dollars had been identified that were in the names of other people, including Timothy Batchelor, but were ultimately owned by Mr Whiteman and his ex-wife, Sherife Ymer.
The ATO's lawyer told the court Mr Whiteman uses "unsophisticated people" to become dummy directors of companies, a common tactic of phoenixing designed to make it more difficult for liquidators to obtain information about the reasons for a company's failure.
He quoted a number of internal emails which appeared to show Mr Whiteman and associates discussing the need to install directors in number of companies, and referred to affidavits by former Whiteman employees who said Mr Whiteman was constantly looking for people to install as "dummy directors".
In October, Melbourne man Christopher Somogyi told the ABC that he had become the director of several companies in return for a small monthly fee.
Mr Somogyi, who is homeless and lives out of his ute, began to receive penalty notices from the ATO, saying he was liable for hundreds of thousands of dollars in unpaid tax and superannuation.
Mr Somogyi was made a "dummy director" of two of Mr Whiteman's companies — A&S Services and Bolton & Swan. A former employee of Mr Whiteman, Marisa Sampieri, also described how she signed up as a director for 12 companies at Mr Whiteman's behest.
The ATO's lawyer quoted internal emails sent between Mr Whiteman and his employees Michael Brennan and Peter Hannah which he said showed that Mr Whiteman was the boss of the companies, despite having been a bankrupt, and banned from managing corporations.
In February, after the ABC named law firm Ainslie Harding & Wood Solicitors as a company controlled by Mr Whiteman, lawyers acting for Mr Whiteman's wife and the firm's principal solicitor, Sherife Ymer, sent a letter requesting that the company's name be removed from the story because the firm was independent of Mr Whiteman.
However, in an affidavit read in court today, ATO official George Khouri described the firm as a "phoenixed entity" that took over the business of Bolton & Swan Solicitors.
Topics: fraud-and-corporate-crime, corruption, law-crime-and-justice, tax, government-and-politics, prahran-3181, vic, australia
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