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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Australian Banks illegal strategies shattered Code of Conduct: Tax Office slam Brokers and Advisers for Snowballing. ASIC neglect in 2005

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For many years we have been warning Brokers they can be charged and sent to jail.  Its the BANKS AT FAULT but brokers will cop the blame.

Banks created the products, the strategies, the commission structure, the agreements, the cover-ups and the intimidation and silencing of Australian Securities and Investment Commission ("ASIC").  Brokers have been set up as "the fall guy."  Its been going on for years.  

How do Brokers protect themselves?  Simple: we suggest BROKERS immediately take the Bank Strategies AND THE SERVICE CALCULATOR to the Taxation Office and ask for a ruling..........................be prepared for a shock.  Are you all operating illegally?    

Remember its the service calculator that's fudges the income and creates the complex "tax incentives, add backs and add ons," for all you nice people.  Bank BDMs also tell you in writing DO NOT SHOW COPY TO BORROWER!

Have Brokers ever questioned why that warning is on the SCF and ICW?  ASIC only ping a few brokers as a warning but you are all doing the same thing.  Its a scam of immense proportions - same as the USA and elsewhere.   You could be facing a custodial sentence.  

Has ASIC ever taken a Lender to Court?  Nope!!!  Yet ASIC admit: "Yes Denise the Banks are the Engineers............................"

Hmmmmmmm Bring on the ROYAL COMMISSION INTO THE BANKING SECTOR

Below is one of the most startling revelations you will see in the midst of our Sub Prime Mortgage Scandal.  Banks will say "our system was different.  The only difference is the cover up lasted longer here in Australia.  

In 2005, I rang the Australian Tax Office - specifically Mr Michael Carmody's Office.  He had indicated in a television interview, the results of an ATO cracked down on Low Doc "borrowing."  Carmody had been briefed by ASIC luminaries that people may be avoiding tax.  It was a sneaky agenda on the part of ASIC.   The Tax Office would investigate if a correlation between income on LAFs and income on borrower tax returns.  I rang Mr Carmody to explain to his deputy, "you have viewed this wrongly...its a trap.....a bank/broker agency scam."  

Two days later I made the journey from my home 2 hours away to the Sydney Tax Office and had meeting on this subject with two investigators.  It is unnecessary to name them.  With permission from borrowers (victims of the Streetwise caper and also of Lionel Sonntag) that low income families and pensioners were being given inappropriate loans known as Low Docs; and retirees being sold tax strategies that have led to them losing funds.  The Tax Office had conducted an investigation into Low Docs and Mr Carmody, on Alan Kohler's program Inside Business, had suggested there was a large number where people had written down their income on the LAF (eg $240K and yet their tax return showed $30k) .  

Obviously, one of these documents was an untruth.    The sample survey of 800 files is ironically in 2013, the same size as BFCSA surveys.  A suitably acceptable survey size to ascertain patterning and highlight key indicators and observations.    Mr Carmody was about release the findings and report and announced as such in his interview with Mr Kohler in April 2005.  The investigations closed down immediately after the announcement and no report to my knowledge was every publicly released.

I took with me to the meeting, files with original documentation from my own collection of investigations into Low Doc Lending since 2002.  ASIC had been fully aware of these issues.   Quite simply, there were say two documents from one file on the table, in front of the senior tax investigators and me.  One was a lie.....but which one was the lie?  If the LAF was lying then, as the tax inspectors agreed....its a job for ASIC.  My response: yes indeed.

If the tax return was a lie....it was a job for the tax department.  I understood the report about to be released considered the tax return to be the lie. The ATO and ASIC, both had super powers to demand the LAFs on Low Doc Loans from the Banks.  ASIC did nothing.  ATO at least looked into the concerns of the time that Low Doc LAFs showed high net income taxpayers as borrowers of Low Docs.  Why would high income people ask for a Low Doc???  They would demand a FULL Doc which so much cheaper than the high risk sub prime low doc product.

