ato's operation elbrus busts plutus payroll

Operation Elbrus, commonly referred to as the Plutus Payroll fraud, was one of the largest tax-fraud investigations undertaken in Australia. The operation was led jointly by the Australian Federal Police (AFP) and the Australian Taxation Office (ATO) through the Serious Financial Crime Taskforce (SFCT).

The alleged offending read like the most improbable Hollywood script with conspiracy spreading across a web of facades, and lead by caricature-like key players which included Adam Cranston, whose father was a former Deputy Commissioner at the ATO.

The investigation examined whether a large-scale syndicate conspired to defraud the Commonwealth by diverting pay-as-you-go withholding tax (PAYGW) and goods and services tax (GST) owed to the ATO. Authorities alleged that, over approximately three years, the scheme deprived the Commonwealth of more than A$105 million in tax revenue.

Background

At the centre of the investigation was Plutus Payroll Australia Pty Ltd, a payroll-services provider that outwardly appeared to offer legitimate payroll administration to corporate clients.

Client businesses transferred payroll funds to Plutus Payroll inclusive of employee wages and tax withholdings, with the expectation that PAYGW and GST would be remitted to the ATO.

Instead, investigators alleged that substantial portions of the withheld tax were diverted away from the tax system. Funds were redirected into a network of associated second-tier companies, many of which were controlled by straw directors. These individuals held nominal directorships but exercised no real operational control. The layered corporate structure was designed to obscure responsibility, complicate audit trails and frustrate regulatory scrutiny.

The scheme was identified through forensic accounting, compulsory information-gathering powers, surveillance and telecommunications interception. As the investigation progressed, authorities identified not only payroll executives and administrators but also financial and professional facilitators involved in handling and laundering diverted funds.

Legal considerations

The prosecutions raised several recurring legal issues, including:

• Whether the diversion of withheld PAYGW and GST constituted a dishonest causing of loss to the Commonwealth under section 135.4 of the Criminal Code (Cth)

• The application of conspiracy liability to coordinated financial conduct involving multiple entities and participants

• Whether funds diverted prior to remittance to the ATO constituted proceeds of crime for the purposes of section 400.3

• The role of professional facilitators in money-laundering offences, particularly the use of trust accounts

• Assessment of objective gravity and individual culpability in large, multi-participant financial crime

• The relevance of guilty pleas, cooperation and role differentiation in sentencing

Courts also considered asset restraint, forfeiture and recovery orders in connection with the proceeds of the offending.

Procedural history

Investigations commenced in 2016 and resulted in a series of arrests and prosecutions between 2018 and 2023. Proceedings were conducted primarily in the Supreme Court of NSW.

Evidence presented showed initial communications between collaborators devising what they thought was a pioneering ruse that could withstand the strictest scrutiny. Those communications eventually lead to the inevitable taxable penny dropping, as the conspirators began to realise their fate.

Across multiple trials and plea hearings, defendants were charged under Part 10.3 of the Criminal Code (Cth) for conspiracy to dishonestly cause a loss to the Commonwealth, and under section 400.3 of the Criminal Code (Cth) for dealing with proceeds of crime valued at A$1 million or more.

Some defendants pleaded guilty at an early stage, while others contested the charges at trial. In March 2023, three defendants were convicted following trial of both conspiracy to defraud the Commonwealth and conspiracy to deal with proceeds of crime.

Sentencing hearings occurred progressively from 2019 through to February 2024, when the final defendant associated with Operation Elbrus was sentenced.

What the court held

The Supreme Court of NSW found that the offending involved deliberate, sustained and coordinated conduct designed to deprive the Commonwealth of significant tax revenue. In relation to principal offenders, the court characterised the conduct as high-range objective gravity.

The court accepted that payroll-services entities provided an effective mechanism for diverting tax liabilities because of the reliance placed on intermediaries to remit withheld amounts. The use of second-tier companies and straw directors was found to be a deliberate attempt to conceal the movement of funds and distance decision-makers from direct responsibility.

In sentencing professional facilitators, the court emphasised that the use of trust accounts to launder criminal proceeds significantly aggravated the offending. The court noted that professional status and access to regulated financial structures increased, rather than reduced, culpability.

Outcome

Sentences varied according to role, duration of involvement and plea.

Key outcomes included:

• Adam Cranston and Jason Onley were each sentenced in August 2023 to 15 years’ imprisonment, with non-parole periods of 10 years

• Patrick Willmott was sentenced in May 2023 to nine years’ imprisonment, non-parole period six years

• Lauren Cranston received a sentence of eight years’ imprisonment

• Simon Anquetil was sentenced to seven years and six months’ imprisonment following a guilty plea

• Solicitor Dev Menon was sentenced to 14 years’ imprisonment for laundering approximately A$24 million through a law-firm trust account

• Joshua Kitson was sentenced in 2019 to four years and six months’ imprisonment

• Additional defendants received custodial sentences for dealing with proceeds of crime

  
  

In February 2024, the final defendant was sentenced to four years and six months’ imprisonment, with a non-parole period of two years and three months, concluding the prosecutions arising from Operation Elbrus. Courts also ordered asset restraint, forfeiture and recovery of proceeds linked to the offending.

Professional significance

Operation Elbrus represents one of the most significant tax-fraud prosecutions in Australia. It demonstrates that payroll-services arrangements can be exploited to divert tax liabilities at scale, but also that such structures are now within the investigative reach of multi-agency taskforces.

The case confirms that large-scale tax fraud and associated money laundering will be treated as serious criminal conduct rather than regulatory non-compliance. Sentencing outcomes of up to 15 years’ imprisonment reflect judicial recognition of the systemic harm caused by sustained revenue fraud.

For legal, accounting and payroll professionals, the matter highlights the risks associated with enabling structures such as second-tier companies, straw directorships and trust-account conduits. It also underscores the heightened scrutiny applied to professional advisers who facilitate, conceal or legitimise the movement of illicit funds.

Operation Elbrus remains a reference point for how complex financial crime is investigated, prosecuted and sentenced in Australia.