No love lost between fraudster and fraud accused

Fraud-accused accountants Barrie James Skinner and David Ingram Rowley made money from helping people defraud tax for almost six years, Wellington High Court heard.

These and other revelations came from convicted fraudster Shaan Stevens, who yesterday gave Crown evidence against his former associates.

Messrs Skinner and Rowley face more than 100 charges of fraudulently using a document to obtain a pecuniary interest, attempting to pervert the course of justice and tax evasion.

Stevens described the pair as “very bright, good at what they do, very personable and likable".

He also told the court how they had concocted a scheme which would see their clients not pay tax and make money on this tax avoidance.

Stevens, who is serving 10 months' home detention on more than 20 offences, received a “referral fee” for sending clients to Messrs Skinner and Rowley.

Stevens was struck off the New Zealand Institute of Chartered Accountants two weeks ago, after the former chairman of Wellington Free Ambulance was convicted of 22 offences in the Wellington District Court in September.

He was found guilty of seven charges of using documents with intent to defraud, 13 of being party to using documents, one of providing false income returns between 2006 and 2010, and one of attempting to pervert the course of justice.

The charges relate to the filing of fraudulent income tax and GST returns on behalf of five clients through his tax agency, Guinness Gallagher.

The court was told the returns were fraudulent because they included claims for fictitious expenses which had the effect of reducing the tax liability of Stevens' clients.

The clients paid an invoice for the false expenses, received the bulk of the payment back and Stevens retained the difference, about $60,000.

The fictitious expenses claimed by Stevens were about $2.1 million, with a loss to the IRD estimated to be just over $821,000.

He was also sentenced to 150 hours of community work and ordered to repay $121,851 to his victims by May 7, 2013.

Yesterday, however, he testified against his former friends, Messrs Skinner and Rowley, who he said had paid him for his referrals and had used his Guinness Gallagher letter head to make fictitious invoices for clients.

In what he described as a “money-merry-go-round”, Stevens told the court how invoices had also been created through a defunct mill company he had owned.

“I was in donkey deep by then, so I agreed to give them [Mr Skinner and Mr Rowley] my firm letterhead. I was travelling overseas at the time, so I passed them on. Mr Skinner created them and Mr Rowley printed them off,” he said.

He told the court how Andrew Gotlieb, director of AGI Motorsports Ltd had told Stevens he didn’t want to pay tax on his income.

Mr Gotlieb, recently involved in a car accident, is expected to give evidence by video link. 

The complicated scheme, which Stevens told the court he didn’t “entirely understand” himself, saw clients referred to Messrs Skinner and Rowley.

In order to avoid paying tax, the clients would be invoiced for contracting, or sub-contracting work, or bought losses in other companies.

The money would go out of clients' accounts for these expenses, but would be returned minus a percentage of “fees” for Messrs Skinner and Rowley, which the client would then put back into their business as a capital investment.

It was hoped that by transferring funds this way, it could not be traced back to them.

However, once found out, Stevens told the court Mr Skinner commissioned his lawyer, Mike Lennard, to advise all the clients and prepared “cut and paste” voluntary disclosures for all those affected.

In cross examination, expected to continue today, the tension between Stevens and the accused’s lawyer, Mr Lennard, was palpable.

Mr Lennard previously acted for Stevens.

“How this works is, I ask the questions and you answer,” Mr Lennard retorted when Stevens answered a question, with a question.

“Thank you for clarifying that for me,” Stevens, a qualified lawyer, responded.

Justice Stephen Kos instructed Stevens to answer the question and earlier, warned a family member of Stevens’ in the public gallery to desist from trying to communicate with the witness.

“I don’t know who you are, but if you do not have anything to contribute to this trial, I will ask you to leave,” Justice Kos warned.

The judge-alone trial is proceeding.