R1.8 million VAT scam: Man’s attempt to steal from SARS ends in seven-year prison sentence

A 39-year-old man has been sentenced to an effective seven years’ direct imprisonment after he was convicted of fraud and money laundering linked to a scheme that defrauded the South African Revenue Service (SARS) of more than R1.8 million in fraudulent VAT refunds.

In a statement released on Friday, the National Prosecuting Authority (NPA) said that the Palm Ridge Specialised Commercial Crimes Court convicted Lufuno Matodzi on six counts comprising three counts of fraud and three counts of money laundering.

Matodzi received seven years’ direct imprisonment on the fraud convictions and a further seven years on the money laundering convictions. The court ordered the sentences to run concurrently, resulting in an effective sentence of seven years behind bars.

According to the NPA, the offences stemmed from Matodzi’s actions after a business owner, identified as Mr Hassan, sought his assistance with submitting tax returns for Coco Pure Manufacturing CC.

Instead of helping the company, Matodzi unlawfully altered its registration details with the Companies and Intellectual Property Commission (CIPC), making himself the sole member of the close corporation.

“He used the South African Revenue Service (SARS) eFiling system to unlawfully change the company’s public officer and banking details before submitting fraudulent VAT refund claims for the February, April and June 2019 tax periods. Through this scheme, he fraudulently claimed and received VAT refunds totalling more than R1.8 million, which he subsequently transferred to various bank accounts to conceal the proceeds of crime,” the prosecuting authority said.

During sentencing, Senior State Advocate Phumlani Ntshangase argued that Matodzi had deliberately hijacked the company’s records to fraudulently claim VAT refunds before laundering the proceeds.

Ntshangase submitted that the offences were serious, sophisticated and carefully planned, warranting a sentence of direct imprisonment.

The NPA welcomed the outcome, saying the conviction sends a strong message that tax fraud and money laundering are serious economic crimes that undermine South Africa’s revenue collection system and prejudice the public purse.

IOL