A former Manhattan developer has been jailed for tax fraud in relation to $1.5 million in fraudulent GST refunds.
Colin David Rath was charged under the Crimes Act with two representative charges of using forged documents and 39 charges of dishonestly using a document to obtain a pecuniary advantage.
He appeared in the Christchurch District Court on 8 March 2023 and was sentenced to three years and 7 months in prison.
Rath arrived in New Zealand in 2016 on an entrepreneur residency visa.
He was given permission by the Overseas Investment Office in 2018 to buy a 28 hectare North Canterbury vineyard called Fiddler’s Green. He used his company Waipara Winds Limited (WWL) to purchase the vineyard with an associated restaurant and bistro.
He also set up a company called New York Grape Escape.
Rath filed fraudulent GST returns for WWL from April 2017 through until April 2021 and for New York Grape Escape from January 2017 until April 2019. He applied for fraudulent GST refunds of $1,506,833.81 for the two companies.
He received $1,331,792.23 and $175,041.58 in fraudulent GST refunds are currently being withheld.
One representative charge related to the forged invoices that were used in support of the fraudulent GST refunds. The other representative charge related to forged Inland Revenue documents that were used in support of his application for an entrepreneur residency visa.
Rath told IR he was renovating and improving the land and property to produce more sustainable income through a restaurant, Bed & Breakfast, and new crops to augment and increase grape and wine production. In his April 2021 return he recorded spending $1.6m on a spec house, subdivision coasts and work on a B & B.
When investigators visited the property with Rath in May 2021 he showed them a ‘spec house’ and subdivision plans to support the development claim but on checking investigators found the house was owned by someone else, not related to Rath’s companies.
The building company named in the contract to build the ‘spec house’ had done work for Rath but confirmed they had not built a spec house for him, nor had they been paid for the work they had done.
Inland Revenue took the court action to try to recover what was fraudulently obtained. This included the unusual step of obtaining a High Court freezing order and having a receiver appointed over the assets of WWL.
Inland Revenue takes the integrity of the tax system seriously and will apply all available recovery options where dishonesty has led to serious loss to New Zealanders.