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Hefty jail sentence for Cape tax fraudsters as SARS tightens the screws

Two Cape Town businesspeople have been sentenced to 16 and 17 years direct imprisonment for 487 counts of tax fraud, racketeering, money laundering and corruption, SARS said on Friday.

Luis Fernandes from Melkbosstrand and Nazmien Warden from Bellville both pleaded guilty following an in-depth investigation by the Criminal Investigation Unit of SARS in Cape Town, the revenue service said in a statement.

Fernandes pleaded guilty to 471 charges, including racketeering, fraud and corruption and corrupting a SARS official. He, and was sentenced to 168 years imprisonment. But they will run concurrently, so he will spend 17 years in jail.

Warner pleaded guilty to 409 charges, including racketeering, fraud and corruption. He was sentenced to 136 years. With his sentences running concurrently, he will serve a 16 year sentence. He will also pay SARS R900 000 and the proceeds of the sale of 9 properties.

The charges emanated from a R115 million VAT fraud scheme ran by Fernandes and Warner between 2008 and 2015, SARS said.

During this time, they claimed fraudulent VAT returns amounting to R115 million with the use of fictitious invoices from non-existent businesses, misrepresenting to SARS that they purchased goods in South Africa and exported this to countries in Africa.

They also forged export documents as well as supplier invoices and handed this to SARS upon request for supporting documents, SARS said. According to the tax agency, it was prejudiced by R111 million.

“Fraud charges emanating from Mr Fernandes misrepresenting to his employees that the PAYE deducted from their remuneration was paid to SARS while the companies were never registered with SARS as employers, were also included in the indictment,” SARS said.

The pair admitted that they had enlisted the services of a SARS accountant to assist them with authorisation of refunds and get the refunds paid out fast. The case against the SARS employee has been postponed, although Fernandes and Warner have agreed to testify against him.

The pair said they had used the money to fund several failed business ventures, an internet gaming and social interaction website, low cost housing projects in Namibia and Cameroon, the importation and installation of revolving doors and a pre-paid fuel card.

“They also used the money to maintain a high lifestyle, spending money on travel, motor vehicles, and luxuries. Mr Warner also invested his share in properties,” SARS said.

“Contrary to popular belief, tax crime is not victimless,” the tax agency added. “By deliberately defrauding the tax system including claiming a refund one is not entitled to, one is stealing from the whole community and disadvantaging South Africans who do the right thing.”

SARS Commissioner Edward Kieswetter said SARS’ institutional rebuilding was “gaining momentum”.

Article: Fin24


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