Controversial lawyer Sevag Chalabian, who has been accused of involvement in a blackmail which resulted in $24 million going into his trust account, has quietly quit the legal profession.
Mr Chalabian, 47, was named in recent court documents in connection with what is alleged to be the nation's largest tax fraud.
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ATO boss formally charged
Michael Cranston has been formally charged in connection with a $130 million fraud.
According to an Australian Federal Police affidavit tendered in a recent Proceeds of Crime application, it was suggested that Mr Chalabian has committed a serious offence, namely dealing with money "suspected of being the proceeds of crime".
The tendered AFP affidavit also suggests that Mr Chalabian was not only involved in a blackmail but he is also alleged to have put $24,244,470 proceeds from the blackmail through the trust account of his law firm Lands Legal.
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On February 1, AFP officers were listening as another solicitor, Dev Menon from Clamenz Lawyers, hosted an extraordinary meeting in his firm's office in Martin Place, only a few blocks from the York Street premises of Lands Legal.
The result of that meeting was that Daniel Rostankovski, 28, allegedly blackmailed the organisers of a fraud which had made the participants multi-millionaires. This was done through keeping $165 million which should have gone to the ATO in Pay As You Go Withholding (PAYGW) liabilities.
At the meeting in Mr Menon's office Mr Rostankovski threatened to expose to the police and the media the alleged tax fraud being perpetrated by Adam Cranston, Jay Onley, and Simon Anquetil.
Mr Rostankovski, who felt he had been underpaid in his job in looking after a number of dummy directors essential to the scheme, told Mr Menon that his lawyer Mr Chalabian will "play ball with you".
The AFP affidavit shows Mr Menon replied: "Oh, Sevag is a friend of ours."
The proceeds of the alleged blackmail was to be split between Mr Rostankovski and his associate, Dan Hausman, a former bankrupt property developer.
The following day, Adam Cranston sent Mr Rostankovski a screenshot suggesting the penalty for extortion could be a 14-year jail sentence.
Told about the screenshot, Mr Hausman said: "I mean Jesus Christ, who's extorting who."
"Yeah, anyway, where do they get off texting like shit like extortion," Mr Rostankovski retorted.
Both Mr Rostankovski and Mr Hausman have been charged over the extortion.
The first million dollars of the alleged blackmail funds went into Mr Chalabian's firm's trust account the day of the alleged blackmail meeting.
By April 26 more than $24 million, which should have been remitted to the ATO, had gone into the Lands Legal trust account, some of which was used to purchase properties.
The affidavit also indicates that another of Mr Chalabian's clients, property developer Michael Teplitsky, allegedly helped Mr Hausman launder the proceeds of the blackmail through a company in Hong Kong.
Mr Teplitsky has not been charged with any offence.
Although Mr Chalabian has not been charged with any offence, NSW Law Society records show that after 24 years as a solicitor, Mr Chalabian handed in his practising certificate on June 2.
The recent tax scandal is not the first bout of unpleasant scrutiny for Mr Chalabian.
In 2012 he found himself in the witness box of the Independent Commission Against Corruption admitting that he set up a complicated series of front companies and trusts to disguise the involvement of his clients, members of the Obeid family, in what was later found to be a corrupt coal deal.
Mr Chalabian's trust account was used to receive the $30 million the Obeids received from the deal, the ICAC inquiry heard.
Mr Chalabian also went into a resources venture with lawyer Nick di Girolamo, who starred in another Obeid-related inquiry examining a water infrastructure company.
Mr Chalabian, a former partner at Philips Fox, founded Lands Legal in 2004 along with Andrew Wennerborn. The firm's major clients are hoteliers and property developers.