SMSF schemer’s super plan lands him behind bars

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Redwing, 18th Nov, 2019.

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  1. Redwing

    Redwing Well-Known Member

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    Kent Nguyen was found to have unlawfully created, operated and benefited from a fraudulent self-managed superannuation fund (SMSF) that did not comply with relevant protocols, procedures and legislation to make it a legal SMSF.

    He then used the fund to arrange the unlawful early release of super for 25 people in the community, with the ATO reporting that many of the people were in financial trouble and were approached by friends who told them “they knew someone” who could help.

    In each case, the individual’s super balance was rolled over into Mr Nguyen’s SMSF, with the total amount of funds unlawfully withdrawn exceeding $700,000.

    According to the ATO, Mr Nguyen then retained a significant portion of this amount, having told clients that the money had been paid to the ATO as tax.

    link
     
  2. Ted Varrick

    Ted Varrick Well-Known Member

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    Sounds a bit iffy.

    Did Mr Nguyen provide said rollover members with an account statement?

    Because it sounds like the ATO might have been unfairly vilified, and the link indicates that the court felt Mr Nguyen was a bit out of order, and then sent him to the bin for a number of years.

    Hopefully, the transactions were partly or fully reversed.
     
  3. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Ahhh no. It was a early release scheme and those involved also were participants by seeking and being involved in rollovers. The participants will face significant losses and personal tax penalties just maybe not the criminal charges. They participated in a early release scheme. Early release of super is an offence. The Commissioner isnt permitted to disregard a breach of law. Typically the Commissioner will assess tax on the sum withdrawn whether or not a fee or share was paid to Nguyen or paid as tax as was suggested. It is not going to get a lump sum tax offset as it is in breach of the provisions which give the offset.

    Superannuation law normally provides protections for fraud. These are excluded for SMSFs in every situation.

    Seeking financial advice from unlicensed persons will also leave any person involved unable to seek redress.
     
  4. Ted Varrick

    Ted Varrick Well-Known Member

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    Fair enough, @[email protected] , your expertise in these matters is a lot better than mine.

    It's a shame the protections from fraud do not extend to SMSFs, but on the other hand that might open a huge can of worms, such as "My SMSF swapped an expensive stamp collection, a very fine 1930 Penny and a pile of cash for the original Mad Max Interceptor and an L Series Fender Strat once owned by Eric Clapton, only to find out that it was only an old taxi with a questionable body kit, and an out of tune cheap electric guitar. Someone needs to pay!"
     
  5. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Being a participant in a early release scheme and then subsequently being ripped off isnt exactly what Treasury had in mind when they gave protection for fraud to non-smsf funds. There was a notable case of Trio capital; is a stark reminder for many. No SMSFs investors got a cent back. All personal investors did. ASIC warns SMSF trustees: When it comes to fraud, you’re on your own - SmartCompany

    https://static.treasury.gov.au/uploads/sites/1/2017/06/Trio_Capital_Fraud_Review.pdf

    Its all explained and agreed to when a fund is established. The trustee declaration reminds this issue. One of the risks of a smsf is that it lacks many prudential safeguards. You can only blame yourself.

    The ATO does not have a prudential role. The ATO is only responsible for regulating SMSFs
     
  6. Ted Varrick

    Ted Varrick Well-Known Member

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    Paul, thanks for that link.

    That PDF should be required reading for all SMSF Trustees, so they can avoid having their money turned into "Shawny Cash", vis a vis https://www.smh.com.au/business/trio-capital-fraudster-shawny-cash-jailed-20110812-1iptk.html
     
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  7. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    SMSF Trustees / Directors are required to read and sign off they understood the key risks and issues at the time of formation. The ATO routinely call new trustees to test they know the issues and I have seen some asked to send this form to the ATO. . Its not just a "sign-here" exercise.
     
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