The investigators stared down at the documents....................."so you are saying these people gave you permission to show their documents and the tax return is the correct document and the LAF is the false one?"  My response: "yes no money in this for you boys..."  ATO: "yes nothing in it for us.  If you are right and the tax return is correct, then this is a job for ASIC."  The Tax office is always on the prowl to recover funds they say belong to them. These people were victims of Bank Fraud, not the perpetrators of tax evasion.  I asked: "how big was your survey?"  Answer: 800.  Me: "How many were showing these discrepancies in the correlation of data?"  Answer:  A high number.................................

I added:  "People are also caught "investing" in worthless companies, and claiming on tax................The Managed Investment Scams............ Its all being pushed through the Spruiker Model for the Banks to avoid liability................The Streetwise victims were pensioners and low income families.  I know, I have 50 families and have been sitting around more kitchen tables listening to stories of grief.  I know whats going on.  Retirees and Pensioners are being sold financial products via third party brokers using tax strategies that are shameful if not illegal.  Its all being invented as  STRATEGY and pushed by the banks who pay the commissions.  People are losing their homes and their financial well being.  Its why I do what I do."    One investigator looked up and said yes, its ASIC's role not ours unfortunately.  Thanks for coming in."  

The only way to stop this evil, bank driven toxic loan scandal and tax and MIS scams,  is for our Federal Government to Jail some Bankers.   This email address is being protected from spambots. You need JavaScript enabled to view it.

ATO slams 'most common' investment strategy as illegal

·         Australian Broker News

by Amy Rosenfeld | 06 Dec 2013

The ‘most common’ investment strategy recommended by brokers and advisers has been slammed by the ATO as bad practice and a potential breach of tax law.

Following Australian Broker’s revelations that many brokers are unaware they may be prosecuted as ‘scheme promoters’ for suggesting certain investment strategies, a number of readers came forward with their understanding of the legislation.

The article related to arrangements such as those described in Tax Determination 2012/1 – a determination based on the Hart case.

The arrangement involves a borrower using a line of credit to pay interest on an investment loan, then, as the line of credit can be claimed as a tax deduction, allowing the debt to capitalise and compound while all of the client’s available cash is used to pay the debt on their home of primary residence.

A number of readers responded that there are some notable exceptions to this rule. A Victoria-based broker, speaking with Australian Broker claimed the practice of ‘snowballing’ is one of these. 

“Snowballing is the most common strategy being used in the industry at the moment. You don’t have to trust me on that; you can ring the tax department. Snowballing is something they don’t even have to worry about.

“We have the rent going into the line of credit, so the line of credit is compounding but it’s only going up by the loss on property. So in other words they’re not putting after tax income or wages towards the shortfall - and the tax department are quite happy with that.”

But Australian Broker did contact the ATO, and assistant commissioner Wayne Barford says the tax department is in fact very worried about these types of arrangements.

“Such arrangements capitalise the investment loan interest whilst freeing up funds for use elsewhere, often in order to meet private expenses. This increases the overall level of tax deductions."

Any borrower capitalising on interest and claiming extra tax benefits leaves themselves exposed to consideration as participating in a tax avoidance scheme, says Barford. 

Whether or not this is a breach of tax law is then determined by other factors, such as the dominant purpose for entering the arrangement. 

Barford refutes claims that borrowers can use the extra funds to meet other expenses, and that these other expenses would then constitute the borrower's dominant purpose.

“These arrangements may be subject to the general anti-avoidance provisions (Part IVA) of the Tax Act (see Taxation Determination 2012/1), even where an arrangement advances a wider objective.

“It’s a two-step process. You can say you did the arrangement to help you afford private school expenses for your kids, but your primary purpose is to get a tax benefit and you’re using that benefit to meet extra expenses. This is simply not allowable."

Arguments from readers that banks, accountants or advisers are the ones who should be responsible for such arrangements were also clarified by Barford.

“Banks provide products but it is how the products are used by the clients that is important. There’s nothing wrong with line of credits and accounts being provided by those banks, it would only be an issue if the banks were the ones providing the advice and we have no evidence that this is the case.

“If brokers give such advice they are responsible. If brokers give tax advice they’re exposed and may be subject to civil penalties under the Promoter Penalty Laws.

