back to article Plutus Payroll clients and staff fell for plausible business model fairy tales

Fallen Australian payroll-services-for-contractors company Plutus Payroll convinced clients and staff that it had hit upon a business model that let it fund free payroll services with clever money market plays, commission deals with financial services companies and by selling workers' details to marketers. But those revenue …

  1. Anonymous Coward
    Anonymous Coward

    Like some other commentors have already said

    I'd like to thank El Reg for their outstanding coverage of this story.

    AC as I don't want to be seen as Teacher's Pet

  2. Adam JC

    Not involved, however...

    I have been following this since the start and although I'm in a permy job and have never contracted in my career, this must be absolutely terrifying for so many people. I really do hope this gets resolved and they get some of their money back :-(

    1. Paul 25

      Re: Not involved, however...

      Yeah, I know contracting has inherent risks with periods of unemployment and so on, but your payroll service being a dodgy tax fraud operation probably isn't one that most people factor in.

  3. tedleaf

    If it looks too good to be true,it's probably a con somehow..

    You would hope that intelligent people would have been more careful and gone else where..

    1. Putters

      I think the problem here is that the fraud was very nicely pitched. A good deal that didn't quite look "too good to be true" ...

    2. John G Imrie

      If it looks too good to be true,it's probably a con somehow..

      Well it seamed to be working fine and all legal as well until the new owners came on board.

      1. Commswonk Silver badge

        Re: If it looks too good to be true,it's probably a con somehow..

        Well it seamed to be working fine and all legal as well ...

        Until it came apart at the seems, that is.

    3. Jason Bloomberg Silver badge

      As someone who was willing to stand up for the company, even if only saying 'don't judge without all the facts', I guess they suckered me, though hardly as much as the people they have really harmed.

      The thing is it was all plausible and it seems far smarter people than me were equally suckered, including experts in the industry and even people working within the company. Most importantly, everything looked fine and dandy, and had been for a long time, until what was going on was revealed for what it was. They are said to have had government departments and big name businesses using their services.

      I think it's important to note the scam was being run behind the scenes rather than directly scamming customers. It may still be that it can be considered a viable business model despite the skimming which was going on - I admit though that I haven't read the full indictment.

      Bottom line is, that if it looks like a legit business, seems to be doing nothing wrong, appears to be doing exactly as it should, is giving no real cause for concern, it is impossible to tell some or all of it isn't legitimate. I can't find it in my heart to blame anyone who has found themselves suffering through having become a customer of Plutus.

  4. JonW
    WTF?

    Question from a Pom

    "Some were overpaid and now tell us that all of their wages have disappeared from their bank accounts."

    They pulled money back from a personal bank account? Is this sort of arrangement usual/ actually possible down there?

    1. Anonymous Coward Silver badge

      Re: Question from a Pom

      From another pom... it is possible over here.

      If you can prove that a mistake has been made, the bank can reverse any transaction but it is a messy process.

      1. Pompous Git Silver badge

        Re: Question from a Pom

        "If you can prove that a mistake has been made, the bank can reverse any transaction but it is a messy process."
        Messy=time-consuming. Unless the amount is worth the time consumed... I've been rogered by landlords and clients in the past.

  5. M7S

    Could someone please enlighten me, and perhaps others

    According to the quote attributed to Munk, it seemed to be going fine before Synep came along.

    Does this mean that Plutus's original business model was in fact valid, or was it some kind of accidental Ponzi scheme that just took a long time to start to crumble?

    If, as I infer from this, it was the Synep takeover that made things go wrong, essentially as they appear to have been crooks and drained the money in order to purchase all the goodies mentioned in another Reg article on this affair, then there seems to be an unwarranted bashing of the original concept.

    1. sal II

      Re: Could someone please enlighten me, and perhaps others

      > Could someone please enlighten me, and perhaps others

      Not intimately familiar with the story so this is just a speculation, but it looks like the sham was going all along for years and the recent activity around the Synep takeover drew enough attention from the ATO to unravel the whole thing.

