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SARS welcomes jail sentence to tax fraudsters

The pair had entered into a plea bargain with the State following an in-depth investigation by the Criminal Investigation Unit of SARS in Cape Town.

Devdiscourse News Desk | Cape Town | Updated: 24-02-2020 15:01 IST | Created: 24-02-2020 15:01 IST
SARS welcomes jail sentence to tax fraudsters
Warner pleaded guilty to 409 charges, including racketeering, fraud, and corruption in terms of the Prevention of Organised Crime Act. Image Credit: Twitter(@SAgovnews)

The South African Revenue Services (SARS) has welcomed the jail sentences handed down to two Cape Town businesspersons.

On Friday, Luis Filipe Duarte D'Almeida Fernandes and Nazmien Warner were sentenced to 16 and 17 years imprisonment, respectively, after pleading guilty 487 counts of VAT fraud and alternative charges such as racketeering, money laundering, and corruption.

The pair had entered into a plea bargain with the State following an in-depth investigation by the Criminal Investigation Unit of SARS in Cape Town.

"Mr. Fernandes pleaded guilty to 471 charges relating to racketeering, fraud as well as corruption, and for corrupting a SARS official. He was sentenced to 158 years of imprisonment. With sentences running concurrently, he will spend 17 years in jail," said SARS in a statement.

Warner pleaded guilty to 409 charges, including racketeering, fraud, and corruption in terms of the Prevention of Organised Crime Act. He was sentenced to 136 years of imprisonment. With sentences running concurrently, he will serve an effective 16 years jail sentence. Warner will pay SARS R900 000, as well as the proceeds of the sale of nine properties.

SARS said the charges emanated from an R115 million VAT fraud scheme ran by the two between 2008 and 2015.

"During this time, they claimed fraudulent Value-Added Tax 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 these to countries in Africa.

"Mr. Fernandes and Mr. Warner furthermore forged export documents, as well as supplier invoices and handed this to SARS upon request for supporting documents. SARS was prejudiced by R111 million," said SARS.

Fraud charges emanating from Fernandes misrepresenting to his employees that the PAYE [pay as you earn] 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 accused admitted that they had enlisted the services of a SARS accountant to assist them with the authorization 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.

"According to the two accused, they 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," said SARS.

The revenue collector said the pair also used the money to maintain a high lifestyle, spending money on travel, motor vehicles, and other luxuries. Warner also invested his share in properties.

"Contrary to popular belief, tax crime is not victimless. 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," said SARS.

The arrest of Fernandes and Warner, said SARS, demonstrates its commitment to detecting and prosecuting tax crimes and should serve as a warning to those who think they can flout the law and get away with it.

SARS Commissioner Edward Kieswetter said: "Slowly the institutional rebuilding gains momentum, and whilst it is our strategic intent to make things easier for honest taxpayers, we are improving our capability to detect criminal and negligent taxpayer behavior to ensure they are successfully prosecuted."

(With Inputs from South African Government Press Release)

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