Gisborne farmer John Richard Bracken was sentenced to eight years six months imprisonment for a $17.3 million GST fraud, the biggest tax fraud ever uncovered by Inland Revenue.
An employee of Bracken’s business, Bracken Enterprises Ltd, blew the whistle, alerting authorities to the fraud created by a paper trail documenting fictitious transactions.
The High Court was told Bracken operated a sheep and dry stock farm at Matawai, near Gisborne. He also ran an export business, with timber, milk, honey and bottled water sent to customers in the Pacific Islands. The fact zero GST is charged on exports was the central feature of the fraud. Over a four year period, Bracken concocted invoices for fictitious purchases of goods totalling $133 million, claiming the GST component of these non-existent purchases as a GST credit. This fraud generated fraudulent GST refunds totalling $17.3 million. Police have commenced action under the Criminal Proceeds (Recovery) Act to seize Bracken’s assets.
The fraud was masked by Bracken’s use of circular payments through Bracken Enterprises’ bank account. He withdrew sums from the account, either in cash or by bank cheque, to create the illusion of a payment to suppliers, and then almost immediately re-deposited money back into the account. Fictitious supply invoices were forged to match the line item on bank statements for amounts withdrawn. These false invoices were forged in the names of real businesses, many of which did in fact supply goods to Bracken. A fictitious export sale of the fictitiously purchased goods was then established by creating a forged export contract. In this way, Bracken generated a GST credit for goods never purchased and then disposed of the non-existent goods without having to account for GST on the sale through the pretence of having exported these non-existent goods. Exports are zero-rated for GST.
Evidence was given that Bracken has prior convictions for accident compensation fraud and for breaches of the Resource Management Act.
R. v. Bracken – High Court (11.05.21)
21.078