Former Blue Chip boss Mark Bryers - who is banned from running companies in New Zealand - has been arrested in Australia as part of a joint agency investigation into a A$17 million fraud.

Australia Federal Police yesterday executed search warrants at 10 locations across the ditch “in a coordinated strike against a transnational and serious organised criminal syndicate using labour hire and payroll companies associated with the building and construction industry to defraud the Commonwealth.”

The alleged fraud syndicate is said to have been led by Sydney construction boss George Alex, who was arrested alongside his 22-year-old son.

Australia Federal Police said Alex’s “primary co-conspirators included a mix of financial industry experts and former bankers, demonstrating the level of expertise required to operate and facilitate such a complex fraud.”

The fraud syndicate included Caitlin Hall, the wife of jailed drug boss Michael Ibrahim. She with an associate is accused of recklessly dealing with the proceeds of crime.

A dozen people including Bryers are facing charges and appeared in court yesterday.

The formerly bankrupt Bryers, who has lived in Australia since 2006, is alleged to have given tax structuring to the syndicate. 

Who is Bryers?

He's best known in NZ for the 2008 Blue Chip collapse, that left about 2,000 investors out of pocket by $84 million. Liquidators gave up pursuing claims against Bryers, and while the Supreme Court ultimately ruled that investors should've been shown a prospectus for the investment scheme, the Financial Markets Authority dropped an investigation when Blue Chip-funded developers reached a settlement with investors. 

Blue Chip was also investigated by the Serious Fraud Office, which decided there wasn't enough evidence to pursue a prosecution, while saying the firm operated in a "moral vacuum." 

Bryers himself avoided a prison sentence in 2010 when he pleaded guilty to 34 charges relating to the company's mismanagement and improper accounting, receiving a fine of $33,750 and 75 hours' community service.

His NZ bankruptcy was lifted in 2015, which had prevented him from holding director or management roles in Australia, but he's still banned from acting in these roles domestically until 2022. 

Bryers has been charged in Australia with one count of conspiring with the intention of dishonestly causing a loss to the Commonwealth, contrary to section 135.4(3) of the Australian Criminal Code 1995, and one count of intentionally dealing with proceeds of crime, money or property worth A$1,000,000 or more, contrary to section 400.3(1) of the Criminal Code 1995.

The maximum penalty for the second offence is 25 years imprisonment.

How it worked

“It will be alleged in court that the syndicate had effective control of labour hire companies undertaking legitimate work in the building and construction industry,” a joint press release from the Australia Federal Police, Australia Tax Office and Australia Securities and Investments Commission said.

The agencies allege that the payroll companies were operated for the sole purpose of not paying income tax, and that money allocated to pay tax was diverted and laundered through other entities.

“When a substantial tax debt was accrued by these payroll companies, the syndicate would abandon them and create new payroll companies in an attempt to continue the fraud and conceal their illegal activities,” the statement said.

The agencies allege funds were then moved through other entities in an attempt to disguise their origin.

Bryers is believed to have been New Zealand’s biggest bankrupt, having owed $230 million when he was bankrupted in 2009.