KEY POINTS:
A judge sentencing the kingpin of the country's largest horticultural fraud has called for tougher penalties for anyone who commits multimillion-dollar frauds.
Judge Lindsay Moore yesterday sentenced Mohammed Wasim, 39, to prison for his part in the $15 million horticultural tax scam.
Wasim, who is from Pakistan, is
already in prison for bigamy and the Tauranga District Court heard he would be deported at the end of his sentence.
The scam involved agricultural contractors evading GST, PAYE and income tax by claiming work completed by their employees had been done by other companies.
The court heard that Wasim was the kingpin of the scam and recruited young Pakistani and Bangladeshi men - most of whom were illegal immigrants - to incorporate companies and register them for tax.
He then paid the men to generate false invoices which were submitted to Inland Revenue, which as a result failed to receive tax it was owed or made refunds based on the fraudulent documents.
It is not known how much Wasim gained personally from the scam, but Judge Moore said it was likely to be "to the tune of seven figures", with the fraud as a whole estimated at between $15.08 million and $15.8 million.
Inland Revenue said it was the biggest horticultural industry tax fraud it had ever prosecuted and further prosecutions were pending.
Judge Moore imposed a three-year minimum non-parole period on Wasim, but said he was "somewhat constrained" by the maximum five-year prison sentence for each charge the defendant faced under the Tax Administration Act.
Wasim had pleaded guilty to 81 charges of tax evasion under the act, after the judge warned him that he could face tougher penalties if he elected to stand trial and was prosecuted by the Crown under the Crimes Act.
Instead, he was sentenced to two cumulative sentences of two years, nine months and three years - making a total of five years, nine months - for blocks of charges relating to different financial years.
But Judge Moore also suggested that the seven-year maximum for dishonesty offences under the Crimes Act was inadequate, saying New Zealand had no offence of grand larceny and a further penalty would have been desirable in the recent case of Wayne Patterson, convicted of $3.4 million in benefit tax fraud.
"Where people get into the millions, Parliament may well wish to consider whether they get in deeper water in other ways as well," Judge Moore said. "You must have benefited to the tune of seven figures at least, and a lot of money has disappeared into a black hole, or several black holes."
Rob Ronayne, acting for Inland Revenue, described the fraud as "wide-ranging, deliberate and sophisticated", saying Wasim had headed 36 companies which generated $45 million of false invoices between April 2004 and December last year.
Wasim's lawyer, Viv Winiata, said the value of his client's guilty plea should not be underestimated because it had saved taxpayers the cost of a lengthy, complicated trial.
Wasim was based in Wainuiomata but operated the scam in the Bay of Plenty and Hawkes Bay.
* THE CRIMES
Pakistani Mohammed Wasim recruited young immigrants to set up fictitious companies which claimed refunds from Inland Revenue. He admitted 81 charges of tax evasion in the $15 million fraud.
THE SENTENCE
He was sentenced to a total of five years and nine months in jail, but Judge Lindsay Moore said existing penalties were inadequate.
THE INDUSTRY
Since January 2005, 12 other agricultural contractors in the Bay of Plenty have been prosecuted for evading tax totalling more than $4.4 million. Ten of the contractors were jailed, for an average of 21 months.