      The fact is that the scheme never actually crumbled as much ATO caught wind of it and froze their assets.

  6. Phukov Andigh Bronze badge

    hmm

    making money based off of money owed somewhere else?

    At the least it sounds like "check kiting writ large".

    at worse, sounds straight up like Charles Ponzi's world-changing scheme.

    Only the product being invested in, and losing out, was real peoples' earned wages.

    1. Anonymous Coward
      Anonymous Coward

      Re: hmm

      Nah, I used to work at a large Insurance brokers, this is how they - legitimately - made a lot of their money back in the 90s.

      But those were the days of high interest rates and no www, so I expect things have changed since.

    2. Pompous Git Silver badge

      Re: hmm

      "making money based off of money owed somewhere else?"
      What my bank does (Commonwealth – the biggest in Oz). I receive cheques from USA and bank charges me $10 to deposit them. They take 28 days to clear the funds for my use. Originating bank says they clear the funds to my bank in 24 –48 hours.

  7. Anonymous Coward
    Anonymous Coward

    So how were they making money?

    I'm confused, easily done.

    I accept it was a scam and it had been going on for some time. The bit I don't understand is how they were making money.

    Here's my logic

    1. $X comes in from organisation Contract Y was working for.

    2. Plutus pays $X to contractor. Nothing is taken off so there's no margin.

    Since contractor is getting $X which is correct, how are they skimming, was it the tax that should be paid to the Australian Tax authorities? If so, surely this would have been picked up very quickly by the ATO. I'd have thought a couple of million in taxes NOT being paid would have attracted the attention of the authorities quite quickly.

    1. Anonymous Coward
      Anonymous Coward

      Re: So how were they making money?

      Seems like they were picking up a slice of the income tax and failing o pay it to the ATO (which would be 40% ish of the value, I'm guessing)

      They would pay some patsy $500 a month to be a director of one of the sub companies. These were poor dupes, with no understanding of the liabilities and responsibilities of being a director. So if a sub company goes bankrupt, oh dear! Phoenixing companies.

      The tax office is far to slow to catch these, and given the number of Tax officers suspended, and the fact that a deputy commissioners family (the one who was their major fraud investigator) was at the center of the scheme.

      This really should cause massive changes in taxation here.

    2. TReko

      Re: So how were they making money?

      >surely this would have been picked up very quickly by the ATO.

      They 4 had insiders at the ATO. The father of one of them, Michael Cranston, was a senior figure at the ATO, although there have been different reports as to the depth of his involvement.

      Despite the insiders, it looks like the fraud was so big that others at the ATO also picked it up.

      How it all worked will probably come out in the court case.

      1. Anonymous Coward
        Anonymous Coward

        Re: So how were they making money?

        OK, but given the level of alleged tax fraud, I would have thought it would have been picked up within a few months, don't companies have to submit quarterly or something? This appears to have gone on for years.

        1. Richocet

          Re: So how were they making money?

          My understanding is that they applied the usual modern financial business approach of creating unnecessary financial transactions between unnecessarily complex arrangement of companies, which muddied the waters enough so the ATO couldn't work out how much was due or which entity was responsible for the income tax payments.

          Stealing employee's superannuation contributions is rife in Australia, and most of the time the employee cops the hit and is not reimbursed. This is building up into a budget timebomb for 2030 and beyond because of the compounding effect of reduced superannuation savings.

  8. Anonymous Coward
    Anonymous Coward

    SMH says...

    http://www.smh.com.au/federal-politics/political-news/department-of-prime-minister-and-cabinet-paid-alleged-tax-fraud-company-plutus-13-million-via-recruiter-20170523-gwbqnt.html

    Ooops!

  9. Anonymous Coward
    Anonymous Coward

    It's not clear whether the business model worked despite the tax fraud. They seem to be separate issues. The business could be legally profitable and the management criminals. The health of the business model and the tax fraud are not necessarily connected.

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