Two Wellington accountants have been sentenced to eight years in prison after being found guilty of a major fraud against the IRD.
In the High Court at Wellington, Justice Stephen Kos sentenced Barrie James Skinner to eight-and-a-half years in prison and David Ingram Rowley to eight years in prison.
The difference reflected that Rowley, who like Skinner was a director at Tax Planning Services, enjoyed less of the financial benefit of the offending and was found guilty on slightly fewer charges.
Justice Kos had earlier found the pair guilty of dozens of charges of fraud, tax evasion and attempting to pervert the course of justice.
The scheme they engaged in saw Skinner and Rowley issue false invoices for services or goods which did not exist or were actually worth much less than the invoice.
The clients were repaid much of the payment almost immediately, and attracted a slight gain through claiming income tax and GST deductions. Skinner and Rowley kept a large chunk of the payment, which would have otherwise to the Inland Revenue, for themselves.
Justice Kos found that either the IRD, or their clients, would ultimately lose out by around $2.9 million, with the pair claiming they had little means to make repayment themselves.
Both have now been declared bankrupt.
Shaan Stevens, another Wellington accountant, was last year sentenced to 10 months home detention after pleading guilty to 13 charges of fraud. The judge in that case used a starting point of 5 years imprisonment, but gave substantial discounts for an early guilty plea, good character and reparation.
Justice Kos gave Skinner gave no similar discount, saying the offending was "at an altogether different scale".
He rejected submissions that the pair were good characters and should be considered first time offenders - because the offending took place over a prolonged period and they had never shown any genuine remorse, right up until sentencing.
During the trial the pair claimed a computer hard drive contained documentation which showed that the invoices that they had issued to clients were genuine, however Justice Kos accepted forensic evidence from the Crown that the documents had been created in the days before the trial.
That Skinner and Rowley had presented such perjured evidence was "disgraceful" Justice Kos said, and would have added to the sentence were he allowed to do so, but instead it was taken into consideration in whether to give them a discount to their sentences.
No minimum period of imprisonment was imposed, with Justice Kos willing to accept the parole process would determine whether the pair had shown genuine remorse for the actions.
Skinner's lawyer Mike Lennard told the court that his client had worked for 24 years, typically working at least 80 hours a week to build the business, often to the detriment of his family and personal enjoyment of life.
After building a substantial business, the IRD investigation and subsequent court action had seen this "crumble to utter financial ruin and disgrace" Lennard said.
"He has nothing now" aside from the support of his family, despite the fact that he is likely to lose his home, Lennard said.
Rowley's lawyer during sentencing Mark Keating (Lennard represented both during the trial) pointed to his client's lesser role in the offending, and the fact that he had enjoyed only a quarter of the financial gain from the offending, with Skinner taking the rest.
While the Crown had made much of the "high life" that Skinner lived during the offending, no similar lifestyle had been enjoyed by Rowley, Keating said.
The court received letters from members of both Skinner's and Rowley's family, both of which have teenage children, that the case had had a devastating impact on them.
Justice Kos said while some of the accounts were moving, the pair should have factored the impact on their family when they were engaged in the illegal activity.
"Either you did not think of them during the offending, or you decided to take the risk."
A pre-sentence report on Skinner showed he believed the convictions were "spurious" which Justice Kos said demonstrated a "breathtaking lack of insight into your offending".
Rowley claimed that he was simply a backroom man employed by clients to "push the envelope'' and it never entered his head that the activity was illegal.
Justice Kos said that statement also showed a breathtaking lack of insight into his role, and while he accepted Skinner was the leader, Rowley had played a key role.
Rowley was "not so much pushing the envelope, as setting fire to it".
Inland Revenue welcomed the sentences, the longest ever handed down in a New Zealand tax case.
Spokesman Patrick Goggin said tax agents and advisors have a duty to ensure their clients' tax affairs are correctly reported to Inland Revenue.
"Rowley and Skinner not only breached their clients' trust by acting illegally but also that of Inland Revenue which trusted them to act with honesty and uphold the integrity of the tax system."
- © Fairfax NZ News