A tax agent has pleaded guilty to several charges of fraud amounting to more than $2 million.
Waikanae resident Ian Victor Petersen (61) admitted at the Porirua District Court on December 2 to 13 counts of theft by a person required to account, 19 counts of theft by person in special relationship, one count of using a document with intent to defraud and one count of dishonestly using a document.
The Serious Fraud Office (SFO) brought the charges against the defendant.
Mr Petersen was remanded in custody for sentencing on February 4, 2011.
It is understood that the charges related to misuse of funds paid by clients to Mr Petersen. These included payment of tax, investments, forestry management fees, and use of certain documents for reducing a tax liability.
Tax Fraud
The Court heard that the accused had obtained $2,000,292.97 from 17 clients over 13 years as an accountant, tax agent and investment advisor.
According to the SFO, a number of clients of Mr Peterson are now discussing their outstanding tax liabilities with Inland Revenue Department (IRD). These liabilities have reportedly arisen out of the monies that they had given to Mr Peterson, who failed to remit them to the Department.
The SFO said that the accused had operated in the name of ‘Sorrel Financial Services,’ offering accounting and financial services.
Mr Petersen had claimed to be a member of the New Zealand Institute of Chartered Accountants (NZICA) and a graduate (Bachelor of Business Studies), both of which were proved false.
The Court heard that between April 2000 and June 2009, Mr Petersen obtained a total of $986,737.30 from 15 clients for making tax, ACC and/or Forestry Management fees on their behalf. But he made either minimal or no payments to these agencies.
“In 2001, Mr Petersen, acting as tax agent for a client, filed an IR315 Business Cessation form with the IRD. The Department wrote to the client in August 2002 (through Mr Petersen) stating that the outstanding tax liability was $133,629.50, since Mr Petersen failed to act properly as a tax agent.
“By November 2006, Mr Petersen’s client’s outstanding tax debt totalled $308,749.86. The IRD accepted a proposal advanced by Mr Petersen to pay $120,150.00 in full and final settlement of the debt, the balance of $188,599.86 being written off,” the charge sheet read.
Between October 2001 and June 2008, Mr Petersen received $74,667.45 from the IRD as tax refunds for three clients for whom he had acted as a tax agent.
The clients either did not know they were receiving a refund or had instructed Mr Petersen to use the refund to settle an ACC debt. In all three cases, the refunds were either not passed on to the client or not used to settle the ACC debt as instructed.
Investment Fraud
Two clients paid Mr Petersen a total of $603,302.36 for investing on their behalf. Both clients believed they were to receive a return of between 9.4% and 10.0% per annum. While they received regular monthly interest payments almost equal to the amount of their supposed investment.
An SFO analysis said that the interest payments were made by either using the funds of the two clients or through fraudulent use of other clients’ funds.
“No investments were made on behalf of these clients by Mr Petersen,” the analysis said.
Another client paid Mr Petersen $75,000.00 for purchase of an investment property in May 2006. He advised the client in February 2008 that a house had been purchased in Levin and tenants installed.
But Land Information New Zealand searches confirmed that no property had been purchased in the name of Mr Petersen’s client during the relevant time. The SFO analysis showed that $75,000 was spent on travel, cash withdrawals, motor vehicle purchases, personal debt, entertainment expenses and interest payments.
Forestry Fraud
Mr Peterson received $71,986.00 from two clients between April 2002 and October 2008 for making fee payments to a forestry management company.
The amounts were far in excess of the true amounts, of which Mr Petersen did make some payments. On occasion, Mr Petersen did not pass on correspondence from the forestry management company to the clients, which included documents advising that particular invoices were not required to be paid as pruning plans had been abandoned.
Mr Feeley said his Office commenced 15 new investigations during the first five months of the current financial year, placed 400 charges in nine cases and secured nine convictions or guilty pleas including that of Mr Peterson.
“Having reduced our investigation times by 70% in the past 18 months, the public can reasonably expect to see more timely justice in the case of white collar crimes,” Mr Feeley said.