“We encourage taxpayers and advisors who may be concerned that they have entered into arrangements of this type to lodge a ruling request with the ATO.”

 

 

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  • doyla66
    doyla66 Saturday, 07 December 2013

    Pursuing a case known to be dishonest; Defrauding the Revenue & Counsel must not mislead the Court:-

    Goldberg J: Pursuing a case known to be dishonest: "Whether instructed or not, a legal representative is not entitled to use litigious procedures for purposes for which they were not intended--- such as unjust enrichment by way of Fraudulent Lending Practices ---as by issuing or pursuing proceedings for reasons unconnected with success in the litigation or pursuing a case known to be dishonest, nor is he entitled to evade rules intended to safeguard the interests of justice, as by knowingly failing to make... "full disclosure on ex parte application" ... or knowingly conniving at incomplete disclosure of documents.

    ... It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it.” ...as Goldberg J quoted this above decision of the English Court of Appeal in
    Ridehalgh -v- Horsefield [1994] Ch. 205:

    Lord Reid states. “Every Counsel has a duty to his client fearlessly to raise every issue, advance every argument and ask every question, however distasteful, which he thinks will help his client’s case. But,

    .... as an "Officer of the Court" concerned in the administration of justice, he has, an overriding duty to the Court, to the standards of his profession, and to the public, which may and often does lead to a conflict with his client’s wishes or with what the client thinks are his personal interests....

    Counsel must not mislead the court, he must not lend himself to casting aspersions on the other party or witnesses for which there is no sufficient basis in the information in his possession, he must not withhold authorities or documents which may tell against his clients but which the law or the standards of his profession require him to produce.

    ”“Fraud” by its dictionary definition means “criminal deception, dishonest artifice or trick” and therefore might relate to any form of deception. ----as referred above --Lord Reid put the duty to the client and to the Court in perspective in Rondel -v- Worsley [1969] 1 AC 191 at 227; [1967] All ER 993 at 998.

    Defrauding the revenue or at least attempting to defraud the revenue was “flavour of the month” some years ago. This involved a “side agreement” between a vendor and purchaser that the purchaser would pay the vendor a sum of money (sometimes a significant sum of money) over and above the consideration stated in the contract, thereby reducing the amount which would attract stamp duty.

    Alternatively, there might have been an attempt to cloak that sort of transaction in a veil of disclosure by splitting the contract into property and chattels. In the English case of Saunders -v- Edwards [1987] 2 ALL ER 651 a solicitor assisted a client by falsely apportioning the consideration between a house and chattels described in a contract for the sale of land to avoid stamp duty thereby defrauding the revenue. The solicitor was found guilty of professional misconduct.

  • doyla66
    doyla66 Saturday, 07 December 2013

    Thankyou, Andy. That's so applicable!
    When one spends time being "maladministered" by an unjust and corrupt system riddled with incompetence it's refreshing to know that there are truths, principles and practices that should underpin the process that has patently gone awry. Time at anchor needed, outside the storm while the opponents choose their next weapons.

  • Denise
    Denise Saturday, 07 December 2013

    Yes banks are misusing the legal system to not only enrich themselves by living off the proceeds of crime, but they are flaunting the ridiculous departure from consumers protection and capitalizing on the absurd deregulation of the banks. Should I suggest: "bring back the lash?" The big divide between rich and poor has been known to cause civil unrest. Solution is simple: re-regulate the banks with consumer driven regulators. [email protected]

  • doyla66
    doyla66 Saturday, 07 December 2013

    What are a consumer's rights if they find they've signed on to a financial arrangement through a spruiker? Is there a 10 day cooling off period?
    What about a consumer who signs either a loan application form or an "agreement" ("contract") to pay a "lender"? Does the 10 day cooling off period apply?
    Is this "agreement" a true contract? I haven't seen one where the "borrowers" signature was witnessed or countersigned/dated by Bank staff? Is this legal/lawful?
    Do these borrower signed "agreements" then go off to be "warehoused" like that or are there other documents too?
    Do investors really know what they're getting with Australian RMBS?

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