Western Australian business owner, Sung Jae Cho, was today sentenced in the District Court of Western Australia to five years and four months' jail for fraudulently obtaining more than $890,000 through illegal phoenix activity. He was also ordered to repay the money he stole.
Mr Cho was convicted of 20 charges under the Criminal Code, including obtaining a financial advantage by deception between 2004 and 2007. The prosecution follows an extensive investigation by the Australian Taxation Office (ATO).
Between 1997 and 2009, Mr Cho operated a labour hire business through four different companies providing workers (mainly welders) to engineering construction companies in and around Perth.
Mr Cho’s business displayed the hallmarks of illegal phoenix activity, where he:
- carried on a business through one corporate entity which intentionally accumulated but did not repay debts
- liquidated the business to avoid paying the debt
- continued the business through a different corporate entity, which was still under his control.
He also failed to report and remit the Goods and Services Tax (GST) and pay as you go withholding while having sole and full control of the relevant entities.
Assistant Commissioner Aislinn Walwyn said illegal phoenix activity deprives employees of their entitlements, and disadvantages honest businesses by undercutting them on prices.
“This kind of behaviour has an incredibly damaging impact on the Australian community through unpaid wages to employees, debts to other businesses, and unpaid taxes,” Ms Walwyn said.
“Companies like these are obtaining financial advantages over their competitors and robbing the Australian economy of revenue that could be spent on essential services.
“While the majority of business operators and directors do the right thing, we pursue those who try to gain an unfair advantage by avoiding their tax obligations.
“This is a strong reminder to those involved in illegal phoenix activity that if you engage in this behaviour you will get caught. We will continue to follow up phoenix operators despite their efforts to conceal their activities.”
The ATO is one of 32 Federal, State and Territory government agencies who work together as part of the Phoenix Taskforce to combat illegal phoenix activity.
To report companies that may be involved in phoenix activity visit ato.gov.au/reportphoenix or call the Phoenix Hotline on 1800 807 875.
For more information on phoenix activity and the work of the Phoenix Taskforce, visit ato.gov.au/phoenix
