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$700 Million Has Already Been Lost – When Will It End?

In an almost unbelievable turn of events, it appears that one particular act of fraud has single-handedly caused the scrap metal industry in Australia to boom from $160m in 2011, to over $1.8 billion in 2016.

While that might sound like an incredibly good thing for the economy… it comes as a terrible twist that the people behind the industry spike just so happen to be a group of very gifted conmen.

So far, it is estimated that the Sydney-based scam has cost Australian taxpayers in excess of $700 million in tax revenue – a sizeable chunk of cash that we surely can’t afford to squander?

So, one might expect the crime ring to be led by some major international criminal organization, whether Australian or foreign, but all that’s we’ve been told is that several of those involved are young men in their late teens and early twenties, living on little or no income.

A number of people have been questioned by tax investigators to date, including one twenty-something who reported to have collected over 4kg of scrap jewellery during his “lifetime,” worth an estimated $210,000AUD if it were all gold, before going on to buy more from a person he’d met online.

How he managed to buy more gold, considering he had “little or no reported income,” never seemed to be questioned… despite the fact that it’s incredibly rare for a twenty-year-old to “collect” over 200 grand’s worth of gold.

Nothing shady about this either, but this man then went on to secure his scrap metal / jewellery trades with that person he’d met online, in a local park in Inner-west Sydney.

Apparently, that man has since gone on to handle and melt down millions of dollars’ worth of gold at his home, before selling it on to gold traders.

Another twenty-something allegedly involved in the scam told investigators that he had been lucky enough to find 8kg of gold bullion and scrap metal in the house his father had left for him in his inheritance. Yep, that’s over $420,000, just sitting there in the house. More still, he then went on to buy scrap gold for a stranger he met whilst walking down the street, before melting it down with his gold to sell on.

In an even more ridiculous instance of the same case, a sixteen-year-old student, with “no reported income,” was found to have transacted over $16 million worth of gold! How in the world does a sixteen-year-old transfer millions upon millions of dollars without so much as a sniff from the Feds or in the very least, the ATO?

We understand that the finer details of the case are still to be explained, but in all honesty, it is preposterous that such an absurdly huge amount of money – the $700 Million – was stolen from Australian tax payers in what is sure to be only one of many, many more scams to appear this year.

We have written quite a few articles on the importance in reducing the tendency for Australian’s to be duped into scams because, for some reason, we are just so good at falling for them, and measures need to be taken to protect us from them.

According to The Australian’s article, from which we’ve derived a lot of this information, “Minister for Revenue Kelly O’Dwyer announced a crackdown to stamp out the practice, making a reverse GST charge introduced in January compulsory, and removing gold, silver and platinum products from the current definition of second-hand goods.” But is that going to do the trick?

While the GST reversal option may help on the transaction side of this particular scam, is it not in the ill interest of the public to change the definition of second-hand goods to exclude silver, gold and platinum? What would the new definition be and how would it effect the honest businesses that work in scrap metal?

These are questions we raise to you, not for an answer per-se, but instead to raise awareness with regards to how deeply these fraud-related issues affect Australia.

By extension, Australians spent $580 million on transaction fraud alone in 2016, with Scamwatch reporting additional losses of $83.5 million through other cons like online romance scams and fake lottery wins – we need to change this.

Precise Investigation has been helping clients across all sectors to effectively mitigate fraud and reduce the associated risks; whether commercial or domestic, you can be sure to benefit from a chat with one of our private investigators.

Call our offices today on 1300 856 011 and tell us what you need or what you’d like assistance with and we’ll take it from there!

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