TOP STORY: Jailed for $526,000 fraud

COURT REPORTER | 6th March 2007

Roydon Glenn McLaughlin was just 16 when he left school to learn about how our tax system works.

The "highly intelligent" teen pursued an accounting degree at university and studied how to set up partnerships, trusts and companies.

Part way through his studies his parents split up _ and a gambling addiction took hold.

Then, using 34 different businesses and entities he had set up to further ``educate'' himself, he slowly ripped off Inland Revenue to the tune of more than $500,000.

It was one of the biggest individual fraud cases the IRD has uncovered and yesterday McLaughlin was sent to prison for two years and 10 months.

The 22-year-old former Tauranga man had earlier admitted 44 representative charges of fraudulently using a document to obtain a pecuniary advantage from Inland Revenue and was sentenced in Tauranga District Court.

Between March 1, 2004, and April 30, 2006, McLaughlin lodged 340 false GST returns with Inland Revenue, stating he operated numerous business activities and trusts, such as horse breeding, accounting services and computerised wholesaling.

Crown prosecutor Rob Ronayne told Judge Louis Bidois that over 2 years McLaughlin had claimed $578,331.41 in GST refunds and was paid out $542,586.73.

Mr Ronayne said McLaughlin had obtained the money after he creating false entities involving 11 partnerships, 20 trusts and three companies, many of which were interlinked.

"This is serious fraud which attacks the very integrity of the whole Inland Revenue taxation base. The total loss is not only very large, representing a huge financial loss to the Inland Revenue consolidated fund, but is one of the highest the department has come across."

Mr Ronayne said there were many aggravating features to this case, not least the number of charges, the amount involved, the extent of premeditation and the repetitive nature of offending in this sophisticated web of deceit.

"Even more importantly it was a significant abuse of trust placed in him by the state and all taxpayers who rely on others' honesty in filing returns."

Mr Ronayne said McLaughlin had deliberately lodged claims for small amounts each time to ``stay under the radar'' knowing not all claims were checked and refund cheques were computer generated.

McLaughlin had gone to considerable time and effort using sophisticated methods to set up the bogus entities, which took some time to unravel, he said.

"The tax system was exposed to abuse and Mr McLaughlin took full advantage of that and all of us. This is crime which was largely motivated by greed. He took the money and just gambled it away."

McLaughlin also reoffended while on bail having filed more returns and been paid another $8000, which he also lost. Mr Ronayne said McLaughlin was in total denial about his offending.

But defence lawyer David Bates said McLaughlin was remorseful, having already apologised to Inland Revenue. He was motivated to turn his life around and was prepared to seek help for his gambling addiction.

McLaughlin's mother, Dianne Miller, who had travelled from Melbourne to be in court to support her son, told Judge Bidois of her sadness that her "highly intelligent" son had fallen from grace in this way.

Ms Miller said she blamed herself for effectively "abandoning" her son, moving to Australia two years ago when she and his father split up.

"Unfortunately it seems after putting a lot of time and effort into his attempt to get his degree it also opened him to this type of addiction ... "

Judge Bidois said he accepted McLaughlin was remorseful but a significant prison term was warranted to send a deterrent message to others.

"Despite some people's viewpoint there is no victimless crime _ particularly ones which involve ripping off the taxpayer and the rest of society. It is becoming far too common."

Judge Bidois said this type of "orchestrated fraud ripping off Inland Revenue on such a grand scale" meant a prison term of two years and 10 months was warranted.

Outside court, a tearful Ms Miller told the Bay of Plenty Times she travelled to Tauranga dearly hoping she could take her son back to Australia with her.

"I only hope he does get the help he obviously needs while in prison or, if not, once he is released."

McLaughlin will serve one third of his sentence before he is eligible to apply for parole.