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 …
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.
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.
> 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.
"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.
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.
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.
>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.
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.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2023
