Seven for trial om GST charge

Press, 23 September 1988, Page 24

Seven for trial om GST charge

All seven men who faced a preliminary hearing of a conspiracy charge arising from their allegedly defrauding the Inland Revenue Department of more than $3 million in Goods and Services Tax refunds will face trial by jury on the charge. After a preliminary hearing lasting three days in the District Court, the men were committed for trial, and remanded on bail pending a date for their trial in the District Court. The preliminary hearing was before Dr J. F. Mann and Mr J. B. Anderson, Justices of the Peace. They held there was sufficient evidence to commit all defendants for trial. The defendants were Garry Leonard Davies, aged 27 (Mr P. J. Rutledge), David John Dickson, aged 42 (Mr P. H. B. Hall), Richard Tilsley Dickson, aged 41 (Mr D. C. Ruth), Ivan Kwasza, aged 59, a property developer (Mr J. F. Burn), Terence Richard Lucas, aged 42, a property trader (Messrs C. A. McVeigh and M. J. Callaghan), Romeo Margaritis, aged

33, a barrister (Mr N. A. Till and Dr W. G. G. A. Young), and Derk Johan Frederikus Te Groen, aged 56, a self-employed administrator (Mr P. M. James). They were charged with conspiring with one another in Christchurch and elsewhere, to defraud the Inland Revenue Department by deceit, falsity or other fraudulent means. The charge related to the period from July 12 last year to June 14 this year. Messrs G. K. Panckhurst and B. M. Stanaway, Crown solicitors, appeared for the department. At the opening of the case on Tuesday, Mr Panckhurst said the department alleged the defendants had been involved in a conspiracy in which GST refunds were claimed on various property transactions. The refunds sought related to contracts with a total value of more than $45 million, written in a period of three to four months last year. The refunds of input tax had been claimed through three companies, and the department had paid out

a little in excess of $3 million, Mr Panckhurst said.

Claims had been made on grossly inflated property prices, and in one case a Christchurch residential property had been on-sold to one of the companies for $6.9 million whereas in the contract for purchase the price was $110,090. At the close of the department’s case yesterday, Mr Till submitted there was no case to answer for Margaritis. He submitted this defendant’s position was different from the other defendants as he was a professional man who had done no more than his job. He had advised his clients on the law as he saw it, and had acted for them in mechanical conveyancing transactions.

He had acted as a solicitor and did not have any personal involvement in the transactions relating to the prosecutions. There was no proof that Margaritis had been involved in conspiracy to defraud. There had been no proof of an agreement to do a wrongful act, or of

dishonest intentions by Margaritis.

The evidence showed that this defendant advised his clients on the legality of the transactions. Mr Till submitted there was no evidence to show that a fee of $50,000 Margaritis received was anything other than proper in relation to the conveyancing services he rendered. Mr Burn submitted there was no case for Kwasza to answer. There had been no evidence that he contributed to the transaction with intent to commit a criminal offence. He contended that Kwasza was no more implicated in any unlawful conspiracy than other innocent people, including a doctor, who had sold properties to defendants allegedly involved in the scheme and which were said to have been the basis, later, for GST refund applications. Kwasza had purchased land at Akaroa two or more years before for $286,000 and agreed to sell it to Davies last year for, $350,000. Davies was then said to have on-sold the property

to a GST-registerd company so a claim could be made for a GST refund against a long-delayed settlement transaction. “That was not the act of Kwasza,” Mr Brown said. Mr Rutledge, for Davies, said it was not suggested that he was a shareholder, director or officer in any of the companies. He was at best an acquaintance, not a friend, of David Dickson. Mr Rutledge said the Crown had contended there was a close relationship among the defendants between July and October last year, and that all the property transactions occurred among a limited number of individuals and the companies. Davies was concerned with one property only, the transaction at Akaroa, Mr Rutledge said.

The financial result from Davies’ point of view, was of obtaining $24,000 profit on the onsale of the property.

That was the total amount alleged to have been involved in this matter of something in excess of $3 million, counsel said.

He said there was not a shred of evidence that proceeds from a scheme to obtain GST refund moneys were used in a purchase, involving Davies, of the Akaroa land. The evidence in the case showed that at no stage was Davies asked whether he knew the source of the funds. He had no knowledge of anything improper as far as the financial parts of the transaction were concerned, Mr Rutledge said. Davies had not tried to justify anything regarding the GST aspects of the matter as he did not know, and told investigating officers so. He had a naive appreciation of what GST was about. On the evidence heard in the case, Davies had no knowledge of any factors which made the scheme unlawful if it was in fact unlawful. There was no evidence that he agreed with anybody to defraud anybody. Counsel for the four other defendants made no submissions and reserved their defence.