ATO deputy commissioner's son has been arrested on fraud charges

A vintage car seized by the Australian Federal Police. Source AFP

One of Australia's senior tax officials has been caught up in a major fraud investigation involving his son.

Australian police have smashed a massive fraud syndicate and seized planes, guns, and luxury cars, they said on Thursday, with a top-ranking tax official and his son embroiled in the scam.

Police have charged nine people and seized cash, homes, cars and luxury items.

Their father has been issued with a court attendance notice for allegedly publicly abusing his position as a public officer, the Australian Federal Police said.

If found guilty, he faces a maximum penalty of five years' jail.

Nine people have been arrested over a $165 million tax fraud investigation.

Mr Cranston, "Crano", has been with the Tax Office for more than 35 years, and was running the ATO's group targeting compliance by wealthy people and families until Wednesday.

The arrests were made after an eight-month investigation, codenamed Operation Elbrus and two other ATO officers have been suspended for allegedly accessing information at Cranston's request.

The AFP says it will take time to see where the conspiracy ends and whether further charges should be laid.

And what gains they were: raids in Sydney yesterday seized 25 motor vehicles, a dozen motorcycles, 18 residential properties, over 100 bank accounts holding over $15m, $1m of cash from a safe deposit box, firearms, jewellery, vintage wines and even a pair of aircraft.

News Corp. reported that the scammers believed they had struck a sweet spot where each individual tax underpayment was too small to trigger a tax office response.

Police allege that the fraud involved a company established by the syndicate to provide payroll services to legitimate clients.

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Conspirators are accused of hiding diverted taxpayer funds through "lavish lifestyles", said police.

Some money was allegedly laundered through Rommark Corporation, a property development firm run by eastern suburbs identities Michael Teplitsky and Boris Markovsky.

"The scale of this allege fraud is unprecedented", AFP deputy commissioner Leanne Close told reporters in Sydney on Thursday.

Adam Cranston is due to face Sydney's Central Local Court on Thursday morning charged with conspiracy to defraud the commonwealth.

The seven others arrested on Wednesday include Dev Menon, Devyn Michelle Hammond, Daniel Rostankovski, Jason Cornell Onley, Christopher James Guillan, Aaron Leo Paul and Daniel Simon Hausman.

The man from Sutherland and the man from Waterloo have also been charged with an offence related to blackmailing, as has a 47-year-old from Woollahra.

Tax Office investigators, who helped the federal police during the investigation, estimate the amount of tax obligations not paid to the Tax Office to be $165 million.

It's alleged Michael Cranston accessed restricted information on an ATO audit for his son, but police do not believe he knew about his son's alleged fraud syndicate.

"Michael was in shock when we spoke to him yesterday, as you would imagine, knowing what has happened to his son", she said. He has been charged with conspiracy to defraud.

ATO Second Commissioner Andrew Mills said two other ATO officers also were being investigated internally for potential code of conduct breaches.

When Australian payroll-for-contractors outfit Plutus Payroll stopped paying its customers, several pointed out that the company looked too good to be true - because it did not charge for its services.

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