Two accountants face long jail sentences after being found guilty of fraud, tax evasion and perverting the course of justice in a multimillion-dollar scam against Inland Revenue.
David Ingram Rowley and Barrie James Skinner scribbled notes yesterday as Justice Kos said he was satisfied beyond reasonable doubt that the Crown's case proved guilt on all but a handful of more than 100 charges they faced.
A six-week trial in the High Court in Wellington heard how Skinner had spent $1.1 million on international travel and spending, well in excess of his declared income.
As well as pronouncing guilty verdicts on dozens of charges of fraudulently using documents, Justice Kos found the pair perverted an IRD investigation by attempting to school their clients on what to say in sworn interviews.
Forensic evidence proved Rowley and Skinner tampered with a computer hard drive in an attempt to give legitimacy to the disputed transactions.
Those transactions were valued by IRD at $9.5m, with IRD underpaid by $3.1m, while Skinner, and to a lesser extent Rowley, benefited to the tune of $2.3m.
The pair were remanded in custody to reappear for sentencing on August 17, with Crown lawyer Dale La Hood saying it was "inevitable" the pair would be jailed.
Yesterday's verdict was the culmination of an IRD investigation into the pair and their Wellington-based tax agency, Tax Planning Services. The agency's Kent Tce offices were raided by IRD in April 2010, when a dozen staff spent 12 hours seizing documents and cloning computers.
It followed concerns from IRD investigator Ben Raggett about the refunds being paid to clients in return for payments for services.
The IRD investigation concluded the pair had concocted a scheme through which they would charge clients for services which never took place, explaining to some that it was a way of "purchasing" tax refunds.
Most of the money was refunded, with clients claiming more than the net amount paid - an amount kept by the agency - in income tax deductions or GST credits.
The clients included Wellington businesses and professionals, such as Kathy Ertel, a lawyer who recently represented Ngati Raupani before the Waitangi Tribunal in hearings over water rights.
Skinner and Rowley met clients explaining the transactions had been deposits on apartments or car parks in central Wellington, and the clients should tell this to IRD investigators during sworn interviews.
While the investigation was under way, the pair battled to keep their names secret, losing a bid which reached the Supreme Court. Shortly after losing name suppression, Tax Planning Services was placed in receivership, when the Bank of New Zealand demanded repayment of an overdraft.
At the time, Rowley and Skinner told The Dominion Post they were being mistreated by the BNZ.
The amount clients owed the agency was far in excess of what it owed the bank, they said.
Shortly before the trial began, a receivers' report claimed much of the $3.4m recorded in the debtors ledger of Tax Planning Services was from entities which were in liquidation, bankrupt or had been struck from the Companies Register.
Receiver Barry Jordan of Deloitte said the ledger was "significantly inflated and included amounts that had either been in dispute or represented invoices clients had never seen or approved of".
The High Court trial heard how, despite being coaxed on what to say, most of the clients told IRD investigators they had no idea what the transactions were for at the time.
One, a retired police officer, secretly recorded a meeting in which Skinner explained that the payment was a deposit on an apartment.
It also heard testimony from Shaan Stevens, a former top businessman who is now serving home detention after pleading guilty to charges in a related case.
Stevens told the court how he provided his electronic signature and company letterhead in a bid to create a paper trail to cover transactions he knew were fraudulent.
The trial was briefly held up following the sudden death of La Hood's father. Justice Kos said the Crown lawyer's "exacting" cross-examination of the accused "sealed the result".
How it worked
Clients of Tax Planning Services would make payments to the tax agency, ostensibly for "services", with about two-thirds of the money returned almost immediately. Skinner and Rowley kept the difference. The clients would benefit by claiming income tax deductions or GST credits in excess of the net amount paid. When an IRD investigation began, Skinner and Rowley told clients to tell investigators that the payments were for deposits on unbuilt apartments or car parks in central Wellington. Most told the IRD they had no idea what the transactions were for, with one providing a secret recording of a meeting with Skinner – in which he explained the client had made a deposit on an apartment on a proposed development on Boulcott St.
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