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AUSTRAC information helped unravel AUD30 million university fraud

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AUSTRAC information assisted law enforcement to investigate a network involved in defrauding a university of over AUD30 million and laundering the funds to purchase property and racehorses. Ultimately, law enforcement laid more than 2,000 charges against the suspects involved in the multi-million dollar fraud.

Managers at the university and the directors of construction companies were complicit in a large fraudulent invoice scheme. The managers would officially approve maintenance work to be carried out by the construction companies. The managers approved the payment of highly inflated invoices from the construction companies, as well as approving invoices for work that was never undertaken. Directors of the construction companies used the profits from the fraud to purchase racehorses and property. The managers at the university were repaid with kickbacks or direct shares in racehorses.

AUSTRAC was requested by law enforcement to investigate international funds transfer instructions (IFTIs) undertaken and received by associates of the suspects. The associates were identified as accounting firms which were undertaking the transfers on behalf of the suspects.

Funds were sent to many countries including New Zealand, Canada, Hong Kong and the USA. A large proportion of the funds were sent to companies linked to the horse racing industry. The accounting firms also received a large number of IFTIs from various overseas entities that were similar in value to the amounts the firms had sent overseas initially. The majority of these transfers originated from Hong Kong. Authorities suspected that the accounting firms were laundering the funds on behalf of the suspects as part of a professional money laundering syndicate.

Authorities believe that the money laundering was an attempt by the directors of the construction company to hide or disguise the ownership of property. The directors also distanced themselves from the racehorses by having the ownership of the horses held in the names of associates. The associates then returned any profits generated by the horses back to the beneficial owners (the directors).

The members of the network were arrested and convicted on a variety of charges, including conspiracy to defraud, obtaining property by deception, theft, aiding and abetting receipt of a secret commission and furnishing false information. The suspects received penalties ranging from fines to six-and-a-half years imprisonment.

Offence

  • Fraud (invoice)

Customer

  • Individual
  • Business

Industry

  • Banking (ADIs)

Channel

  • Physical
  • Electronic

Report type

  • IFTI

Jurisdiction

  • Domestic
  • International - Canada, Hong Kong, New Zealand, USA

Designated service

  • Account and deposit-taking services

Indicators

  • Large number of horses purchased by customers with unexplained wealth and links to horse racing industry
  • Outgoing funds transfers sent to overseas entities matched by incoming funds transfers, in similar amounts, from different entities located in the same countries
  • Sudden increase in purchase of properties inconsistent with customer’s established transaction/wealth profile

Case 5 - AUSTRAC information helped unravel AUD30 million university fraud

Case 5 - AUSTRAC information helped unravel AUD30 million university fraud

Last modified: 30/07/2015 15:35