According to Fairfax Media, Mendieta Blanco is the subject of a major investigation by the Australian Taxation Office (ATO) for his alleged participation in the goods and services tax (GST) fraud scheme involving the gold bullion and precious metals industries.
The Age reported that it understood the ATO began investigating Mendieta Blanco’s tax affairs more than six months ago.
It is believed the audit came after a business activity statement was submitted for his Sell Your Gold business that requested a GST refund of approximately $1 million.
The GST scam involves gold traders ‘exploiting’ a loophole in the way GST was applied to scrap gold as opposed to gold bullion.
The ATO alleged that individuals and businesses were refining GST-free gold bullion into scrap gold, making it eligible for GST when sold to precious metal dealers and jewellers. The 10 per cent tax was paid by the new buyer and pocketed by the seller who did not declare it to the tax office.
When its investigation was announced in 2013, the ATO estimated the scheme had cost up to $65 million in lost tax revenue; however, that figure has now been revised and sits at $879 million.
Jeweller contacted the ATO for confirmation that Mendieta Blanco was under investigation but was told the department could not provide details on the matter.
An ATO spokesperson did state that the department continued to review, audit and investigate the activities undertaken by a number of entities in the precious metals industry.
“To date, the ATO has raised liabilities totalling $879 million on entities within the industry, and currently has 89 cases on hand,” the spokesperson said.
Court appearance
As previously reported by Jeweller, Mendieta Blanco was one of three men arrested on 5 October in relation to the alleged receiving and selling of jewellery stolen in a series of armed jewellery store robberies in Melbourne.
He, along with Julio Mendieta Blanco and Chey Tenenboim, appeared in Melbourne Magistrates Court on 10 October.
The three men were charged with handling stolen goods, recklessly possessing stolen goods and knowingly possessing stolen goods.
Perry Hannah, the owner of All Diamonds jewellery store in Elsternwick, attended the court hearing.
Hannah’s business was robbed earlier this year and although it wasn’t clear if the robbery was linked to the accused, the jeweller said it was important for him to be there.
“If the gold dealers are the ones behind the robberies, then to see their faces lets them know how we as a whole industry have been affected,” Hannah said.
“The police are doing their investigations thoroughly, which seems to have stopped the spate of armed hold-ups; these investigations give some peace of mind,” he added.
All three men were granted bail; their passports were surrendered and police held assets reportedly totalling $20 million. They were scheduled to re-appear at court in January 2018.
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