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Perth tax scam gambler’s luck runs out after 14 years

Gabrielle KnowlesThe West Australian
Gary Parsons living the high life in Las Vegas.
Camera IconGary Parsons living the high life in Las Vegas. Credit: Australian Federal Police

He was a high-stakes poker player gambling against the Commonwealth with stolen taxpayer funds.

But eventually financier Gary Parsons’ luck ran out.

The former Perth stockbroker was jailed for five years last month for ripping off almost $530,000 from the Australian Taxation Office in false GST rebates more than a decade ago.

Based in the US when he filed the fraudulent claims, he spent the stolen money on a high life in New York, gambling at casinos in Las Vegas and on real estate deals that soured during the US housing collapse.

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Now the Australian Federal Police and the ATO have given The West Australian an exclusive insight into the 11-year operation to bring the father of three home to face justice in a WA court.

Parsons worked as a stockbroker and securities dealer in Perth until 2003 when he moved to America after his marriage broke down and he lost money in bad investments.

In New York, he claimed to be running a global hedge fund and be involved in futures trading.

In reality he was holed up in his Manhattan apartment lodging false business activity statements in Australia on behalf of several business entities, claiming between $3000 and $4000 a month that was deposited into his bank accounts.

As his confidence grew that his gamble of claiming relatively low amounts was enabling him to stay under the radar, he started to expand his scam.

He advertised in The New York Times and on Craigslist — an American classified advertisements website — offering unwitting US citizens $75,000 in return for “being his clients” and completing rebate applications for him.

Between 2004 and 2006, Parsons lodged more than 200 GST rebate claims with the ATO on behalf of several business entities.

Red flags were raised in late 2006, when the ATO’s data-matching systems found seemingly separate entities with the same bank account and registered addresses.

Det. Sgt John Whitehead of the AFP.
Camera IconDet. Sgt John Whitehead of the AFP. Credit: Michael Wilson

AFP financial fraud specialist Det-Sgt John Whitehead was working in the tax office in Perth when the suspicious dealings sparked an audit to identify who controlled the bank account and whether there were any other linked claims.

Little did he realise the criminal investigation also launched — codenamed Operation Devoir — would stay with him for more than a decade.

Despite moves to different roles within the AFP — including a stint in uniform at Perth Airport — Det-Sgt Whitehead kept hold of the growing boxes of documents detailing Parsons’ business dealings and web of lies and worked on the case whenever he could.

Det-Sgt Whitehead said he had gathered so much knowledge during the initial years of the inquiry that it would have been difficult for someone else to take over.

“It just became this case that I wanted to see through to the end,” he said. “It wasn’t an overly complex matter but it had a lot of complicating issues to it.”

Australian investigators needed the help of their US counterparts to get access to bank records and other financial information about Parsons and the US citizens he had recruited.

The two countries have a good intelligence-sharing relationship but competing requests about large-scale drug and counterterrorism matters meant it took two years to get back some initial bank records, Det-Sgt Whitehead said.

After the 2006 audit, the ATO put a stop to thousands of dollars worth of other claims lodged by Parsons and, in early 2007, auditors questioned him about the past rebates.

He bluffed, telling them he had lost all his records because his computer had died. But he denied any wrongdoing and ignored attempts to recoup the money.

Investigators kept gathering evidence that tax fraud was Parsons’ sole source of income — following the money trail, collecting financial records and checking with Australian broking agencies to see if any had dealt with Parsons and kept invoices where they had charged him GST.

They also contacted the managers of the properties listed by Parsons as business addresses for the organisations he claimed to represent, to check if anyone knew of those entities.

“The biggest difficulty in a case like this is trying to prove a negative,” Det-Sgt Whitehead explained.

“Essentially we have 26 entities over this period that are allegedly trading in Australia and we’re trying to show they haven’t traded in Australia.”

Eventually in 2010, the AFP with the assistance of the FBI, raided Parsons’ Manhattan apartment and questioned him over the suspicious dealings.

After returning to Australia, Det-Sgt Whitehead worked with prosecutors on a brief to extradite Parsons to WA.

Until Parsons was arrested in the US and extradited early last year, Det-Sgt Whitehead did his best to keep tabs on him — hoping he did not disappear and thwart the long-running inquiry.

Former Perth stockbroker Gary Parsons was extradited from the US.
Camera IconFormer Perth stockbroker Gary Parsons was extradited from the US. Credit: Australian Federal Police

Parsons did not fight a return to Perth but kept his cards close to his chest and seemed determined to gamble that investigators would not be able to prove every allegation.

Then, on the second day of a planned six-week District Court trial last month, the 53-year-old changed his plea to guilty.

He admitted seven counts of obtaining a financial advantage from the Commonwealth by deception and four counts of attempting to obtain a financial advantage by deception in return for prosecutors dropping other charges.

The trial would have involved more than 70 witnesses, many of whom live overseas, about 4500 pages of data and about 800 exhibits.

Det-Sgt Whitehead believes Parsons folded because authorities had called his bluff by having all the witnesses ready to come to court to give evidence against him.

“We come back to the gambler reference — it was a game of poker and it was show your hand time,” he said.

“I think he figured the longer it went on, it would be harder and harder to have all these people (available).

“We laid our cards down and had every card.”

ATO assistant commissioner Peter Vujanic said tax crime and tax evasion posed a significant risk to the community — not just by decreasing the revenue available to the government to provide services but because it was often linked to other crimes.

He hoped the case would serve as a warning to anyone else contemplating abusing the system that authorities had the techniques and resources to track people down.

“This is a great example of the professionalism, dedication and resilience of particularly the AFP and ATO working together with our foreign law enforcement partners to pursue such offenders who are abroad who commit these serious offences against the Australian tax system,” he said.

Australia, the US, Britain, Canada and the Netherlands have recently formed an alliance to better combat international and transnational tax crime and money laundering.

Parsons has been ordered by the court to repay the stolen money.

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