Former EY executive gets 11 year jail sentence for $450 million fraud
Tuesday, March 24, 2015/
A former executive of Ernst & Young has been handed an 11-year jail sentence for his role in an elaborate tax fraud that involved a mysterious company in the Cayman Islands and one of Australia’s largest banks.
Anthony Dickson was last week given a combined 11-year jail term in the New South Wales Supreme Court for two fraud charges, relating to a scheme that was perpetrated in 2005 and 2006 and involved a company he founded, Neumedix Health Australasia. The non-parole period is seven years.
Dickson, who was a principal at EY for four years prior to operating the scheme, was accused of claiming $750 million in false tax deductions for medical technologies allegedly held in the Cayman Islands by another company he owned, Athenahealth Patents.
The claims were connected to a leaseback deal organised by Dickson in partnership with ANZ Investment Holdings Ltd. Under the deal, ANZ clients Bluescope Steel, Incitec Pivot and collapsed timber company Gunns sold property assets under deals that were financed by ANZ.
Dickson and a business associate were accused of using the leaseback arrangements to claim $450 million in depreciation on rights to three medical technologies held in the Cayman Islands but if the scheme had not been uncovered, the total value of claims could have been as high as $750 million.
The scheme is estimated to have cost the Australian Tax Office $135 million in lost revenue.
Justice Robert Beech-Jones said it was Dickson’s “unshakeable belief in his intellectual superiority to all those around him and the ATO” that was his “undoing”.
“One can have sympathy for the position of the offender,” Justice Beech-Jones said.
“He finds himself broke, professionally ruined and incarcerated. He was a person who had much to lose and he has now lost it. The consequences for him and his family are severe.”
“However, this situation is not a product of circumstances but of a conscious decision on his part to pursue a dishonest and fraudulent tax scheme on a large scale.”
A spokesperson for EY confirmed to SmartCompany EY is not involved or implicated in the fraud as the offences occurred after Dickson had left the firm.
Andrew Morgan, forensic services partner at BDO Australia, told SmartCompany there are a number of different types of fraudster, but based on Justice Beech-Jones comments, it appears Dickson falls into the category of the “narcissistic offender”.
“The person is extremely clever, extremely well-placed, with great experience,” Morgan said.
“What makes a tremendous executive is also what makes a tremendous criminal.”
Morgan says, according to the theory of the fraud triangle, perpetrators of fraud need motivation, opportunity and the ability to rationalise their behaviour. In this case, he says Dickson had all three.
“Part of the motivation in this case might have been his need or desire to keep demonstrating how clever he is,” Morgan said.
“He clearly had the opportunity to perpetrate the fraud and the ability to rationalise his own behaviour is the final piece in the jigsaw.”
Morgan says it is relatively easy for fraud investigators to “catch the non-sophisticated crooks” as they often “leave a trail” and their desire or capacity to cover up their actions is not as well-developed.
But he also said “sophisticated criminal activity is incredibly hard to detect”.
Morgan says the lesson for companies is to always be absolutely aware of what is happening within your business and to ensure you have the appropriate structure and people in place.
“You have to be able to put your hand on your heart and say, ‘we’ve got this covered’,” he said.
SmartCompany contacted Neumedix but did not receive a response prior to publication.
*This article was updated on March 24 at 3.12pm to include a response from EY.