The Commonwealth Director of Public Prosecutions (CDPP) has lodged an appeal over the “manifestly inadequate” sentence handed down to insurance figure and tax fraudster Charles Pratten.

The founder of Rural & General Insurance and Rural & General Insurance Brokers was jailed for five years in April after failing to declare more than $5 million of income.

He was found guilty last year at the NSW Supreme Court on seven counts of obtaining a financial advantage by deception, by deliberately understating his income on tax returns.

The court heard that after changes to Australian laws requiring insurers to hold higher levels of capital, Pratten split his business into an Australian-based broker and an insurance company operating out of Vanuatu.

The broking company sold cover notes and policies in the name of the Vanuatu insurer, and remitted two-thirds of those premiums to Vanuatu into trust companies.

About 25% of the amounts remitted to Vanuatu were then transferred back to Pratten, or to certain third parties he controlled.

Justice Stephen Rothman said Pratten is a first-time offender, suffers depression and would “find it difficult to cope” with prison life.

As a result, he imposed a sentence “at the lowest end of the range I consider appropriate and available”.

However, the CDPP has lodged an appeal with the NSW Court of Criminal Appeal, on the grounds Pratten’s sentence “was manifestly inadequate for the crimes he committed”.

The maximum sentence for each offence is 10 years.