Home / Daily / Fraudster and former broker Pratten must pay $2.4 million penalty
18 February 2021
Former Sydney insurance broker and convicted tax cheat Timothy Charles Pratten must pay a $2.43 million penalty as sought by the Commonwealth, the Supreme Court of NSW has ruled.
The court struck down Pratten's arguments to have the penalty dismissed, ruling the Commissioner of the Australian Federal Police’s (AFP) application for pecuniary orders "was justiciable”.
Recovering the pecuniary penalty is part of proceedings that arose out of action taken by the Commonwealth Director of Public Prosecutions against Pratten, who was known as Charles within insurance industry circles.
Responsibility for the proceedings was later transferred to the Commissioner of the AFP who sought further orders, including an order under section 116 of the Proceeds of Crime Act that Pratten pay a pecuniary penalty.
Pratten was released from custody in 2019 after having been jailed following a retrial for concealing more than $5 million in income.
In last week's hearing he claimed no pecuniary penalty could be imposed since there was no evidence that the Commissioner of Taxation had made assessments under the applicable income tax regime.
He questioned the method used by the Commissioner of Taxation to calculate the tax he owed from the undeclared income that was transferred to offshore accounts in Vanuatu. The penalty sought by the Commonwealth was based on the income he did not declare to tax authorities.
Pratten also claimed the Court has no power to impose the pecuniary penalty, arguing in his written submissions that the Commissioner of the AFP was not speaking on behalf of the Commissioner of Taxation.
He says despite his convictions, there was no evidence that any benefit he had received had been unlawfully obtained.
But the Supreme Court of NSW rejected his arguments.
“The offences of which Mr Pratten was convicted were both indictable offences and ‘serious offences’,” the court ruling says. “The evidence well establishes that Mr Pratten did ‘derive’ such a ‘benefit’ from his offences.”
He directed transfers from the Vanuatu accounts to a number of third parties such as paying for his personal expenses and daughters’ school fees, buying a house in Port Vila and other properties including several in Australia.
“The evidence establishing as it does that Mr Pratten benefitted from the very considerable income he was convicted of dishonestly failing to disclose, leaves the court with no discretion… not to impose a pecuniary penalty upon him.”
The court directed the Official Trustee in Bankruptcy to “sell or otherwise dispose” of restrained properties held by the corporate defendants named in the case. These properties include a 45-foot game fishing boat and a farm in NSW.
The corporate defendants are entities linked to or controlled by Pratten.
Pratten is to also pay the AFP Commissioner’s costs as agreed or assessed.
He was representing himself in the case filed by the AFP Commissioner, after his former solicitor filed a notice in August 2017 to cease acting as his lawyer.
Pratten, who founded Rural & General Insurance Broking, was jailed in 2016 for failing to declare more than $5 million in income from $19 million of premium transferred to Vanuatu.
The licence of Rural & General Insurance Broking was subsequently cancelled after his conviction.
Click here for the ruling.