Fraudster convicted in R7.4 million VAT scam

Fraudster convicted in R7.4 million VAT scam! A 58-year-old fraudster, Malcolm Kgosietsile Lesolang, has been convicted on seven counts of fraud following an extensive investigation by the Directorate for Priority Crime Investigation (Hawks).

The case, which involved fraudulent Value Added Tax (VAT) invoices, resulted in the South African Revenue Service (SARS) suffering a financial loss of over R7.4 million.

Lesolang was sentenced on Monday by the Palm Ridge Specialised Commercial Crime Court.

The Investigation

The Hawks, South Africa’s elite crime-fighting unit, launched an investigation after the fraudulent activities were reported to the Johannesburg Central Police Station in February 2022.

Fraudster convicted

According to Hawks spokesperson Lieutenant Colonel Lloyd Ramovha, the scheme involved fake VAT invoices that were submitted in an attempt to claim undue tax refunds from SARS.

“This case involved fraudulent VAT invoices submitted to claim undue VAT refunds, resulting in a financial loss of over R7.4 million to the South African Revenue Service (SARS),” said Ramovha.

The investigation exposed a well-organized tax fraud scheme, in which Lesolang manipulated financial documents to receive illegitimate VAT refunds.

How the Fraud Scheme Worked

Lesolang’s fraudulent activities involved submitting false invoices for non-existent transactions to SARS. The VAT system in South Africa allows businesses to claim refunds on VAT paid for goods and services. However, criminals often exploit loopholes in the system by fabricating invoices to inflate refund claims.

The investigation revealed that Lesolang:

• Falsified VAT invoices to reflect higher business expenses than what was actually incurred.

• Submitted fake tax documents to SARS to claim refunds that he was not entitled to.

• Pocketed millions in undue VAT returns, which resulted in significant financial losses to the tax authority.

The Hawks worked closely with SARS’ fraud detection unit to track the discrepancies in his tax filings, which ultimately led to his arrest and prosecution.

Court Ruling and Sentence

The Palm Ridge Specialised Commercial Crime Court found Lesolang guilty on seven counts of fraud.

His sentencing sends a strong message to individuals attempting to defraud the tax system, as authorities continue to crack down on financial crimes.

While the exact details of his sentence have not been disclosed, cases like this typically result in lengthy prison terms and heavy financial penalties to recover lost funds.

SARS and Hawks’ Ongoing Efforts Against Tax Fraud

This case is just one of many in SARS’ ongoing battle against tax fraud and financial crimes. The tax authority, in collaboration with the Hawks, has intensified efforts to track down individuals and companies attempting to exploit the tax system.

Over the past few years, SARS has implemented advanced fraud detection technologies, including:

• Artificial intelligence and machine learning to detect irregular tax filings.

• Data analytics tools to identify suspicious refund claims.

• Increased audits and investigations into high-risk tax filers.

SARS Commissioner Edward Kieswetter has repeatedly warned that the agency is taking a hard stance against tax fraud, and those who attempt to cheat the system will face severe consequences.

“We are strengthening our capabilities to detect, investigate, and prosecute fraudsters. Anyone engaging in fraudulent tax activities should know that it’s only a matter of time before they are caught,” said Kieswetter in a previous statement.

The Impact of Tax Fraud on South Africa

Fraudulent VAT claims deprive South Africa of critical revenue, which could otherwise be used for essential public services such as education, healthcare, and infrastructure development.

Tax fraud not only affects SARS but also places an increased burden on honest taxpayers, who end up shouldering the financial shortfall caused by fraudulent activities.

Authorities have urged South Africans to report any suspected tax fraud to SARS’ anonymous tip-off hotline, emphasizing that every rand lost to fraud is a loss to the country’s economy.

Conclusion

The conviction of Malcolm Kgosietsile Lesolang marks a significant victory in South Africa’s fight against tax fraud.

With SARS and the Hawks ramping up their enforcement efforts, fraudsters engaging in similar schemes should expect to face the full force of the law.