The country’s biggest tax fraudster has this week been sentenced to a term of eight years and six months. John Bracken, a Matawai farmer and an exporter, has been convicted of carrying out a crude but effective $17.4 million tax scam in the form of GST refunds he was not entitled to.
This case was filed by the IRD in 2019, following information that Bracken’s company had made false claims between 2014 and 2018. Bracken Enterprises Limited (BEL), which is separate from his Matawai farm operations, was used to submit false invoices totalling over $133 million during the four year period. This resulted in Bracken receiving the $17.4 million in GST returns for mostly non-existent transactions.
The invoices were submitted by Bracken, and sometimes his wife Margaret, to a Gisborne accounting firm, Bain and Sheppard at the end of each month. The accounting firm would check them against transactions in the company’s bank accounts. Copies would be forwarded to the brackens for approval before onward submission to the IRD.
According to the Crown, the company claimed to have exported products received from New Zealand suppliers to the Pacific Islands. This entitled BEL to claim input tax credits for the merchandise it purchased. The transactions would also have meant not having to pay output tax on the products sold overseas that are zero-rated for GST use.
The banking transactions that purportedly supported this scam were a result of same day deposits and withdrawals of large sums of money through cash or cheque. Bracken would carry out the transactions in person at the counters of two specific bank tellers. The first lady was paid to aid in creating the false invoices.
He later struck up an association with the second lady in 2016. This second woman later contacted the Serious Fraud Office (SFO) in 2017 after a friend of Bracken informed her that the invoices may be illegal. The two women and the accounting firm were not subject to prosecution in this case. The Crown conceded that the Bain and Shepard provided only preparatory services, not auditory.
An investigation revealed that Bracken created the invoices from earlier legitimate transactions and pro-forma invoices obtained from different suppliers of export-quality products. The businesses were not engaged in the transactions and were surprised to learn their names were involved in the fraud.
Crown lawyer, Megan Mitchell, said the high sentence was due to the size of the crime, the high degree of planning and premeditation. The presiding High Court judge, Justice Graham Lang, noted that it was the largest tax fraud of its kind in the country’s history.
The sentencing is not the end of the Brackens woes. There is ongoing action by the Commissioner of police to recover these monies from their assets under the Criminal Proceeds Recovery Act. They have already been granted applications to restrain an estimated $12.5 million in assets, including the Matawai farm that is worth about $7 million.