News

Former local business linked to multi-million dollar scam

By Morgan Dyer

A former Shepparton business has made national headlines once again as an ABC investigation uncovered a multimillion-dollar scam that targets drug addicts and the homeless.

Former local accountancy firm Brown Baldwin have been accused of exploiting vulnerable Australians by signing them as directors of failing businesses for a small cash fee.

The scheme allowed failing businesses to leave their outstanding debts in the names of people who had little capacity to repay the funds, leaving them no choice but to declare bankruptcy.

ABC Background Briefing reporters Dan Oakes and Jeremy Story Carter uncovered the long-running exploitive scheme involving nearly 200 companies across almost every state in Australia.

Jamie Cox was one of the people caught up in the scheme and told the ABC a man at a truck stop made him a proposition at a time when he was battling a drug and alcohol addiction.

Mr Cox initially signed on to become the director of a trucking company by accounting firm Brown Baldwin in exchange for $400 cash.

However, he told the ABC he soon found he had been made the director of a string of companies without his permission, leaving him responsible for thousands of dollars in the businesses unpaid tax and fines.

Mr Cox now cannot apply for credit and having a debt with the ATO means he can’t get Centrelink repayments.

The ABC investigation identified dozens of people known as “dummy directors” in their investigation.

Criminal charges are yet to be laid to the accounting firm which closed its offices in Shepparton and Melbourne in 2019. However, the tax office continues to investigate the companies.

Brown Baldwin’s founder Chris Baldwin was not available to comment on the story.

The current investigation follows others concerning the controversial firm, including the August 2018 raid by 250 ATO officers on 11 businesses and residential sites across Melbourne and Shepparton believed to be associated with the accounting firm.

At the time the Deputy Commissioner Jeremy Geale told the News they were examining a group of tax agents suspected of facilitating “phoenix” activity and promoting avoidance of tax involving GST, income tax and the failure to remit pay-as-you-go withholding tax payments.

Speaking generally of the practice of ‘‘phoenixing’’, Professor Louis de Koker of La Trobe University said the often illegal activity involved setting up an incorporated company.

‘‘If your business is struggling, it becomes very attractive to form a new company, especially a new company with a similar sounding name and you just shift the business through contracts over to the new company,’’ he said.

‘‘And you leave the shell with all of the creditors and the tax debts and you abandon it. You have a new company in a clean shell that is not responsible for paying the debts, leaving the creditors high and dry, including the ATO, and they don’t like that.’’