The Ministry of Social Development (MSD) have been in the media lately with their ongoing battle against fraudulent COVID-19 Wage Subsidy applications.
About $18.8 billion was delivered in 2020 and 2021 supporting about 1.8 million people's jobs. It would however appear the "high trust" Wage Subsidy scheme has been significantly abused.
Nearly 7000 cases of reported abuse have been resolved since the scheme started. MSD citing 9 successfully prosecuted cases through the Courts representing $660,000.00 in false claims and a "pipeline" of cases being processed and before the Courts currently.
The Courts are taking a very dim view of wage subsidy fraud as being "more exploitative" since it demonstrates the perpetrators taking advantage of a nation during a time of national emergency, and in sentencing custodial periods are being handed down.
One of the most egregious cases has just been seen by the Manukau District Court in Auckland late last month. Nathan Peter Irvie Downey has been prosecuted following his admission to 13 related dishonestly charges. The offenses in question occurred between March 23 and August 24, 2020, when Downey, serving as the sole director and shareholder of Protective Systems Limited (PSL). PSL primarily operated by utilising contractors for painting and fireproofing services. During this period, Downey submitted a total of 19 fraudulent wage subsidy applications on behalf of PSL.
Out of these 19 applications, 13 were successfully approved, resulting in a monetary gain of $196,076.00. These applications falsely listed several individuals as employees of PSL, including Downey himself. However, subsequent investigations conducted by MSD revealed that PSL had no legitimate employees, and it was not a registered employer. Furthermore, it was discovered that some of the individuals named in the applications did not exist.
Examining PSL's bank statements during this period, it was uncovered that the company disbursed $74,363.73 to contractors. Notably, a portion of these funds, approximately $17,896.15, was channelled into Downey's personal bank account. Downey spent the balance of $121,712.27 on the company and personal use, including online gambling, adult entertainment clubs, and fast food.
Additionally, it came to light that Downey made several unsuccessful wage subsidy applications totalling $66,781.20 during this period. Concurrently, from March to June 2020, while he was also benefiting from the wage subsidy program as a full-time employee of a company managed by his mother.
Downey has received a sentence of imprisonment for 20.5 months.
MSD are quoted saying they are "committed to pursuing criminal and civil prosecutions to recover wage subsidy funds where necessary".